Question 1

Which of the following equations is the balance sheet equation?

Accepted Answer

A)  Assets + Liabilities = Stockholders' Equity.
B)  Assets + Stockholder's Equity = Liabilities.
C)  Assets = Liabilities + Stockholders' Equity.
D)  Assets = Liabilities + Common Stock.E) A) and D)
F) B) and D)

Question 2

Which of the following would immediately cause a change in a corporation's retained earnings?

Accepted Answer

A)  Net income or net loss and declaration of dividends.
B)  Declaration of dividends and issuance of common stock to new stockholders.
C)  Net income and issuance of stock to new stockholders.
D)  Declaration of dividends and purchase of new machinery.E) A) and D)
F) A) and C)

Question 3

The income statement is a measure of an entity's economic performance for a period of time.

Accepted Answer

A) True 
 B)False

Question 4

The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements?

Accepted Answer

A)  The income statement only.
B)  The statement of stockholders' equity.
C)  The balance sheet only.
D)  The statement of cash flows.E) C) and D)
F) A) and B)

Question 5

How is net income in the income statement different from the cash flow from operating activities in the cash flow statement?

Accepted Answer

Net income is comprised of revenues expe...

Question 6

Which of the following best describes assets?

Accepted Answer

A)  They are equal to liabilities minus stockholders' equity.
B)  They are considered to be the economic resources of the business.
C)  They are all reported on the balance sheet at their current market value.
D)  They equal financing provided by creditors.E) None of the above
F) A) and C)

Question 7

Which of the following would be reported in the investing activities section of a cash flow statement?

Accepted Answer

A)  Cash received from customers.
B)  Cash received from the issue of common stock.
C)  Cash paid to repay a bank loan.
D)  Cash paid to acquire common stock of another company.E) B) and D)
F) B) and C)

Question 8

Which of the following is not reported as a liability on a balance sheet?

Accepted Answer

A)  Income taxes payable.
B)  Common stock.
C)  Accounts payable.
D)  Dividends payable.E) B) and D)
F) A) and D)

Question 9

Which of the following statements is correct?

Accepted Answer

A)  The payment of a cash dividend reduces net income.
B)  Cash received from issuing common stock to stockholders is reported as a financing activity cash flow within the statement of cash flows.
C)  Providing services to a customer on account does not impact net income.
D)  The purchase of manufacturing equipment is reported within the statement of cash flows as a financing activity.E) A) and C)
F) A) and D)

Question 10

Borrowing money is an investing activity.

Accepted Answer

A) True 
 B)False

Question 11

Stockholders' equity on the balance sheet includes common stock and retained earnings.

Accepted Answer

A) True 
 B)False

Question 12

Madrid Company has provided the following data (ignore income taxes) : 2019 revenues were $77,500.
2019 net income was $33,900.
Dividends declared and paid during 2019 totaled $5,700.
Total assets at December 31,2019 were $217,000.
Total stockholders' equity at December 31,2019 was $123,000.
Retained earnings at December 31,2019 were $83,000.
-
Which of the following is correct?

Accepted Answer

A)  2019 expenses were $37,900.
B)  Total liabilities at December 31,2019 were $11,000.
C)  Retained earnings increased $28,200 during 2019.
D)  Common stock at December 31,2019 was $206,000.E) B) and C)
F) A) and D)

Question 13

Which of the following correctly describes the various financial statements?

Accepted Answer

A)  An income statement covers a period of time.
B)  The cash flow statement is a financial statement at a specific point in time.
C)  The balance sheet is a financial statement that covers a period of time.
D)  The statement of stockholders' equity is a financial statement at a specific point in time.E) A) and D)
F) B) and D)

Question 14

Which of the following has the legal authority to determine financial reporting in the United States?

Accepted Answer

A)  Financial Accounting Standards Board.
B)  American Accounting Association.
C)  Securities and Exchange Commission.
D)  Public Company Accounting Oversight Board.E) B) and D)
F) A) and B)

Question 15

Which of the following best describes liabilities and stockholders' equity?

Accepted Answer

A)  They are the sources of financing an entity's assets.
B)  They are the economic resources owned by a business entity
C)  They are reported on the income statement.
D)  They both increase when assets increase.E) C) and D)
F) All of the above

Question 16

Willie Company's retained earnings increased $20,000 during the current year.What was Willie's current year net income or loss given that Willie declared $25,000 of dividends during this year?

Accepted Answer

A)  Net income was $5,000.
B)  Net income was $45,000.
C)  Net loss was $45,000.
D)  Net loss was $5,000.E) B) and C)
F) A) and B)

Question 17

In what order would the items on the balance sheet appear?

