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Exam 1: Financial Statements and Business Decisions

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Question 41

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

A) True
B) False

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Question 42

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

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

E) None of the above
F) A) and B)

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Question 43

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

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?

Which of the following correctly describes the various financial statements?

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?

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 describes the operating activities section of a cash flow statement?

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

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

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?

Describe the elements of the balance sheet equation.

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

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?

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?

Which of the following best describes assets?

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

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

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

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.