Question

_____ report a company's performance for each period, independent of other periods.

a.The statement of cash flows and the income statement

b.The statement of cash flows and the balance sheet

c.The income statement and the balance sheet

d.The balance sheet and the statement of retained earnings

Which of the following is the last of the financial statements to be prepared by a company for any given financial year?

a.The statement of stockholders' equity

b.The balance sheet

c.The statement of cash flows

d.The income statement

Which of the following is true of dividends?

a.Payment of dividends does not affect retained earnings.

b.Dividends are operating expenses.

c.Dividends do not represent assets consumed in earning revenues.

d.Dividends are non-operating expenses.

Using the given financial data of Abe Inc., calculate the ending balance of assets on December 31, 20Y7.

Closing balance of cash on December 31, 20Y7	$5,000
Closing balance of accounts receivable on December 31, 20Y7	$7,000
Closing balance of common stock on December 31, 20Y7	$8,000
Closing balance of retained earnings on December 31, 20Y7	$2,000
Closing balance of accounts payable on December 31, 20Y7	$2,000

a.$14,000

b.$18,000

c.$12,000

d.$16,000

Wobble Inc. has an opening cash balance of $5,200. Its liquidity metric for the period has increased by $2,320. Calculate its ending cash balance.

a.$2,880

b.$2,320

c.$5,200

d.$7,520

Identify the financial statements prepared by a company at the end of every accounting period.

a.Balance sheet, statement of stockholders' equity, statement of net present value

b.Balance sheet, income statement, statement of bondholders' claims

c.Balance sheet, income statement, statement of stockholders' equity

d.Balance sheet, statement of net present value, bank reconciliation statement

The total assets of Gunther Inc. increased by $4,650 during the year. However, there was no change in its liabilities. Which of the following statements is true in the current scenario?

a.Gunther's total stockholders' equity must have increased by $4,650.

b.Gunther's total stockholders' equity must have decreased by $4,650.

c.Gunther's cash flow from investing activities must have decreased by $4,650.

d.Gunther's cash flow from investing activities must have increased by $4,650.

Which of the following elements of a balance sheet are affected as a result of the payment of dividends?

a.Stockholders' equity and liabilities

b.Stockholders' equity and assets

c.Liabilities and assets

d.Only assets

Astrik Inc. has the following assets and liabilities (in millions). Determine Astrik's stockholders' equity.

Assets	$5,000
Liabilities	$3,750

a.$1,250

b.$5,000

c.$8,750

d.$3,750

Identify the correct order in which land, accounts receivable, cash, and inventory are listed in the assets section of a balance sheet.

a.Land, inventory, accounts receivable, cash

b.Cash, inventory, accounts receivable, land

c.Cash, accounts receivable, inventory, land

d.Cash, land, accounts receivable, inventory

A(n)_____ is defined as an economic event that under generally accepted accounting principles (GAAP) affects the financial statements.

a.review

b.arrangement

c.performance

d.transaction

Consider the following information related to Honor Inc.:

Common stock at the beginning of the year	$8,000
Common stock issued during the year	$2,000
Net income for the year	$5,200
Dividends paid during the year	$3,800

Which of the following is the accurate way of reporting the common stock and retained earnings on the statement of stockholders' equity at the end of the year?

a.$8,000 is shown as common stock, and $5,200 is shown as retained earnings.

b.$10,000 is shown as common stock, and $1,400 is shown as retained earnings.

c.$11,400 is shown as common stock, and $0 is shown as retained earnings.

d.$10,000 is shown as common stock, and $5,200 is shown as retained earnings.

_____ are prepared by expressing financial statement amounts as a percent of a base amount and are useful in assessing a company's financial condition and performance over time.

a.Stand-alone financial statements

b.Consolidated financial statements

c.Common-sized financial statements

d.Audited financial statements

Companies prepare common-sized income statements by expressing income statement amounts as a percent of _____.

a.gross profit

b.cost of goods sold

c.ending inventory

d.sales

Which of the following is added to beginning retained earnings in order to calculate ending retained earnings?

a.Operating income

b.Gross income

c.Net income

d.Cash flow from financing activities

A balance sheet begins with the ending balances of the earlier period because:

a.it is not the cumulative total of an entity's assets and expenses from the company's inception.

b.it is the cumulative total of an entity's expenses and incomes from the company's inception.

c.it is not the cumulative total of an entity's assets, liabilities and stockholders' equity from the company's inception.

d.it is the cumulative total of an entity's assets, liabilities and stockholders' equity from the company's inception.

Which of the following is the first of the financial statements to be prepared by a company for any given financial year?

a.The balance sheet

b.The income statement

c.The statement of cash flows

d.The statement of stockholders' equity

_____ are defined as distributions of a company's earnings to its stockholders.

a.Earnings before interest and taxes

b.Surpluses

c.Dividends

d.Retained earnings

Which of the following statements is the cumulative total of an entity's assets, liabilities, and stockholders' equity since the company's inception?

a.An income statement

b.A balance sheet

c.A statement of cash flows

d.A statement of retained earnings

Alpha Inc. borrows $15,000 to finance its operations by signing a note payable with a bank. Identify the effect of this transaction on Alpha's financial statements.

a.The cash account decreases by $15,000, and the notes payable account decreases by $15,000.

b.The cash account increases by $15,000, and the notes payable account increases by $15,000.

c.The cash account decreases by $15,000, and the notes payable account increases by $15,000.

d.The cash account increases by $15,000, and the notes payable account decreases by $15,000.

Answer 1

Answer :a. The statement of cash flows and income statement.

Because, income statement and cash flow statement represents financial performance i.e. how well company generates income and cash respectively. Both statements are independent of other periods because they show current year activity i.e. current year revenue and current year cash generated from different activities. Whereas, balance sheet shows financial position of a business as on one particular date and it is not independent of other periods as previous years balances comes forward.

Answer : c. The statement of cash flows

The order of preparing financial statements is - income statement, statement of retained earnings, balance sheet and cash flow statement. The cash flow statement depicts the cash generated from different activities (investing, operating and finacing activitie). Cash flow statements are prepared using information that is there in other three financial statements. As a result, cash flow statement is prepared after preparing other three statements.

Answer: c. Dividends do not represent assets consumed in earning revenues.

Because, assets consumed in earning revenues is expense and not dividend. For example, depreciation of an asset is expense. Dividend is distribution of earnings to its shareholders. Dividend is not an expense to show in income statement.

Answer: c. $12000

Because, 'cash' and 'accounts receivable' are assets (company owns them) of the company. Whereas, 'common stock' and 'retained earnings' (belongs to owners of the company) represents owner's equity and 'accounts payable' (company owes to others) is liability of the company.