Accepted Answer

A)  Assets,retained earnings,liabilities,and common stock.
B)  Common stock,retained earnings,liabilities,and assets.
C)  Assets,liabilities,common stock,and retained earnings.
D)  Common stock,assets,liabilities,and retained earnings.E) C) and D)
F) A) and B)

Question 18

As of January 1,2019,a corporation had assets of $340,000 and liabilities of $120,000.During 2019,assets increased $45,000 and liabilities increased $15,000.

Accepted Answer

Assets at December 31,2019 = $385,000 = ...

Question 19

Revenue is recognized within the income statement during the period in which cash is collected.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements describes the balance sheet?

Accepted Answer

A)  It reports a company's revenues and expenses.
B)  Assets are generally reported on the balance sheet at the cost incurred to acquire them.
C)  Stockholders' equity includes only retained earnings.
D)  It reports a company's cash flow from operations.E) C) and D)
F) A) and D)

Exam 1: Financial Statements and Business Decisions

Which of the following equations is the balance sheet equation?

Correct Answer
verified

Which of the following would be reported in the investing activities section of a cash flow statement?

Correct Answer
verified

Which of the following best describes liabilities and stockholders' equity?

Correct Answer
verified

The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements?

Correct Answer
verified

The income statement is a measure of an entity's economic performance for a period of time.

Correct Answer
verified

How is net income in the income statement different from the cash flow from operating activities in the cash flow statement?

Correct Answer
verified
Net income is comprised of revenues expe...
View Answer

Correct Answer
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Which of the following best describes assets?

Correct Answer
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Willie Company's retained earnings increased $20,000 during the current year.What was Willie's current year net income or loss given that Willie declared $25,000 of dividends during this year?

Correct Answer
verified

Borrowing money is an investing activity.

Correct Answer
verified

Which of the following would immediately cause a change in a corporation's retained earnings?

Correct Answer
verified

Which of the following has the legal authority to determine financial reporting in the United States?

Correct Answer
verified

Which of the following statements describes the balance sheet?

Correct Answer
verified

In what order would the items on the balance sheet appear?

Correct Answer
verified

Revenue is recognized within the income statement during the period in which cash is collected.

Correct Answer
verified

Which of the following correctly describes the various financial statements?

Correct Answer
verified

Stockholders' equity on the balance sheet includes common stock and retained earnings.

Correct Answer
verified

Which of the following is not reported as a liability on a balance sheet?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

As of January 1,2019,a corporation had assets of $340,000 and liabilities of $120,000.During 2019,assets increased $45,000 and liabilities increased $15,000.

Correct Answer
verified
Assets at December 31,2019 = $385,000 = ...
View Answer

Exam 1: Financial Statements and Business Decisions

Which of the following equations is the balance sheet equation?

Correct AnswerverifiedShow Answer

Which of the following would be reported in the investing activities section of a cash flow statement?

Correct AnswerverifiedShow Answer

Which of the following best describes liabilities and stockholders' equity?

Correct AnswerverifiedShow Answer

The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements?

Correct AnswerverifiedShow Answer

The income statement is a measure of an entity's economic performance for a period of time.

Correct AnswerverifiedShow Answer

How is net income in the income statement different from the cash flow from operating activities in the cash flow statement?

Correct AnswerverifiedNet income is comprised of revenues expe...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following best describes assets?

Correct AnswerverifiedShow Answer

Willie Company's retained earnings increased $20,000 during the current year.What was Willie's current year net income or loss given that Willie declared $25,000 of dividends during this year?

Correct AnswerverifiedShow Answer

Borrowing money is an investing activity.

Correct AnswerverifiedShow Answer

Which of the following would immediately cause a change in a corporation's retained earnings?

Correct AnswerverifiedShow Answer

Which of the following has the legal authority to determine financial reporting in the United States?

Correct AnswerverifiedShow Answer

Which of the following statements describes the balance sheet?

Correct AnswerverifiedShow Answer

In what order would the items on the balance sheet appear?

Correct AnswerverifiedShow Answer

Revenue is recognized within the income statement during the period in which cash is collected.

Correct AnswerverifiedShow Answer

Which of the following correctly describes the various financial statements?

Correct AnswerverifiedShow Answer

Stockholders' equity on the balance sheet includes common stock and retained earnings.

Correct AnswerverifiedShow Answer

Which of the following is not reported as a liability on a balance sheet?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

As of January 1,2019,a corporation had assets of $340,000 and liabilities of $120,000.During 2019,assets increased $45,000 and liabilities increased $15,000.

Correct AnswerverifiedAssets at December 31,2019 = $385,000 = ...View AnswerShow Answer

Correct Answer
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Net income is comprised of revenues expe...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Assets at December 31,2019 = $385,000 = ...
View Answer