Question 1

Laker Company has provided the following information for its most recent year of operation:
Cash collected from customers totaled $99,300.
Cash borrowed from banks totaled $42,700.
Cash paid to employees totaled $23,300.
Cash paid for interest totaled $3,100.
Cash received from selling an investment in Husky stock totaled $73,000.
Cash payments to banks for repayment of money borrowed totaled $9,700.
Cash paid for operating expenses totaled $11,200.
Land costing $75,000 was sold for $75,000 cash.
Cash paid for dividend payments to stockholders totaled $7,700.
How much was Laker's net cash flow from financing activities?

Accepted Answer

The answer of Laker Company has provided the following information...

Question 2

Which of the following accounts would not be reported on the balance sheet?

Accepted Answer

A)  Retained earnings. 
B)  Inventory. 
C) Accounts payable. 
D) Dividends.

Question 3

The balance sheet includes assets, liabilities, and stockholders' equity as of a point in time.

Accepted Answer

A) True 
 B)False

Question 4

The Financial Accounting Standards Board (FASB) has been given the authority by the Securities and Exchange Commission (SEC) to develop generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 5

Sparty Corporation has provided the following information for its most recent year of operation: Revenues earned were $97,000, of which $9,000 were uncollected at the end of the year.
Operating expenses incurred were $39,000, of which $7,000 were unpaid at the end of the year.
Dividends declared were $11,000, of which $3,000 were unpaid at the end of the year.
Income tax expense is $17,400.
What is the amount of net income reported on Sparty's income statement?

Accepted Answer

A)  $32,900. 
B)  $39,300. 
C) $33,600. 
D) $40,600.

Question 6

Which of the following are the components of stockholders' equity on the balance sheet?

Accepted Answer

A)  Common stock and liabilities. 
B)  Common stock and assets. 
C) Retained earnings and dividends. 
D) Common stock and retained earnings.

Question 7

Describe the elements of the balance sheet equation.

Accepted Answer

The answer of Describe the elements of the balance sheet...

Question 8

Madrid Company has provided the following data (ignore income taxes): 2014 revenues were $77,500.
2014 net income was $33,900.
Dividends declared and paid during 2014 totaled $5,700.
Total assets at December 31, 2014 were $217,000.
Total stockholders' equity at December 31, 2014 was $123,000.
Retained earnings at December 31, 2014 were $83,000.
Which of the following is correct?

Accepted Answer

A)  2014 expenses were $37,900. 
B)  Total liabilities at December 31, 2014 were $11,000. 
C) Retained earnings increased $28,200 during 2014. 
D) Common stock at December 31, 2014 was $206,000.

Question 9

How are creditor and investor claims reported on a balance sheet?

Accepted Answer

A)  The claims of creditors are liabilities and those of investors are assets. 
B)  The claims of both creditors and investors are liabilities, but only the claims of investors are considered to be long-term. 
C) The claims of creditors are reported as liabilities while the claims of investors are recorded as stockholders' equity. 
D) The claims of creditors and investors are considered to be essentially equivalent.

Question 10

Which of the following is not a formal requirement to become a licensed certified public accountant (CPA)?

Accepted Answer

A)  A college education. 
B)  Professional experience. 
C) Membership in the American Institute of Certified Public Accountants (AICP
A) . 
D) A professional examination.

Question 11

In the United States, the Securities and Exchange Commission (SEC) is considering requiring the use of International Financial Reporting Standards (IFRS) by U.S. companies for their financial reporting in the U.S.

Accepted Answer

A) True 
 B)False

Question 12

Laker Company has provided the following information for its most recent year of operation:
Cash collected from customers totaled $99,300.
Cash borrowed from banks totaled $42,700.
Cash paid to employees totaled $23,300.
Cash paid for interest totaled $3,100.
Cash received from selling an investment in Husky stock totaled $73,000.
Cash payments to banks for repayment of money borrowed totaled $9,700.
Cash paid for operating expenses totaled $11,200.
Land costing $75,000 was sold for $75,000 cash.
Cash paid for dividend payments to stockholders totaled $7,700.
How much was Laker's net cash flow from operating activities?

Accepted Answer

The answer of Laker Company has provided the following information...

Question 13

How is net income in the income statement different than cash flow from operating activities in the cash flow statement?

Accepted Answer

The answer of How is net income in the income...

Question 14

Which of the following correctly describes the various financial statements?

Accepted Answer

A)  An income statement covers a period of time. 
B)  The cash flow statement is a financial statement at a specific point in time. 
C) The balance sheet is a financial statement that covers a period of time. 
D) The statement of stockholders' equity is a financial statement at a specific point in time.

Question 15

Which of the following best describes assets?

Accepted Answer

A)  They are equal to liabilities minus stockholders' equity. 
B)  They are considered to be the economic resources of the business. 
C) They are all reported on the balance sheet at their current market value. 
D) They equal financing provided by creditors.

Question 16

A company's retained earnings increased $375,000 last year and its assets increased $973,000. The company declared a $79,000 cash dividend during the year. What was last year's net income?

Accepted Answer

A)  $296,000. 
B)  $375,000. 
C) $454,000. 
D) $519,000.

Question 17

A business entity's accounting system creates financial accounting reports which are provided to external decision makers.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following describes the operating activities section of a cash flow statement?

Accepted Answer

A)  It provides information about how operations have been financed. 
B)  It provides information pertaining to dividend payments to stockholders. 
C) It provides information with respect to a company's ability to generate cash flows to pay for goods and services. 
D) It provides the net increase or decrease in cash during the perioD.Cash flows from operating activities are cash flows directly related to earning income.

Question 19

Which of the following best describes the purpose of an audit?

Accepted Answer

A)  To prove the accuracy of an entity's financial statements. 
B)  To lend credibility to an entity's financial statements. 
C) To audit every transaction that an entity entered into. 
D) To establish that a corporation's stock is a sound investment.

Question 20

Which of the following transactions increases both cash and net income?

Accepted Answer

A)  Cash receipts from a bank loan. 
B)  Cash receipts from sale of common stock. 
C) Cash receipts from customers for services provided. 
D) Cash receipts from cost of goods solD.Net income is the result of revenues less cost of goods sold and other expenses. Cash receipts from customers increases revenue, which flows through to an increase in net income. Cash receipts also increase the cash account.

Exam 1: Financial Statements and Business Decisions

Which of the following accounts would not be reported on the balance sheet?

The balance sheet includes assets, liabilities, and stockholders' equity as of a point in time.

The Financial Accounting Standards Board (FASB) has been given the authority by the Securities and Exchange Commission (SEC) to develop generally accepted accounting principles.

Which of the following are the components of stockholders' equity on the balance sheet?

Describe the elements of the balance sheet equation.

How are creditor and investor claims reported on a balance sheet?

Which of the following is not a formal requirement to become a licensed certified public accountant (CPA) ?

In the United States, the Securities and Exchange Commission (SEC) is considering requiring the use of International Financial Reporting Standards (IFRS) by U.S. companies for their financial reporting in the U.S.

How is net income in the income statement different than cash flow from operating activities in the cash flow statement?

Which of the following correctly describes the various financial statements?

Which of the following best describes assets?

A company's retained earnings increased $375,000 last year and its assets increased $973,000. The company declared a $79,000 cash dividend during the year. What was last year's net income?

A business entity's accounting system creates financial accounting reports which are provided to external decision makers.

Which of the following describes the operating activities section of a cash flow statement?

Which of the following best describes the purpose of an audit?

Which of the following transactions increases both cash and net income?