WorksheetsWilley 1 Accounting: Introduction to Financial Statements
Total questions: 39
Worksheet time: 2hrs 55mins
What is the definition of a sole proprietorship?
A business owned and operated by a single individual
A business owned by shareholders
A partnership between two or more individuals
A corporation owned by a board of directors
What is an advantages of a sole proprietorship?
Simple to establish
Corporate Controlled
Multiple Shareholders
All of the questions
Which of the following are examples of typical sole proprietorships?
Freelance writer
Local bakery
Independent consultant
All of the above
What is the definition of a Partnership?
A business organization where two or more individuals manage and operate the business.
A type of business owned by a single individual.
A large company with many shareholders.
A non-profit organization.
What is an advantage of a partnership?
One owner
No personal liability
Easy to transfer ownership
Tax advantages
What type of businesses typically form partnerships?
Corporations
Large manufacturing plants with many owners
Lawyers, doctors, and Accountants
Non-profit organizations
Which of the following best defines a Corporation?
A legal entity that is separate and distinct from its owners
A type of partnership where partners share equal responsibility
A small business owned by a single individual
A non-profit organization focused on charitable activities
What are three advantages of a corporation?
Easier to transfer ownership through purchase of stock
Easier to raise funds than other forms of ownership
No personal liability
Simple to establish
What is a disadvantage of sole proprietorship and partnerships?
Limited liability
Unlimited liability
Easy transfer of ownership
Complex tax structure
What form of business has the highest revenue produced and is used by most large businesses in the United States?
Sole Proprietorship
Partnership
Corporation
Limited Liability Company (LLC)
What is the definition of accounting?
The process of Investing assets for the benefit of the company
The preparation of financial statements for an organization
A system of budgeting that informs and communicated the economic events of an organization
An information system that identifies, records, and communicates the economic events of an organization
Who are the internal users of accounting information?
Creditors
Investors
Managers
Customers
Who two of the external users of accounting information?
Investors
Internal management
Employees
Government agencies (Taxation and Regulation)
What are the three principal business activities?
Financing
Investing
Operating
Budgeting
What is the purpose of the accounting information system?
To keep track of each of the business activities.
To manage employee schedules.
To design marketing strategies.
To develop new products.
What are the two primary sources of outside financing for corporations?
Borrowing money (debt financing)
Issuing (selling) shares of stock in exchange for cash (Equity Financing)
Borrowing from friends and family
None of the answers
What is a creditor?
A person or entity a business owes money to
A person or entity a business lends money to
A person or entity that manages a business
A person or entity that audits a business
What are amounts owed to creditors called?
Assets
Accounts Recievable
Inventory
Liabilities
What are two examples of liabilities?
Notes payable
Bonds payable
Bonds receivable
Accounts receivable
What is common stock?
Common stock is a government-issued security.
Common stock is a type of bond issued by companies.
Common stock is a form of debt that companies owe to stockholders.
The total amount paid in by stockholders for the shares they purchase.
What is a dividend?
A type of stock
The cash payments to stockholders
A company's profit
A financial loss
What are investing activities?
The raising of cash which help a company operate.
Investing activities are related to the day-to-day operations of a company.
The purchase of resources a company needs in order to operate.
The financial transactions related to borrowing money.
What are assets?
Expenses of a business
Liabilities of a business
Resources owned by a business
Income of a business
What is revenue?
The decrease in assets or decrease in liabilities resulting from the sale of goods or the performance of services in the course of business.
The increase in assets or decrease in liabilities resulting from the sale of goods or the performance of services in the course of business.
Revenue is the net profit after all expenses are deducted.
Revenue is the amount of cash on hand.
What are three types of revenue used by Columbia Sportswear?
Sales
Services
Licensing
Interest
What are the four different financial statements?
Income statement
Retained earnings statement
Annual Report
Statement of cash flows
Balance Sheet
What is an income statement?
A financial statement that reports a company's revenue and expenses and resulting net income or net loss for a specific period of time.
A document that outlines a company's assets and liabilities.
A report detailing a company's cash flow activities.
A summary of a company's shareholder equity.
What is retained earnings?
The portion of net income paid to the stockholders
The portion of net income retained by the company
The portion of net income used for taxes.
The portion of net income used for operational expenses.
What is a retained earnings statement? The amounts and causes of changes in retained earnings for a specific time period.
A financial statement showing the company's revenue and expenses.
A statement showing the amounts and causes of changes in retained earnings for a specific time period.
A document detailing the company's assets and liabilities.
A report on the company's cash flow activities.
What is a balance sheet?
A financial statement that reports the assets and claims to those assets over a period of time
A document that outlines the company's future financial plans.
A financial statement that reports the assets and claims to those assets at a specific point in time.
A summary of the company's cash flow activities.
What is the basic accounting equation?
Assets = Liabilities + Stockholders Equity
Assets = Liabilities - Stockholders Equity
Assets = Liabilities * Stockholders Equity
Assets = Liabilities / Stockholders Equity
What are the two parts of Stockholders Equity?
Common Stock
Retained Earnings
Sales
Total Assets
What is the primary purpose of the statement of cash flows?
To provide information about a company's cash receipts and cash payments during a period.
To show the profitability of a company.
To display the financial position of a company at a specific point in time.
To summarize the changes in equity during a period.
An annual report is:
A detailed report that includes financial statements with management analysis
A monthly newsletter sent to shareholders
A quarterly earnings report
A daily stock market update
What is a Management discussion and analysis (MD&A)?
A section of a company's annual report where management discusses the company's financial performance.
A legal document required for company mergers.
A financial statement showing the company's profits and losses.
A marketing strategy document.
What are the Notes to the financial statements?
Explanatory notes that accompany the financial statements
A summary of the company's financial performance
The main financial statements themselves
A list of all transactions made by the company
What is an Auditors Report?
A document that provides an opinion on the accuracy of financial statements
A report that details the daily operations of a company
A summary of a company's marketing strategies
A document that outlines the company's future goals
An auditor is responsible for:
Reviewing financial statements
Conducting market research
Developing software applications
Managing human resources
A Certified Public Accountant (CPA) is:
a licensed accounting professional who has passed the CPA exam and met additional state certification and experience requirements.
a type of financial analyst who works exclusively in the public sector.
an accountant who specializes in tax law and tax preparation.
a financial advisor who primarily works with individual clients.
