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

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Management is primarily responsible for ...

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An audit is an examination of the financial statements provided by management to ensure that they represent what they claim and to make sure that they are in compliance with generally accepted accounting principles.

A) True
B) False

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Willie Company's retained earnings increased $20,000 during 2014. What was Willie's 2014 net income or loss given that Willie declared $25,000 of dividends during 2014?


A) Net income was $5,000.
B) Net income was $45,000.
C) Net loss was $45,000.
D) Net loss was $5,000.

E) A) and D)
F) A) and B)

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B

Which of the following would be reported in the financing activities section of a cash flow statement?


A) Cash paid for dividends to stockholders.
B) Cash paid for interest expense.
C) Cash paid to acquire equipment.
D) Cash received from sale of investments.

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

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Which of the following items is reported as an expense on the income statement?


A) Dividends declared.
B) Cost of goods sold.
C) Dividends paid.
D) Accounts payable.

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

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What are the categories of cash flows that appear on a statement of cash flows?


A) Cash flows from investing, financing, and service activities.
B) Cash flows from operating, production, and internal activities.
C) Cash flows from financing, production, and growth activities.
D) Cash flows from operating, investing, and financing activities.

E) A) and B)
F) A) and C)

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Which of the following transactions affects both the income statement and the statement of cash flows?


A) Selling stock in exchange for cash.
B) Declaring and paying a cash dividend.
C) Selling a product to a customer which creates an account receivable.
D) Paying employee wages as they are earneD.Paying an employee wages as they are earned results in an expense being recognized (income statement) and a cash outflow (statement of cash flows) .

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

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D

Which of the following would not be reported in the operating activities section of a cash flow statement?


A) Cash paid for dividends to stockholders.
B) Cash paid for interest expense.
C) Cash paid for employee wages.
D) Cash received from customers.

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

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

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The objective of the cash flow statement...

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Which of the following is not a consequence to a company resulting from the issuance of their financial statements?


A) The effect on the selling price of their stock.
B) The providing of information to their competitors.
C) The effect on bonus payments to its employees.
D) The providing of information to their auditors.

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

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Which of the following statements describes the balance sheet?


A) It reports a company's revenues and expenses.
B) Assets are generally reported on the balance sheet at the cost incurred to acquire them.
C) Stockholders' equity includes only retained earnings.
D) It reports a company's cash flow from operations.

E) B) and C)
F) B) and D)

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Gail's Greenhouse, Inc., a small retail store that sells houseplants, started business on January 1, 2014. At the end of January 2014, the following information was available:  Sales of plants for cash $75,000 Sales of plants for credit (not yet collected) 15,000 Cost of plants which were sold and paid for during January 45,000 Expenses during January incurred, and paid for, during  January unless otherwise noted:  Salaries  Telephone $5,000 Office supplies (all used) 250 Electricity 150 Rent on the store for January, 2014 (will not be paid until 300 February, 2014) 1,000\begin{array} { | l | r | r | } \hline \text { Sales of plants for cash } & & \$ 75,000 \\\hline \text { Sales of plants for credit (not yet collected) } & & 15,000 \\\hline \text { Cost of plants which were sold and paid for during January } & & 45,000 \\\hline \begin{array} { l } \text { Expenses during January incurred, and paid for, during } \\\text { January unless otherwise noted: }\end{array} & & \\\hline \text { Salaries } & & \\\hline \text { Telephone } & \$ 5,000 & \\\hline \text { Office supplies (all used) } & 250 & \\\hline \text { Electricity } & 150 & \\\hline \text { Rent on the store for January, 2014 (will not be paid until } & 300 & \\\hline \text { February, 2014) } & 1,000 & \\\hline\end{array} Requirements: A. Using the above information, prepare the income statement for Gail's Greenhouse for the month ended January 31, 2014. B. What is the amount of cash flows provided by operating activities to be presented on the statement of cash flows?

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A. blured image B. $38,300 - 15,...

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Which of the following would be reported in the investing activities section of a cash flow statement?


A) Cash received from customers.
B) Cash received from the issue of common stock.
C) Cash paid to repay a bank loan.
D) Cash paid to acquire common stock of another company.

E) C) and D)
F) B) and C)

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Which of the following is not an alternate title for the Statement of Income?


A) Income Statement.
B) Statement of Net Income.
C) Statement of Operations.
D) Statement of Income.

E) A) and C)
F) B) and C)

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


A) The owners and the business are separate legal entities.
B) Each partner is potentially responsible for the debts of the business.
C) Formation of a partnership requires getting a charter from the state of incorporation.
D) A partnership is not considered to be a separate accounting entity.

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

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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 declareD.Common stock is a component of stockholders' equity on the balance sheet.

E) B) and C)
F) A) and B)

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Which of the following would not be found within the investing activities section of the statement of cash flows?


A) Cash paid to purchase a building for manufacturing facilities.
B) Cash received from the sale of common stock to stockholders.
C) Cash received from the sale of equipment used in manufacturing a product.
D) Cash paid to purchase lanD.Cash received from the sale of common stock is a financing activity. Investing activities involve the purchase of the company's productive assets.

E) A) and B)
F) A) and C)

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B

A calendar year reporting company preparing its annual financial statements should use the phrase "As of December 31,2014" in the heading of which financial statements?


A) On all of the required financial statements.
B) On only the income statement.
C) On the income statement and balance sheet, but not the statement of cash flows.
D) On the balance sheet only.

E) All of the above
F) None of the above

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During 2014, Rock Company's cash balance increased from $79,000 to $91,300. Rock's net cash flow from operating activities was $37,300 and its net cash flow from financing activities was $11,100. How much was Rock's net cash flow from investing activities?


A) A net cash flow of $42,900.
B) A net cash flow of ($36,100) .
C) A net cash flow of $60,700.
D) A net cash flow of ($60,700) .

E) B) and D)
F) B) and C)

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Which of the following statements is true?


A) The statement of stockholders' equity always reports the same amount of dividend payments, as does the statement of cash flows.
B) The statement of cash flows has a relationship with the balance sheet.
C) Dividends paid are reported on the statement of cash flows as an operating cash flow and on the income statement as a financing cash flow.
D) Net income is reported on the income statement but not on the statement of stockholders' equity.

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

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Showing 1 - 20 of 122

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