Test bank fundamental accounting principles 22nd 22e john wild

Chapter 01
Accounting in Business
True / False Questions
1. Accounting is an information and measurement system that identifies, records, and
communicates relevant, reliable, and comparable information about an organization's
business activities.
True

False

2. Bookkeeping is the recording of transactions and events and is only part of
accounting.
True

False

3. An accounting information system communicates data to help users make better
decisions.
True

False

4. Financial accounting is the area of accounting that provides internal reports to assist
the decision making needs of internal users.
True

False

5. Internal operating activities include research and development, distribution, and
human resources.
True

False

6. The primary objective of managerial accounting is to provide general purpose
financial statements to help external users analyze and interpret an organization's
activities.
True

False

7. External auditors examine financial statements to verify that they are prepared
according to generally accepted accounting principles.
True

False

8. External users include lenders, shareholders, customers, and regulators.
True

False

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9. Regulators often have legal authority over certain activities of organizations.
True

False

10. Internal users include lenders, shareholders, brokers and managers.
True

False

11. Opportunities in accounting include auditing, consulting, market research, and tax
planning.
True

False

12. Identifying the proper ethical path is usually easy.
True

False

13. The Sarbanes-Oxley Act (SOX) requires each issuer of securities to disclose whether it
has adopted a code of ethics for its senior financial officers and the contents of that
code.
True

False

14. The fraud triangle asserts that the three factors that must exist for a person to
commit fraud are opportunity, pressure, and rationalization.
True

False

15. The Sarbanes-Oxley Act (SOX) does not require public companies to apply both
accounting oversight and stringent internal controls.
True

False

16. A partnership is a business owned by two or more people.
True

False

17. Owners of a corporation are called shareholders or stockholders.
True

False

18. In the partnership form of business, the owners are called stockholders.
True

False

19. The balance sheet shows a company's net income or loss due to earnings activities
over a period of time.
True

False

20. The Financial Accounting Standards Board is the governmental agency that sets both
broad and specific accounting principles.
True

False

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21. The business entity principle means that accounting information reflects a
presumption that the business will continue operating instead of being closed or
sold.
True

False

22. Generally accepted accounting principles are the basic assumptions, concepts, and
guidelines for preparing financial statements.
True

False

23. The business entity assumption means that a business is accounted for separately
from other business entities, including its owner or owners.
True

False

24. As a general rule, revenues should not be recognized in the accounting records when
earned, but rather when cash is received.
True

False

25. Specific accounting principles are basic assumptions, concepts, and guidelines for
preparing financial statements and arise out of long-used accounting practice.
True

False

26. General accounting principles arise from long-used accounting practices.
True

False

27. A sole proprietorship is a business owned by one or more persons.
True

False

28. Unlimited liability and separate taxation of the business are advantages of a sole
proprietorship.
True

False

29. Understanding generally accepted accounting principles is not necessary to
effectively use and interpret financial statements.
True

False

30. The International Accounting Standards board (IASB) has the authority to impose its
standards on companies around the world.
True

False

31. Objectivity means that financial information is supported by independent, unbiased
evidence.
True

False

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32. The idea that a business will continue to operate instead of being closed or sold
underlies the going-concern assumption.
True

False

33. According to the cost principle, it is necessary for managers to report an
approximation of an asset's market value upon purchase.
True

False

34. The monetary unit assumption means that all companies doing business in the
United States must express transactions and events in U.S. dollars.
True

False

35. The International Accounting Standards Board (IASB) is the government group that
establishes reporting requirements for companies that issue stock to the public.
True

False

36. A limited liability company offers the limited liability of a partnership or proprietorship
and the tax treatment of a corporation.
True

False

37. The Securities and Exchange Commission (SEC) is a government agency that has
legal authority to establish GAAP.
True

False

38. The three common forms of business ownership include sole proprietorship,
partnership, and non-profit.
True

False

39. The three major types of business activities are operating, financing, and investing.
True

False

40. Planning involves defining an organization's ideas, goals, and actions.
True

False

41. Strategic management is the process of determining the right mix of operating
activities for the type of organization, its plans, and its market.
True

False

42. Investing activities are the means an organization uses to pay for resources like land,
buildings, and equipment to carry out its plans.
True

False

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43. Investing activities are the acquiring and disposing of resources that an organization
uses to acquire and sell its products or services.
True

