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Exam 1: Financial Statements and Business Decisions

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Question 1

Multiple Choice

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Which of the following accounts would be reported as assets on the balance sheet?

A) Cash,accounts payable,and notes payable.
B) Cash,retained earnings,and accounts receivable.
C) Cash,accounts receivable,and inventories.
D) Inventories,property and equipment,and common stock.

E) A) and B)
F) All of the above

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Question 2

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Since 2002,there has been substantial movement toward the adoption of International Financial Reporting Standards (IFRS) issued by the:

A) Financial Accounting Standards Board.
B) Securities and Exchange Commission.
C) International Accounting Standards Board.
D) American Institute of Certified Public Accountants.

E) All of the above
F) A) and C)

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Question 3

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The accounting equation states that Assets = Liabilities + Stockholders' Equity.

At the beginning of 2019,a corporation had assets of $270,000 and liabilities of $160,000.During 2019,assets increased $25,000 and liabilities increased $5,000.What was stockholders' equity at December 31,2019?

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

Which of the following statements is correct?

Which of the following is not one of the three steps taken by a corporation to assure the accuracy of its records?

Which of the following items is not reported as an expense on the income statement?

A company's retained earnings balance increased $50,000 last year;therefore,net income last year must have been $50,000.

Which financial statement would you use to determine a company's earnings performance during an accounting period?

The auditor can be held liable for malpractice in situations where the investors suffered losses while relying on the financial statements.

Which of the following does not represent a professional accounting certification?

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 rent 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. Calculate Laker's net cash flow from financing activities.

For a business organized as a general partnership,which statement is true?

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?

Which of the following is the amount of revenue reported on the income statement of a retail company?

During 2019,Canton Company's assets increased $95,500 and the liabilities decreased $17,300.Canton Company's stockholders' equity at December 31,2019 was $211,500.What amount was stockholders' equity at January 1,2019?

What is the objective of the cash flow statement? Describe the three cash flow classifications that are reported within the cash flow statement.

Fulton Company was established at the beginning of 2019 when several investors paid a total of $200,000 to purchase Fulton common stock.No additional investments in common stock were made during the year.By December 31,2019,Fulton had cash on hand of $45,000,office equipment of $40,000,inventory of $156,000,and accounts payable of $10,000.Sales for the year were $812,000.Of this amount,customers still owed $20,000.Fulton declared and paid dividends of $25,000 to its stockholders during 2019. 1.Based on the information above,prepare a balance sheet for Fulton Company at December 31,2019.In the process of preparing the balance sheet,you must calculate the ending balance in retained earnings. 2.Prepare a statement of stockholders' equity for the year ended December 31,2019. 3.What was the amount of Fulton's net income for 2019? 4.Was Fulton successful during its first year in operation? Explain your answer.

Larson Company ends its recent year of operations with $3,500,000 in retained earnings.During the year Larson's net income exceeded its dividend declarations by $200,000.Larson's dividend declarations were $25,000 greater than the dividend payments. How much was Larson Company's beginning retained earnings?