Exam 1: Introduction to Financial Statements

The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time.

U.S. standards are developed by the

An annual report includes all of the following except

The proprietorship form of business organization

Expenses are incurred

If the retained earnings account increases from the beginning of the year to the end of the year, then

Ending retained earnings for a period is equal to beginning

Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations in Hawaii. During the time Jill is away from the business, Jack increases the debts of the business by $20,000. Which of the following statements is true regarding this debt?

Joe Laramie owns and operates Joe's Burgers, a small fast food store, located at the edge of City College campus in Newton, Ohio. After several very profitable years, Joe's Burgers began to have problems. Most of the problems were related to Joe's expansion of the eating area in the restaurant without corresponding increases in the food preparation area. Joe does not have the cash or financial backing to expand further. He has therefore decided to sell his business. William Sheets is interested in purchasing the business. However, he is located in another city and is unfamiliar with Newton. He has asked Joe why he is selling Joe's Burgers. Joe replies that his elderly mother requires extra care, and that his brother needs help in his manufacturing business. Both are true, but neither is his primary reason for selling. Joe reasons that William should not have asked him anyway, since profitable businesses don't come up for sale. Required: 1. Identify the stakeholders in this situation. 2. Did Joe act ethically in not revealing fully his reasons for selling the business? Why or why not?

All of the following are interrelationships that are important to understand when preparing financial statements except

Which of the following groups uses accounting information to determine whether the company's net income will result in a stock price increase?

The statement of cash flows for Nyland Corporation reveals the following information: Provide three comments about this information. Make your comments concise yet thorough.

The financial statement that summarizes the changes in retained earnings for a specific period of time is the

In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is your best response to this statement?

The retained earnings statement

Your friend, James, made this comment: "My major is biology and I plan to research for cures for major illnesses. Therefore, I have no need to study accounting." What is your response to James?

A corporation has which of the following set of characteristics?

At the beginning of the year, Gant Company had total assets of $660,000 and total liabilities of $300,000. Answer the following questions viewing each situation as being independent of the others. (1) If total assets increased $225,000 during the year, and total liabilities decreased $100,000, what is the amount of stockholders' equity at the end of the year? (2) During the year, total liabilities increased $215,000 and stockholders' equity decreased $130,000. What is the amount of total assets at the end of the year? (3) If total assets decreased $60,000 and stockholders' equity increased $150,000 during the year, what is the amount of total liabilities at the end of the year?

Payments to stockholders are called

Cesar Ruiz was reviewing his company's activities at the end of the year (2014) and decided to prepare a retained earnings statement. At the beginning of the year his assets were $530,000, liabilities were $140,000, and common stock was $120,000. The net income for the year was $250,000. Dividends of $220,000 were paid during the year. Prepare a retained earnings statement in good form.