Question 1

An income statement reports a firm's cumulative revenues and expenses from the inception of the firm through the income statement date.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following accounts belongs on the asset side of a balance sheet?

Accepted Answer

A)  depreciation expense 
B)  accounts payable 
C)  inventory 
D)  accruals

Question 3

Prepare an income statement using the information given below.Make sure to identify gross profit,operating income,and net income.

Accepted Answer

The answer of Prepare an income statement using the information...

Question 4

Baron,Inc.has total current assets of $1,200,000; total current liabilities of $500,000; long-term assets of $800,000; and long-term debt of $600,000.How much is the firm's total equity?

Accepted Answer

A)  $1,200,000 
B)  $800,000 
C)  $900,000 
D)  $2,000,000

Question 5

On an accrual basis income statement,revenues equal cash receipts and expenses equal cash expenditures.

Accepted Answer

A) True 
 B)False

Question 6

Two companies have identical assets and operating activities.Which of the follow statements is true?

Accepted Answer

A)  Both companies have the same net income. 
B)  The company with more debt will have lower operating income due to interest expense. 
C)  The company with more debt will have higher operating income due to leverage. 
D)  The company with more debt will have lower net income due to interest expense.

Question 7

An income statement may be represented as follows:

Accepted Answer

A)  Sales - Liabilities = Profits. 
B)  Revenues - Liabilities = Net Income. 
C)  Sales - Expenses = Retained Earnings. 
D)  Sales - Expenses = Profits.

Question 8

Given the information below,calculate the company's cash balance at the end of the year.

Accepted Answer

The answer of Given the information below,calculate the company's cash...

Question 9

Corporation B reported earnings per share of $10.Corporation B has 100,000 shares of common stock outstanding and reported an increase in owners equity of $400,000 for the period.Corporation B paid $50,000 in interest expense during the period.Corporation B paid dividends per share of

Accepted Answer

A)  $6.00. 
B)  $5.50. 
C)  $6.50. 
D)  $14.003.

Question 10

A firm's income statement reports the results from operating the business for a period of time,while the firm's balance sheet provides a snapshot of the firm's financial position at a specific point in time.

Accepted Answer

A) True 
 B)False

Question 11

Please refer to Table 3-1 for the following questions.
Table 3-1
Jones Company
Financial Information
 
-Based on the information in Table 3-1,the change in cash for 2010 is

Accepted Answer

A)  $4,000. 
B)  $4,950. 
C)  $5,800. 
D)  $5,500.

Question 12

Li Retailing reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000.Li's operating income is equal to

Accepted Answer

A)  $770,000. 
B)  $1,070,000. 
C)  $1,100,000. 
D)  $1,500,000.

Question 13

The income statement for Brit,Inc.indicates that tax expense was $20,000.The balance sheet indicates that taxes payable for the same year increased by $5,000.What amount did Brit,Inc.actually pay in taxes during this year?
A) $15,000
B) $20,000
C) $25,000
D) Cannot be determined without the cash balance

Accepted Answer

The answer of The income statement for Brit,Inc.indicates that tax...

Question 14

Please refer to Table 3-1 for the following questions.
Table 3-1
Jones Company
Financial Information
 
-Based on the information in Table 3-1,assuming that no assets were disposed of during 2010,the amount of depreciation expense was

Accepted Answer

A)  $375. 
B)  $500. 
C)  $2,500. 
D)  $3,500.

Question 15

What information does a firm's income statement provide to the viewing public?

Accepted Answer

A)  an itemization of all of a firm's assets and liabilities for a defined period of time 
B)  a complete listing of all of a firm's cash receipts and cash expenditures for a defined period of time 
C)  a report of revenues and expenses for a defined period of time 
D)  a report of investments made and their cost for a specific period of time

Question 16

Which of the following represents an attempt to measure the net results of the firm's operations (revenues versus expenses)over a given time period?

Accepted Answer

A)  Balance Sheet 
B)  Statement of Cash Flows 
C)  Income Statement 
D)  Sources and Uses of Funds Statement

Question 17

Which of the following statements concerning net income is most correct?

Accepted Answer

A)  Net income represents cash available to pay dividends. 
B)  Net income represents sales minus operating expenses at a specific point in time. 
C)  Negative net income reduces a company's cash balance. 
D)  Net income represents income that may be reinvested in the firm or distributed to its owners.

Question 18

Changes in depreciation expense do not affect operating income because depreciation is a non-cash expense.

Accepted Answer

A) True 
 B)False

Question 19

Please refer to Table 3-2 for the following questions.
Table 3-2
Enigma has the following financial information:
  No changes were made in interest payable or taxes payable.
-A firm paid dividends of $10,000,paid interest of $20,000,reduced debt principal outstanding (paid off debt)in the amount of $100,000,and sold new stock for $150,000.What was the firm's cash flow from financing activities?

Accepted Answer

A)  +$20,000 ($20,000 flowed into the firm) 
B)  -$20,000 ($20,000 flowed out of the firm) 
C)  +$280,000 ($280,000 flowed into the firm) 
D)  -$280,000 ($280,000 flowed out of the firm)

Question 20

PDQ Corp.has sales of $4,000,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000.The firm's interest expense is $250,000,and the corporate tax rate is 40%.The firm paid dividends to preferred stockholders of $40,000,and the firm distributed $60,000 in dividend payments to common stockholders.What is PDQ's "Addition to Retained Earnings? "

Accepted Answer

A)  $650,000 
B)  $390,000 
C)  $330,000 
D)  $290,000

Exam 3: Understanding Financial Statements and Cash Flows

An income statement reports a firm's cumulative revenues and expenses from the inception of the firm through the income statement date.

Which of the following accounts belongs on the asset side of a balance sheet?

Prepare an income statement using the information given below.Make sure to identify gross profit,operating income,and net income.

Baron,Inc.has total current assets of $1,200,000; total current liabilities of $500,000; long-term assets of $800,000; and long-term debt of $600,000.How much is the firm's total equity?

On an accrual basis income statement,revenues equal cash receipts and expenses equal cash expenditures.

Two companies have identical assets and operating activities.Which of the follow statements is true?

An income statement may be represented as follows:

Given the information below,calculate the company's cash balance at the end of the year.

Corporation B reported earnings per share of $10.Corporation B has 100,000 shares of common stock outstanding and reported an increase in owners equity of $400,000 for the period.Corporation B paid $50,000 in interest expense during the period.Corporation B paid dividends per share of

A firm's income statement reports the results from operating the business for a period of time,while the firm's balance sheet provides a snapshot of the firm's financial position at a specific point in time.

Please refer to Table 3-1 for the following questions. Table 3-1 Jones Company Financial Information -Based on the information in Table 3-1,the change in cash for 2010 is

Li Retailing reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000.Li's operating income is equal to

Please refer to Table 3-1 for the following questions. Table 3-1 Jones Company Financial Information -Based on the information in Table 3-1,assuming that no assets were disposed of during 2010,the amount of depreciation expense was

What information does a firm's income statement provide to the viewing public?

Which of the following represents an attempt to measure the net results of the firm's operations (revenues versus expenses) over a given time period?

Which of the following statements concerning net income is most correct?

Changes in depreciation expense do not affect operating income because depreciation is a non-cash expense.