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Exam 1: Financial Statements and Business Decisions

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Question 51

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Indicate on which financial statement you would expect to find each of the following.If an item can be found on more than one statement,list each statement.

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Question 52

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

A) a certification.
B) an audit.
C) a verification.
D) a validation.

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

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Question 53

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

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

Gail's Greenhouse,Inc. ,a small retail store that sells houseplants,started business on January 1,2019.At the end of January 2019,the following information was available: Expenses during January incurred,and paid for,during January unless otherwise noted: A.Using the above information,prepare the income statement for Gail's Greenhouse for the month ended January 31,2019. B.What is the amount of cash flows provided by operating activities to be presented on the statement of cash flows?

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.

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

If a U.S.domestic company does business in a foreign country,the Securities and Exchange Commission (SEC)requires the use of International Financial Reporting Standards (IFRS)for the company's financial reporting in the U.S.

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

National Shops,Inc.reported the following amounts on its balance sheet as of December 31,2019: Prepare an income statement for the year ended December 31,2019.

Which of the following statements is correct?

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

Husky Company has provided the following information for its most recent year of operation: Cash collected from customers totaled $89,300. Cash borrowed from banks totaled $31,700. Cash paid to employees for salaries totaled $32,100. Cash received from selling Husky common stock to stockholders totaled $41,000. Cash payments to banks for repayment of money borrowed totaled $7,500. Cash paid to suppliers totaled $12,500. Land costing $25,000 was sold for $25,000 cash. Cash paid for dividends to stockholders totaled $3,300. - How much was Husky's cash flow from financing activities?

Cosmos Corporation was established on December 31,2018,by a group of investors who invested a total of $1,000,000 for shares of the new corporation's common stock.During the month of January 2019,Cosmos provided services to customers for which the total revenue was $100,000.Of this amount,$10,000 had not been collected by the end of January.Cosmos recorded salary expense of $20,000,of which 90% had been paid by the end of the month;rent expense of $5,000,which had been paid on January 1;and other expenses of $12,000,which had been paid by check.On January 31,2019,Cosmos purchased a van by paying cash of $30,000.There were no other transactions that affected cash. 1.In which section of the statement of cash flows would the amount of cash paid for rent be reported? 2.In which section of the statement of cash flows would the amount of cash paid for the van purchase be reported? 3.By how much did Cosmos's cash increase or decrease during January 2019? 4.What was Cosmos's net income or net loss (after income tax expense)for the month of January 2019? The income tax expense was $18,900. 5.Explain why the net increase or decrease in cash for a business generally will be different than the net income,or net loss,for the same period.

Which financial statement would you utilize to determine whether a company will be able to pay liabilities which are due in 30 days?

Which of the following would most likely increase retained earnings?

Rose Corporation began operations on January 2,2019.During 2019,Rose made cash and credit sales totaling $500,000 and collected $420,000 in cash from its customers.Rose purchased inventory costing $250,000,paid $15,000 for dividends and the cost of goods sold was $210,000.Also,the corporation incurred the following expenses during 2019: 1.Prepare an income statement showing revenues,expenses,income before income taxes,income tax expense,and net income for the year ended December 31,2019. 2.Based on the above information,what is the amount of accounts receivable on the balance sheet prepared as of December 31,2019? 3.Based on the above information,what is the amount of retained earnings on the balance sheet prepared as of December 31,2019?

Lena Company has provided the following data for its 2019 operations (ignore income taxes) : 2019 revenues were $99,000. 2019 expenses were $47,800. Dividends declared and paid during 2019 totaled $9,500. Total assets at December 31,2019 were $177,000. Total liabilities at December 31,2019 were $89,000. Common stock at December 31,2019 was $28,000. Which of the following is correct?

Which of the following describes the primary objective of the balance sheet?

Moss Company has provided the following data: 2019 revenues were $87,500. 2019 expenses were $43,900. Dividends declared and paid by Moss during 2019 totaled $15,700. Total assets on December 31,2019 were $227,000. Total stockholders' equity on December 31,2019 was $133,000. Common stock on December 31,2019 was $93,000. Calculate the beginning retained earnings balance.