False

44. Owner financing refers to resources contributed by creditors or lenders.
True

False

45. Revenues are increases in equity from a company's sales of products and services to
customers.
True

False

46. A net loss occurs when revenues exceed expenses.
True

False

47. Net income occurs when revenues exceed expenses.
True

False

48. Liabilities are the owner's claim on assets.
True

False

49. Assets are the resources a company owns or controls that are expected to yield

future benefits.
True

False

50. Owner withdrawals are expenses.
True

False

51. The accounting equation can be restated as: Assets - Equity = Liabilities.
True

False

52. The accounting equation implies that: Assets + Liabilities = Equity.
True

False

53. Owner's investments are increases in equity from a company's earnings activities.
True

False

54. Every business transaction leaves the accounting equation in balance.
True

False

55. An external transaction is an exchange within an entity that may or may not affect
the accounting equation.
True

False

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56. From an accounting perspective, an event is a happening that affects the accounting
equation, but cannot be measured.
True

False

57. Owner's equity is increased when cash is received from customers in payment of
previously recorded accounts receivable.
True

False

58. An owner's investment in a business normally creates an asset (cash), a liability (note
payable), and owner's equity (investment.)
True

False

59. Return on assets is often stated in ratio form as the amount of average total assets

divided by income.
True

False

60. Return on assets is also known as return on investment.
True

False

61. Return on assets is useful to decision makers for evaluating management, analyzing
and forecasting profits, and in planning activities.
True

False

62. Arrow's net income of $117 million and average assets of $1,400 million results in a
return on assets of 8.36%.
True

False

63. Return on assets reflects a company's ability to generate profit through productive
use of its assets.
True

False

64. Risk is the uncertainty about the return we will earn.
True

False

65. Generally the lower the risk, the higher the return that can be expected.
True

False

66. U.S. Government Treasury bonds provide low return and low risk to investors.
True

False

67. The four basic financial statements include the balance sheet, income statement,
statement of owner's equity, and statement of cash flows.
True

False

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68. An income statement reports on investing and financing activities.
True

False

69. A balance sheet covers activities over a period of time such as a month or year.

True

False

70. The income statement describes revenues earned and expenses incurred over a
specified period of time due to earnings activities.
True

False

71. The statement of cash flows shows the net effect of revenues and expenses for a
reporting period.
True

False

72. The income statement shows the financial position of a business on a specific date.
True

False

73. The first section of the income statement reports cash flows from operating
activities.
True

False

74. The balance sheet is based on the accounting equation.
True

False

75. Investing activities involve the buying and selling of assets such as land and
equipment that are held for long-term use in the business.
True

False

76. Operating activities include long-term borrowing and repaying cash from lenders, and
cash investments or withdrawals by the owner.
True

False

77. The purchase of supplies appears on the statement of cash flows as an investing
activity because it involves the purchase of assets.
True

False

78. The income statement reports on operating activities at a point in time.
True

False

79. The statement of cash flows identifies cash flows separated into operating, investing,
and financing activities over a period of time.
True

False

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80. Ending capital reported on the statement of owner's equity is calculated by adding
owner investments and net losses and subtracting net income and withdrawals.
True

False

Multiple Choice Questions
81. Accounting is an information and measurement system that does all of the following
except:

A.
B.
C.
D.
E.

Identifies business activities.
Records business activities.
Communicates business activities.
Eliminates the need for interpreting financial data.
Helps people make better decisions.

82. Technology:

A.
B.
C.
D.
E.

Has replaced accounting.
Has not improved the clerical accuracy of accounting.
Reduces the time, effort and cost of recordkeeping.
In accounting has replaced the need for decision makers.
In accounting is only available to large corporations.

83. The primary objective of financial accounting is to:

A.
B.
C.
D.
E.

Serve the decision-making needs of internal users.
Provide accounting information that serves external users.
Monitor and control company activities.
Provide information on both the costs and benefits of looking after products and
Know what, when, and how much product to produce.

84. The area of accounting aimed at serving the decision making needs of internal users
is:

A.

B.
C.
D.
E.

Financial accounting.
Managerial accounting.

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85. External users of accounting information include all of the following except:

A.
B.
C.
D.
E.

Purchasing managers.
Government regulators.

86. All of the following regarding a Certified Public Accountant are true except:

A.
B.
C.
D.

E.

Must meet education and experience requirements.
Must pass an examination.
Must exhibit ethical character.
May also be a Certified Management Accountant.
Cannot hold any certificate other than a CPA.

87. Ethical behavior requires that:

A.
B.
C.
D.
E.

Auditors' pay not depend on the success of the client's business.
Auditors invest in businesses they audit.
Analysts report information favorable to their companies.
Managers use accounting information to benefit themselves.
Auditors' pay depends on the success of the client's business.

88. The conceptual framework that the Financial Accounting Standards Board (FASB) and
the International Accounting Standards Board (IASB) are attempting to converge and
enhance includes the following broad areas to guide standard setting except:

A.
B.
C.
D.

E.

