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Exam 1: Financial Statements and Business Decisions

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Question 31

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Which of the following is not reported as a liability on a balance sheet?

A) Income taxes payable.
B) Common stock.
C) Accounts payable.
D) Dividends payable.

E) A) and D)
F) A) and C)

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Question 32

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

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Net income is based on the accrual conce...

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Question 33

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Which of the following is considered to be an expense on the income statement?

Which of the following properly describes the impact on the financial statements when a company borrows $20,000 from a local bank?

Which of the following statements is correct?

Business managers utilize managerial accounting reports to plan and manage the daily operations.

Total assets are $37,500, total liabilities are $20,000 and common stock is $10,000; therefore, retained earnings are $7,500.

Due to the relationships among financial statements, the statement of stockholders' equity links the income statement to the balance sheet.

During 2016, Rock Company's cash balance increased from $57,000 to $94,300. Rock's net cash flow from operating activities was $26,900 and its net cash flow from financing activities was $13,700. Required: Calculate Rock's net cash flow from investing activities.

National Shops, Inc. reported the following amounts on its balance sheet as of December 31, 2016: Required: 1. What is the amount of National's total assets as of December 31, 2016? 2. Identify the items listed above that are liabilities. 3. What is the amount of National's retained earnings as of December 31, 2016? 4. Prepare a balance sheet for National at December 31, 2016. 5. National wishes to purchase merchandise from your company on account. The amount of the purchases would probably be about $10,000 per month, and the terms would require National to make payment in full within 30 days. Would you recommend that your company grant credit to National under these terms? Explain the reasoning for your response.

For Glad Rags Shops, the following information is available for the year ended December 31, 2016: Dividends declared $10,000 The income tax is $150,000. Required: Prepare an income statement for Glad Rags Shops.

Describe the role of a company's management and the external auditors in the accounting communication process.

Which of the following would immediately cause a change in a corporation's retained earnings?

During 2016, Canton Company's assets increased $95,500 and the liabilities decreased $17,300. Canton Company's stockholders' equity at December 31, 2016 was $211,500. What amount was stockholders' equity at January 1, 2016?

An examination of the financial statements of a business to ensure that they conform to generally accepted accounting principles is called

The amount of cash paid by a business for dividends would be reported as an operating activity cash flow on the statement of cash flows.

For each of the following items that appear on the balance sheet, identify each as an asset (A), liability (L), or element of stockholders' equity (SE). For any item that would not appear on the balance sheet, write the letter, N.

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

With regard to relationships among financial statements, which of the following is true?

Which of the following accounts is not a liability on the balance sheet?