Exam 1: Introduction to Financial Statements

The company's policy toward dividends and growth could best be determined by examining the

Prepare an income statement and a retained earnings statement, for the month of October, 2014 and a balance sheet at October 31, 2014 for the medical practice of Linda Denny, MD, from the items listed below. Retained earnings (October 1) \ 15,000 Common stock 30,000 Accounts payable 6,000 Equipment 29,000 Service revenue 23,000 Dividends 6,000 Insurance expense 3,500 Cash 11,000 Utilities expense 700 Supplies 2,800 Salaries and wages expense 9,000 Accounts receivable 10,000 Rent expense 2,000

The primary purpose of the statement of cash flows is to report

Determine the missing items.

Which of the following is the best definition of an internal user of accounting information?

Which of the following would not be considered an external user of accounting data for the Julian Company?

Which of the following groups uses accounting information to determine whether the company can pay its obligations?

The purchase of equipment is an example of a financing activity.

The retained earnings statement would not show

Which of the following financial statements is concerned with the company at a point in time?

Marvin Services Corporation had the following accounts and balances: Accounts payable \ 18,000 Equipment \ 21,000 Accounts receivable 3,000 Land 21,000 Buildings ? Unearned service revenue 6,000 Cash 9,000 Total stockholders' equity ? If the balance of the Buildings account was $45,000 and the equipment was sold for $21,000, what would be the total of stockholders' equity?

Why should the income statement be prepared first?

The management discussion and analysis (MD & A) section of an annual report covers various financial aspects of a company.

Elston Company compiled the following financial information as of December 31, 2014: Service revenue \ 700,000 Common stock 150,000 Equipment 200,000 Operating expenses 625,000 Cash 175,000 Dividends 50,000 Supplies 25,000 Accounts payable 100,000 Accounts receivable 75,000 Retained earnings, 1/1/14375,000 Elston's assets on December 31, 2014 are

Net income results when

Proprietorships in the United States generate more revenue than the other two forms of business enterprise.

Liabilities

Which of the following is not a satisfactory statement of the accounting equation?

The heading on the statement of cash flows identifies all of the following except

Borrowing money is an example of a(n)