Qualitative characteristics

Recognition and measurement

89. All of the following are true regarding ethics except:

A.
B.
C.
D.
E.

Ethics are beliefs that separate right from wrong.
Ethics rules are often set for CPAs.
Ethics do not affect the operations or outcome of a company.
Are critical in accounting.
Ethics can be difficult to apply.

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90. The accounting concept that requires financial statement information to be supported
by independent, unbiased evidence is:

A.
B.

C.
D.
E.

Business entity assumption.
Revenue recognition principle.
Going-concern assumption.
Time-period assumption.
Objectivity principle.

91. A corporation is:

A.
B.
C.
D.
E.

A business legally separate from its owners.
Controlled by the FASB.
Not responsible for its own acts and own debts.
The same as a limited liability partnership.
Not subject to double taxation.

92. The independent group that is attempting to harmonize accounting practices of
different countries is the:

A.
B.
C.

D.
E.
93. The private-sector group that currently has the authority to establish generally
accepted accounting principles in the United States is the:

A.
B.
C.
D.
E.
94. The accounting concept that requires every business to be accounted for separately
from other business entities, including its owner or owners is known as the:

A.
B.
C.
D.
E.

Time-period assumption.
Business entity assumption.
Going-concern assumption.
Revenue recognition principle.

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95. The rule that requires financial statements to reflect the assumption that the

business will continue operating instead of being closed or sold, unless evidence
shows that it will not continue, is the:

A.
B.
C.
D.
E.

Going-concern assumption.
Business entity assumption.
Objectivity principl
Monetary unit assumption.

96. If a company is considering the purchase of a parcel of land that was acquired by the
seller for $85,000, is offered for sale at $150,000, is assessed for tax purposes at
$95,000, is recognized by the purchaser as easily being worth $140,000, and is
purchased for $137,000, the land should be recorded in the purchaser's books at:

A.
B.
C.
D.
E.
97. To include the personal assets and transactions of a business's owner in the records
and reports of the business would be in conflict with the:

A.
B.
C.

D.
E.

Objectivity principle.
Monetary unit assumption.
Business entity assumption.
Going-concern assumption.
Revenue recognition principle.

98. The accounting principle that requires accounting information to be based on actual
cost and requires assets and services to be recorded initially at the cash or cashequivalent amount given in exchange, is the:

A.
B.
C.
D.
E.

Accounting equation.
Going-concern assumption.
Realization principle.
Business entity assumption.

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99. The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows
the inflow of assets associated with revenue to be in a form other than cash, and (3)

measures the amount of revenue as the cash plus the cash equivalent value of any
noncash assets received from customers in exchange for goods or services, is called
the:

A.
B.
C.
D.
E.

Going-concern assumption.

Revenue recognition principle.
Objectivity principl
Business entity assumption.

100 The question of when revenue should be recognized on the income statement
.
according to GAAP is addressed by the:

A.
B.
C.
D.
E.

Revenue recognition principle.
Going-concern assumption.
Objectivity princip
Business entity assumption.

101 The International Accounting Standards Board (IASB):
.
A.
B.
C.
D.
E.

Hopes to create harmony among accounting practices of different countries to imp
Is the government group that establishes reporting requirements for companies th
Has the authority to impose its standards on companies around the world.
Is the only source of generally accepted accounting principles (GAAP).
Only applies to companies that are members of the European Union.

102 The Superior Company acquired a building for $500,000. The building was appraised
.
at a value of $575,000. The seller had paid $300,000 for the building 6 years ago.
Which accounting principle would require Superior to record the building on its
records at $500,000?

A.
B.
C.
D.
E.

Monetary unit assumption.
Going-concern assumption.
Business entity assumption.

Revenue recognition principle.

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103 On December 15 of the current year, Conrad Accounting Services signed a $40,000
.
contract with a client to provide bookkeeping services to the client in the following
year. Which accounting principle would require Conrad Accounting Services to record
the bookkeeping revenue in the following year and not the year the cash was
received?

A.
B.
C.
D.
E.

Monetary unit assumption.
Going-concern assumption.
Business entity assumption.
Revenue recognition principle.

104 Marsha Bogswell is the owner of Bogswell Legal Services. Which accounting principle
.
requires Marsha to keep her personal financial information separate from the
financial information of Bogswell Legal Services?

A.
B.
C.
D.
E.

Monetary unit assumption.
Going-concern assumption.

Business entity assumption.
Matching princip

105 A limited partnership:
.
A.
B.
C.
D.
E.

Includes a general partner with unlimited liability.
Is subject to double taxation.
Has owners called stockholders.
Is the same as a corporation.
May only have two partners.

