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Exam 1: Financial Statements and Business Decisions

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Question 1

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

A) Income taxes payable
B) Contributed capital
C) Accounts payable
D) Dividends declared

E) B) and D)
F) B) and C)

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Question 2

Multiple Choice

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How are creditor and investor claims reported on a balance sheet?

A) The claims of creditors are liabilities and those of investors are assets.
B) The claims of both creditors and investors are liabilities, but only the claims of investors are considered to be long-term.
C) The claims of creditors are reported as liabilities while the claims of investors are recorded as stockholders' equity.
D) The claims of creditors and investors are considered to be essentially equivalent.

E) A) and B)
F) All of the above

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C

Question 3

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Larson Company ends its recent year of operations with $3,500,000 in retained earnings.During the year Larson's net income exceeded its dividend declarations by $200,000.Larson's dividend declarations were $25,000 greater than the dividend payments. How much was Larson Company's beginning retained earnings?

Which of the following statements is correct?

Husky Company has provided the following information for its most recent year of operation: Cash collected from customers totaled $89,300. Cash borrowed from banks totaled $31,700. Cash paid to employees totaled $32,100. Cash paid for interest totaled $2,900. Cash received from selling Husky stock to stockholders totaled $41,000. Cash payments to banks for repayment of money borrowed totaled $7,500. Cash paid for operating expenses totaled $9,600. Land costing $25,000 was sold for $25,000 cash. Cash paid for dividends to stockholders totaled $3,300. How much was Husky's cash flow from operating activities?

Which of the following properly describes the impact on the financial statements when a company incurs operating expenses of $9,000,of which $3,000 remains unpaid?

Which of the following statements pertaining to the audit function is incorrect?

Which financial statement would you use to determine a company's earnings performance during an accounting period?

Husky Company has provided the following information for its most recent year of operation: Cash collected from customers totaled $89,300. Cash borrowed from banks totaled $31,700. Cash paid to employees totaled $32,100. Cash paid for interest totaled $2,900. Cash received from selling Husky stock to stockholders totaled $41,000. Cash payments to banks for repayment of money borrowed totaled $7,500. Cash paid for operating expenses totaled $9,600. Land costing $25,000 was sold for $25,000 cash. Cash paid for dividends to stockholders totaled $3,300. How much was Husky's cash flow from financing activities?

Which of the following doesn't represent a professional accounting certification?

The statement of retained earnings explains the change in the retained earnings balance caused by stockholder investments and dividend declarations.

Which of the following is not a consequence to a company resulting from the issue of their financial statements?

Which of the following statements is true about a sole proprietorship?

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

Fulton Company was established at the beginning of 2010 when several investors paid a total of $200,000 to purchase Fulton stock.No additional investments in stock were made during the year.By December 31,2010,Fulton had cash on hand of $45,000,office equipment (net)of $40,000,inventories of $156,000,and accounts payable of $10,000.Sales for the year were $812,000.Of this amount,customers still owed $20,000.Fulton paid dividends of $25,000 to its stockholders during 2010. Requirements: 1.Based on the information above,prepare a balance sheet for Fulton Company as of December 31,2010.In the process of preparing the balance sheet,you must calculate the ending balance in retained earnings. 2.Prepare a statement of retained earnings for the year ended December 31,2010. 3.What was the amount of Fulton's net income for 2010? 4.Was Fulton successful during its first year in operation?

Which of the following describes the operations section of a cash flow statement?

Determine the missing amounts for each independent case below.Assume the amounts given are at the end of the company's first year of operation. $\begin{array}{l}\begin{array} { l } \text { Company } & \text { Total } & \text { Total } \\\text { Name } & \text { Revenue } & \text { Assets } \\\text { Randolph } & \$ 600,000 & \$ 450,000 \\\text { Newman } & \$ 105,000 & \\\text { Wiseman } & & \$ 190,000 \\\text { Martin } & \$ 180,000 & \$ 215,000 \\\text { VanTassel } & &\end{array}\begin{array} { l } \text { Total } & \text { Total } \\\text { Expenses } & \text { Liabilities } \\\$ 350,000 & \$ 130,000 \\& \$ 80,000 \\\$ 70,000 & \\\$ 115,000 & \$ 75,000 \\\$ 55,000 & \$ 75,000\end{array}\begin{array} { l } \text { Net Income } & \text { Stockholders} \\\text { (Loss) } & \text { Equity } \\\\\$ 10,000 & \$ 75,000 \\ (\$ 30,000) & \$ 100,000\\\\ \$ 19,000 &\$ 79,000 \end{array}\end{array}$

Which of the following is a disadvantage of a corporation when compared to a partnership?

Which of the following would not be reported in the operating activities section of a cash flow statement?

During the fiscal year ended 2010,a company had revenues of $400,000,expenses of $280,000,and an income tax rate of 30 percent.What was the company's 2010 net income?