Question 1

Hemd Company has liabilities equal to one fourth of the total assets. Hemd's shareholders'equity is €60,000. Using the accounting equation, what is the amount of liabilities for Hemd?

Accepted Answer

The answer of Hemd Company has liabilities equal to one...

Question 2

The following information is reported by ComCo, a Singapore company; all figures are in millions of Singapore dollars ($).The firm reported revenues of $15,882, cost of goods sold of $13,671, interest and other expenses of $2,113, and tax expense of $67.It also reported $14,894 in cash receipts from customers, $102 in miscellaneous cash receipts, $6,447 in cash payments to employees and creditors, $6,861 in cash payments for milk, $402 in cash payments for interest, and $64 in cash payments for taxes. 
Required:
1)Calculate net income and its net cash flow.
2)Explain why ComCo's net income is so much different than its net cash flow.

Accepted Answer

The answer of The following information is reported by ComCo,...

Question 3

As of 2011, the _____ is an independent accounting standard-setting entity with 15 voting members from a number of countries.

Accepted Answer

A) Public Companies Accounting Oversight Board (PCAO
B)  
B) International Accounting Standards Board (IAS
B)  
C) American Institute of Certified Public Accountants (AICP
A)  
D) World Institute of Certified Public Accountants (WICP
A)  
E) International Institute of Certified Public Accountants (IICP
A)

Question 4

Determine the missing amount "X" for each of the following:
 $\begin{array}{|l|l|l|}
\hline \text { Assets } & \text { Liabilities } & \text { Shareholders' Equity } \
\hline \text { a. } \$ 85,700 & \$ 40,000 & \mathrm{X} \
\hline \text { b. } \mathrm{X} & \$ 66,570 & \$ 145,000 \
\hline \text { c. } \$ 57,900 & \mathrm{X} & \$ 34,000 \
\hline
\end{array}$

Accepted Answer

The answer of Determine the missing amount "X" for each...

Question 5

Assets are economic resources with the potential to provide future economic benefits to a firm.

Accepted Answer

A) True 
 B)False

Question 6

_____ is a private-sector financial accounting standard setter that promulgates accounting standards that are required or permitted to be used in over 100 countries, but has no enforcement powers.

Accepted Answer

A) Financial Accounting Standards Board (FAS
B)  
B) International Accounting Standards Board (IAS
B)  
C) Public Company Accounting Oversight Board (PCAO
B)  
D) U.S.Securities and Exchange Commission (SE
C)  
E) Governmental Accountability Office (GAO)

Question 7

Who provides an opinion that reflects their professional conclusions regarding the financial statements and for most publicly traded firms in the U.S.also provides a separate opinion on the effectiveness of the firm's internal controls over financial reporting?

Accepted Answer

A) management 
B) controller 
C) financial vice-president 
D) independent auditor 
E) general counsel

Question 8

A(n) _____ item is expected to generate cash over periods longer than a year or use cash over periods longer than a year.

Accepted Answer

A) illiquid 
B) appropriated 
C) liquid 
D) current 
E) noncurrent

Question 9

_____ measure the outflow of assets (or increases in liabilities) used in generating revenues.

Accepted Answer

A) Revenues 
B) Expenses 
C) Cash inflows 
D) Cash-outflows 
E) Shareholder equity

Question 10

U.S.GAAP and IFRS contain broad guidance on what the financial statements must contain, but neither completely specifies the level of detail or the names of accounts.

Accepted Answer

A) True 
 B)False

Question 11

Compute the missing information in each of the four independent cases below.The letters in parentheses refer to the following:
 $\begin{array}{ll}
\text { BS } & \text { - Balance sheet } \
\text { IS } & \text { - Income statement } \
\text { SCF } & \text { - Statement of cash flows }
\end{array}$

a.$\begin{array}{ll}
\text { Accounts Receivable, Jan. 1, Year 2 (BS) } & \$ 500 \
\text { Sales on Account for Year 2 (IS) } & 1900 \
\text { Collections from Customers on Account during Year 2 (SCF) } & 1,350 \
\text { Accounts Receivable, Dec. 31, Year 2 (BS) } & -?-
\end{array}$

b.$\begin{array}{ll}
\text { Salaries Payable, Jan. 1, Year 2 (BS) } & \$ 175 \
\text { Salary Expense for Year 2 } & -?- \
\text { Payments to Salaried Employees during Year 2 (SCF) } & 725 \
\text { Salaries Payable, Dec. 31, Year 2 (BS) } & 100
\end{array}$

c.$\begin{array}{ll}
\text { Equipment (net of depreciation), Jan. 1, Year 2(BS) } & \$ 900 \
\text { Depreciation Expense for Year 2 (IS) } & -?- \
\text { Sales of Equipment during Year 2 (SCF) } & -0- \
\text { Acquisition of Equipment during Year 2 (SCF) } & 330 \
\text { Equipment (net of depreciation), Dec. 31, Year 2 (BS) } & 910
\end{array}$

d.$\begin{array}{ll}
\text { Retained Earnings, Jan. 1, Year 2 (BS) } & \$ 1,550 \
\text { Net Income for Year 2 (IS) } & 400 \
\text { Dividends Declared and Paid during Year 2 (SCF) } & -?- \
\text { Retained Earnings, Dec. 31, Year 2 (BS) } & 1,350
\end{array}$

Accepted Answer

The answer of Compute the missing information in each of...

