Exam 2: Basic Financial Statements

Computation of assets,liabilities,and owners' equity after a series of transactions On April 30,2014,the balance sheet of China Collectibles showed total assets of $700,000,total liabilities of $400,000,and owners' equity of $300,000.The following transactions occurred in May of 2014: (1)Capital stock was issued in exchange for $165,000 cash. (2)The business purchased equipment for $360,000,paying $160,000 cash and issuing a note payable for $200,000. (3)The business paid $70,000 of its accounts payable. (4)The business collected $54,000 of its accounts receivable. Compute the following as of May 31,2014: (A.)Total assets $____________ (B.)Total liabilities $____________ (C.)Owners' equity $____________

Limited liability means that owners of a business are only liable for the debts of the business up to the amounts they can afford.

At the end of the current year,the owners' equity in Durante Co.is $360,000.During the year,the assets of the business had increased by $68,000 and the liabilities had increased by $118,000.Owners' equity at the beginning of the year must have been:

Which of the following transactions would cause a change in owners' equity?

Liabilities are usually listed in order of magnitude,from smallest dollar amount to largest dollar amount.

A strong statement of cash flows indicates that significant cash is being generated by:

Retained earnings is:

Any business event that might affect the future profitability of a business should be reported in its balance sheet.

The concept of adequate disclosure means that:

The statement of cash flows provides a link between two balance sheets by showing how net income (or loss)has changed owners' equity from one balance sheet date to the next.

Window dressing occurs when management attempts to make a company look financially stronger than it actually is.

The accounting equation may be stated as "assets minus liabilities equals owners' equity."

Which of the following is correct when a corporation uses cash to pay for an expense?

Assets need not always have physical characteristics as do buildings,machinery,or inventory.

A revenue transaction will result in all of the following except:

If a company purchases equipment by issuing a note payable,its total assets will not change.

The valuation of assets in the balance sheet is based primarily upon:

The way in which financial statements relate is known as:

A transaction caused a $60,000 increase in both assets and total liabilities.This transaction could have been which of the following?

Which one of the following is not considered as one of the three primary financial statements?