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The income statement shows the financial position of a business on a specific date.

A) True
B) False

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The following information is available for the Skate and Boards Rental.  Assets at December 31,2011$152,000 2011 Cash inflows from operating activities 105,000 2011 Cash outflows from financing activities (44,000) 2011 Cash outflows from investing activities (84,000) 2011 Expenses (43,000) Retained earnings at December 31, 2010 50,000 Liabilities at December 31, 2011 28,000 Common stock at December 31, 2011 12,000 2011 Revenues 135,000 2011 Dividends (30,000)\begin{array}{|l|r|}\hline \text { Assets at December } 31,2011 & \$ 152,000 \\\hline \text { 2011 Cash inflows from operating activities } & 105,000 \\\hline \text { 2011 Cash outflows from financing activities } & (44,000) \\\hline \text { 2011 Cash outflows from investing activities } & (84,000) \\\hline \text { 2011 Expenses } & (43,000) \\\hline \text { Retained earnings at December 31, 2010 } & 50,000 \\\hline \text { Liabilities at December 31, 2011 } & 28,000 \\\hline \text { Common stock at December 31, 2011 } & 12,000 \\\hline \text { 2011 Revenues } & 135,000 \\\hline \text { 2011 Dividends } & (30,000)\\\hline\end{array} Using the above information prepare an Income Statement,Statement of Retained Earnings and Statement of Cash Flows for the Skate and Boards Rental for 2011.Also,prepare its Balance Sheet as of December 31,2011.Assume that the 12/31/10 cash balance is $70,000.

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Beginning cash bal...

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Net income:


A) Occurs when revenues exceed expenses
B) Is the same as revenue
C) Equals resources owned or controlled by a company
D) Occurs when expenses exceed assets
E) Represents assets taken from a company for an owner's personal use

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

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Match the following terms with the appropriate definition.

Premises
Social responsibility
Ethics
Cost principle
Investing activities
Recordkeeping
Accounting
External users
Operating activities
Financing activities
Internal users
Responses
Provide the means organizations use to pay for resources such as land, buildings and equipment to carry out plans
The use of resources to research, develops, purchase, produce, distribute and market products and services
Persons using accounting information who are directly involved in managing the organization
Persons using accounting information who are not directly involved in the running of the organization
An information and measurement system that identifies records and communicates relevant, reliable and comparable information about an organization's business activities
Concern for the impact of actions on society
. The acquisition and disposing of resources that an organization uses to acquire and sell products and services
The part of accounting that involves recording transactions and events, either electronically or manually
Beliefs that distinguish right from wrong
The idea that accounting information is based on actual cost

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Social responsibility
Ethics
Cost principle
Investing activities
Recordkeeping
Accounting
External users
Operating activities
Financing activities
Internal users

Match each of the following items with the financial statement in which each item would most likely appear. An item may appear on more than one statement.

Premises
Revenues
Cash from investing activities
Assets
Cash from operating activities
Total equity
Liabilities
Cash dividends paid
Costs and expenses
Responses
Balance sheet
Statement of retained earnings
Income statement
Statement of cash flows

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Revenues
Cash from investing activities
Assets
Cash from operating activities
Total equity
Liabilities
Cash dividends paid
Costs and expenses

Which of the following elements are found on the income statement?


A) Cash
B) Accounts Receivable
C) Common Stock
D) Retained Earnings
E) Salaries Expense

F) A) and C)
G) None of the above

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Lorton's Web Services has assets of $265,000 and liabilities of $130,000.Calculate the amount of equity.

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Equity = $...

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Accounting is an information and measurement system that identifies records and communicates financial information to users.

A) True
B) False

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Match each term to its definition

Premises
Monetary unit principle
Expenses
Statement of retained earnings
Business entity principle
Statement of cash flows
Liabilities
Revenue recognition principle
Business transaction
Accounting equation
Responses
A financial statement that lists cash inflows (receipts) and cash outflows (payments); the cash flows are arranged by operating, investing and financing activities.
An exchange of value between two parties.
The principle that assumes transactions and events can be expressed in money units.
The principle that requires a business to be accounted for separately from its owners.
The principle that revenue is recognized when earned.
The relation between a company's assets, liabilities and equity.
A financial statement that reports the changes in retained earnings over the reporting period; adjusted for increases from net income and for decreases such as dividends or net loss.
The cost of assets or services used to earn revenue.
Creditor's claims on assets.

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Monetary unit principle
Expenses
Statement of retained earnings
Business entity principle
Statement of cash flows
Liabilities
Revenue recognition principle
Business transaction
Accounting equation

The accounting equation can be restated as: Assets - Equity = Liabilities.

A) True
B) False

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Match each term to its definition

Premises
Revenues
Going-concern principle
Statement of retained earnings
Net assets
Dividends
Objectivity principle
Cost principle
Assets
Responses
Resources owned or controlled by a company that are expected to yield future benefits.
A principle that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold.
A financial statement that reports the changes in retained earnings over the reporting period; including increases from net income and for decreases such as dividends or net loss.
Another term for equity.
A principle that requires the information in financial statements to be supported by independent unbiased evidence.
The accounting principle that requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange.
The distribution of assets to stockholders.
Increases in retained earnings from a company's earnings activities.

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Revenues
Going-concern principle
Statement of retained earnings
Net assets
Dividends
Objectivity principle
Cost principle
Assets

A company's balance sheet shows: cash $22,000,accounts receivable $16,000,office equipment $50,000 and accounts payable $17,000.What is the amount of equity?


A) $17,000
B) $29,000
C) $71,000
D) $88,000
E) $105,000

F) C) and D)
G) B) and D)

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A company has liabilities of $475,000 and $925,000 of equity.What is the amount of its assets?

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Assets = $...

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Assets created by selling goods and services on credit are:


A) Accounts payable
B) Accounts receivable
C) Liabilities
D) Expenses
E) Equity

F) A) and E)
G) A) and D)

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The income statement is a financial statement that shows revenues earned and expenses incurred during a specified period of time.

A) True
B) False

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ParFour's total liabilities are $130,000 and its equity is $340,000.Calculate the company's total assets.

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Total asse...

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The balance sheet is based on the accounting equation.

A) True
B) False

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Determine the net income of a company for which the following information is available. Employee salaries expense……………..$180,000 Interest expense………………………… 10,000 Rent expense……………………………. 20,000 Consulting revenue……………………..400,000


A) $190,000
B) $210,000
C) $230,000
D) $400,000
E) $610,000

F) A) and D)
G) B) and E)

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Beta Corporation purchased $100,000 worth of land by paying 10,000 cash and signing a $90,000 mortgage.Immediately prior to this transaction the corporation had assets,liabilities and owners' equity in the amounts of $150,000; $30,000; and $120,000 respectively.What is the total amount of Beta Corporation's assets after this transaction has been recorded?


A) $240,000
B) $250,000
C) $160,000
D) $40,000
E) $260,000

F) A) and B)
G) B) and E)

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A company spent $52,000 in cash for this period's advertising activities.Enter the appropriate amounts that reflect this transaction into the accounting equation format shown below.  Assets = Liabilities + Equity \begin{array} { | c | c | c | } \hline \text { Assets } = & \text { Liabilities } + & \text { Equity } \\\hline & & \\\hline\end{array}

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\[\begin{array} { | c | c | c ...

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