Question 12

Who evaluates the accounting system, including its ability to record transactions properly and its operational effectiveness, and also determines whether the financial reports prepared conform to the requirements of the applicable authoritative guidance?

Accepted Answer

A) management 
B) general counsel 
C) independent auditor 
D) financial vice-president 
E) controller

Question 13

Who are the users of financial statements and what do they need?

Accepted Answer

The answer of Who are the users of financial statements...

Question 14

In the United States, regulatory requirements applicable to publicly traded firms require the inclusion of a(n) _____, in which management discusses operating results, liquidity (sources and uses of cash), capital resources, and reasons for changes in profitability and risk during the past year.

Accepted Answer

A) Balance sheet or statement of financial position 
B) Management's Discussion and Analysis 
C) Income statement or statement of profit and loss 
D) Statement of cash flows. 
E) Statement of shareholders' equity.

Question 15

Liabilities are creditors' claims for funds, usually because they have provided funds, or goods and services, to the firm.

Accepted Answer

A) True 
 B)False

Question 16

The income statement of Peoples Motors Corporation, a U.S.automotive manufacturer, for the year ended December 31, 20x1, reported revenues of $207,000, cost of sales of $165,000, other operating expenses, including income taxes of $50,000, and net financing income, after taxes, of $6,000. Compute the amount of net income or loss that Peoples Motors reported for 20x1.

Accepted Answer

A) net income of $0 
B) net income of $2,000 
C) net loss of $2,000 
D) net income of $8,000 
E) net loss of $8,000

Question 17

Goals are the end results toward which the firm directs its energies, and strategies are the means for achieving those results.

Accepted Answer

A) True 
 B)False

Question 18

As a basis for measuring performance for a particular accounting period, the cash basis of accounting has three weaknesses.Briefly describe the three weaknesses.

Accepted Answer

The answer of As a basis for measuring performance for...

Question 19

What is the best definition of an accounting period?

Accepted Answer

A) Any 12-month period 
B) The calendar year 
C) The period between any two balance sheet dates 
D) The period in which the major income-producing activity occurs 
E) The period between any two income statement dates

Question 20

_____ are the amounts at which items entered the firm's balance sheet and reflect economic conditions at the time the firm obtained assets or obtained financing.

Accepted Answer

A) Past amounts 
B) Present amounts 
C) Valuation amounts 
D) Historical amounts 
E) Current amounts

Exam 1: Introduction to Business Activities and Overview of Financial Statements and the Reporting Process

Hemd Company has liabilities equal to one fourth of the total assets. Hemd's shareholders'equity is €60,000. Using the accounting equation, what is the amount of liabilities for Hemd?

As of 2011, the _____ is an independent accounting standard-setting entity with 15 voting members from a number of countries.

Assets are economic resources with the potential to provide future economic benefits to a firm.

_____ is a private-sector financial accounting standard setter that promulgates accounting standards that are required or permitted to be used in over 100 countries, but has no enforcement powers.

Who provides an opinion that reflects their professional conclusions regarding the financial statements and for most publicly traded firms in the U.S.also provides a separate opinion on the effectiveness of the firm's internal controls over financial reporting?

A(n) _____ item is expected to generate cash over periods longer than a year or use cash over periods longer than a year.

_____ measure the outflow of assets (or increases in liabilities) used in generating revenues.

U.S.GAAP and IFRS contain broad guidance on what the financial statements must contain, but neither completely specifies the level of detail or the names of accounts.

Who evaluates the accounting system, including its ability to record transactions properly and its operational effectiveness, and also determines whether the financial reports prepared conform to the requirements of the applicable authoritative guidance?

Who are the users of financial statements and what do they need?

In the United States, regulatory requirements applicable to publicly traded firms require the inclusion of a(n) _____, in which management discusses operating results, liquidity (sources and uses of cash) , capital resources, and reasons for changes in profitability and risk during the past year.

Liabilities are creditors' claims for funds, usually because they have provided funds, or goods and services, to the firm.

Goals are the end results toward which the firm directs its energies, and strategies are the means for achieving those results.

As a basis for measuring performance for a particular accounting period, the cash basis of accounting has three weaknesses.Briefly describe the three weaknesses.

What is the best definition of an accounting period?

_____ are the amounts at which items entered the firm's balance sheet and reflect economic conditions at the time the firm obtained assets or obtained financing.