Name Chapter 1
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Question 1

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Question The managers of a business prepare financial statements to present meaningful information about that business’s activities to external users,
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Question 2

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Question The independent external auditors of a business prepare financial statements to present meaningful information about that business’s activities to external users,
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Question 3

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Question The activities of a business include establishing goals and strategies, obtaining financing, making investments and conducting operations.
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Question 4

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Question Goals are the end results toward which the firm directs its energies, and strategies are the means for achieving those results.
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Question 5

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Question Each firm makes financing decisions about the proportion of funds to obtain from owners, long-term creditors, and short-term creditors.
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Question 6

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Question A firm makes investments to obtain productive capacity to carry out its business activities.
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Question 7

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Question Patents, licenses, and other contractual rights are tangible, in the sense that the rights have a physical existence.
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Question 8

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Question Management operates the productive capacity of the firm to generate earnings.
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Question 9

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Question Firms communicate the results of their business activities in the annual report to shareholders.
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Question 10

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Question Assets are economic resources with the potential to provide future economic benefits to a firm.
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Question 11

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Question Liabilities are creditors’ claims for funds, usually because they have provided funds, or goods and services, to the firm.
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Question 12

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Question Retained earnings represent the net assets (total assets - total liabilities) a firm derives from its earnings that exceed the dividends
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Question 13

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Question The amounts of individual assets that make up total assets, represented by accounts receivable, inventories, equipment, and other assets, reflect a firm’s financing decisions, each measured at the balance sheet date.
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Question 14

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Question The mix of liabilities plus shareholders’ equity reflects a firm’s investing decisions, each measured at the balance sheet date.
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Question 15

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Question Current liabilities represent obligations a firm expects to pay within one year.
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Question 16

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Question Current assets, typically held and used for several years, include land, buildings, equipment, patents; and long-term investments in securities.
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Question 17

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