Exam 1: Accounting and the Financial Statements

Which one of the following is not one of the three business activities?

In a(n)____________________-step income statement, all expenses and losses are added together, then deducted from the sum of all revenues and gains.

The financial statement in which you list revenues, starting with sales revenue (service revenue), is called the ____________________.

-Refer to Baloon-E-Tunes. Calculate the amount of working capital at December 31, 2013. What can you learn from the current ratio that you cannot learn from the amount of working capital?

Best Deal Auto Parts began 2013 with $400,000 in assets, $140,000 in liabilities, and $160,000 of retained earnings. Net income for the year was $100,000, and dividends of $80,000 were paid.

Which of the following best describes the term "expenses"?

Investing is the business activity that measures the company's ability to generate cash from its revenue and expense activities.

-Refer to Baloon-E-Tunes. Calculate the current ratio at December 31, 2013. What does this ratio tell you about the "composition" of the current assets?

Which one of the following groups is considered an internal user of financial statements?

Which one of the following items is reported as a current stockholders' equity on a classified balance sheet?

Stockholders equity is composed of contributed capital and retained earnings.

The following amounts were taken from the accounting records at December 31, 2013:

-Refer to Baker's Pride Bakery. Was the company profitable both years? What are the amounts of the total revenues and total expenses, respectively, for 2013? Which financial statement provides this information to you?

Listed below are several amounts from the accounting records of Big Tom's Pawn Shops, for the year ended December 31, 2013. Prepare a single-step income statement in good form.

Independent auditors (CPAs)render an opinion that the financial statements do or do not fairly present a company's financial position, operating results, and cash flows.

Current assets include all of the following: cash, inventory, equipment, supplies, and accounts receivable.

Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group that is most likely to have the need described. (Choices may be used more than once.) a.Investors b.Management c.Supplier d.Banker e.Government f.Employees g.Labor Union h.Investors and Banker i.Supplier and Banker -The profitability of the company based upon the Internal Revenue Code.

Which one of the following is not an external user of financial statements?

You are a potential creditor and are concerned that a particular company you are ready to give a loan to might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern?