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MBA 5100 - Chapter 2 Questions and answers latest update
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MBA 5100 - Chapter 2Describe the basic elements of a financial accounting system - correct answer Rules to record each
economic event
A framework to prepare the financial statements
Controls to detect the errors in the recording process
Rules of accounting are called ____________. - correct answer Generally Accepted Accounting Principles
(GAAP)
GAAP determines.... - correct answer ...What transactions are recorded
When transactions are recorded
Amount of the transaction recorded
Transaction - correct answer An economic event or condition that under generally accepted accounting
principles directly affects an element of the accounting equation:
Assets = Liabilities + Stockholders' Equity
Integrated Financial Statement Approach - correct answer Analyzes, records, and summarizes
transactions by Integrating the accounting equation with Income statement Statement of Cash Flows
The Accounting Equation - correct answer Assets = Liabilities + Stockholders' Equity
Expand Stockholders' Equity. What is the equation? - correct answer Stockholders' Equity = Common
Stock + Retained Earnings
Expand Retained Earnings. What is the equation? - correct answer Retained Earnings = Revenues -
Expenses - Dividends
Expand Net Income. What is the equation? - correct answer Net Income = Revenues - Expenses
, What is the impact of common stock, revenue, expense, and dividend transactions on total on
Stockholders' Equity? - correct answer Issuance of Stock and/or Revenues = an increase on Stockholders'
Equity
Expenses and/or Dividends Paid = a decrease on Stockholders' Equity
What are the controls for the accounting equation? - correct answer - The accounting equation MUST
balance
- The ending cash balance on the Statement of Cash Flows must equal the cash balance on the Balance
Sheet
- The net income on the Income Statement must equal the net effects of revenues and expenses on
retained earnings
A __________ is an economic event that under generally accepted accounting principles affects an
element of the financial statements and must be recorded.
a. Framework
b. Controls
c. Set of rules
d. Transaction - correct answer d. Transaction
The Statement of cash flows are linked to ______ on the balance sheet. - correct answer Cash
Net Income from the Income Statement is linked to _____ _____ _____. - correct answer Retained
Earnings Statement
Retained Earnings is linked to the ______ ______ in ___________ _________. - correct answer Balance
Sheet; Stockholders' Equity
Which of the following will NOT cause a change in the shareholder's equity of a business?
a. Payment of a business debt.
b. Payment of dividends.
c. Sale of land at a profit.
d. Losses from unprofitable operations. - correct answer a. Payment of a business debt.
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