106 A partnership:
.
A.
B.

C.
D.
E.

Is also called a sole proprietorship.
Has unlimited liability for its partners.
Has to have a written agreement in order to be legal.
Is a legal organization separate from its owners.
Has owners called shareholders.

107 Which of the following accounting principles require that all goods and services
.
purchased be recorded at actual cost?

A.
B.
C.
D.
E.

Going-concern assumption.
Matching princip
Business entity assumption.
Consideration assumption.

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108 Which of the following accounting principles prescribes that a company record its
.
expenses incurred to generate the revenue reported?

A.
B.
C.
D.
E.

Going-concern assumption.
Matching princip
Business entity assumption.
Consideration assumption.

109 Revenue is properly recognized:
.
A.
B.
C.
D.
E.

When the customer makes an order.
Only if the transaction creates an account receivable.
At the end of the accounting period.
Upon completion of the sale or when services have been performed and the busi
When cash from a sale is received.

110 Which of the following purposes would financial statements serve for external users?

.
A.
B.
C.
D.
E.

To find information about projected costs and revenues of proposed products.
To assess employee performance and compensation.
To assist in monitoring consumer needs and price concerns.
To fulfill regulatory requirements for companies whose stock is sold to the pub
To determine purchasing needs.

111 In a business decision where there are ethical concerns, the preferred course of
.
action should be one that:

A.
B.
C.
D.
E.

Is agreed upon by the most managers.
Maximizes the company's profits.
Results in maintaining operations at the current level.
Costs the least to implement.
Avoids casting doubt on the decision maker and upholds trust.

112 If a company uses $1,300 of its cash to purchase supplies, the effect on the

.
accounting equation would be:

A.
B.
C.
D.
E.

Assets increase $1,300 and liabilities decrease $1,300.
One asset increases $1,300 and another asset decreases $1,300, causing no eff
Assets decrease $1,300 and equity decreases $1,300.
Assets decrease $1,300 and equity increases $1,300.
Assets increase $1,300 and liabilities increase $1,300.

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113 If a company receives $12,000 from the owner to establish a proprietorship, the
.
effect on the accounting equation would be:

A.
B.
C.
D.
E.

Assets decrease $12,000 and equity decreases $12,000.
Assets increase $12,000 and liabilities decrease $12,000.
Assets increase $12,000 and liabilities increase $12,000.
Liabilities increase $12,000 and equity decreases $12,000.
Assets increase $12,000 and equity increases $12,000.

114 If a company purchases equipment costing $4,500 on credit, the effect on the
.
accounting equation would be:

A.
B.
C.
D.
E.

Assets increase $4,500 and liabilities decrease $4,500.
Equity decreases $4,500 and liabilities increase $4,500.
Liabilities decrease $4,500 and assets increase $4,500.
Assets increase $4,500 and liabilities increase $4,500.
Equity increases $4,500 and liabilities decrease $4,500.

115 An example of a financing activity is:
.
A.
B.
C.
D.
E.

Buying office supplies.
Obtaining a long-term loan.
Buying office equipment.

116 An example of an operating activity is:
.
A.
B.
C.
D.
E.

Purchasing office equipment.
Borrowing money from a bank.

117 Operating activities:
.
A.
B.
C.
D.
E.

Are the means organizations use to pay for resources like land, buildings and equ
Involve using resources to research, develop, purchase, produce, distribute and m
Involve acquiring and disposing of resources that a business uses to acquire and
Are also called asset management.
Are also called strategic management.

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118 An example of an investing activity is:
.
A.
B.
C.
D.
E.

Paying wages of employees.
Withdrawals by the owner.

Contribution from owner.

119 Net Income:
.
A.
B.
C.
D.
E.

Represents the amount of assets owners put into a business.
Equals assets minus liabilities.
Is the excess of revenues over expenses.
Represents owners' claims against assets.

120 If equity is $300,000 and liabilities are $192,000, then assets equal:
.
A.
B.
C.
D.
E.
121 If assets are $300,000 and liabilities are $192,000, then equity equals:
.
A.
B.
C.
D.
E.
122 Resources a company owns or controls that are expected to yield future benefits
.
are:

A.
B.
C.
D.
E.

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123 Increases in equity from a company's sales of products or services are:

.
A.
B.
C.
D.
E.
124 The difference between a company's assets and its liabilities, or net assets is:
.
A.
B.
C.
D.
E.
125 Creditors' claims on the assets of a company are called:
.
A.
B.
C.
D.
E.
126 Decreases in equity that represent costs of providing products or services to
.
customers, used to earn revenues are called:

A.
B.
C.
D.
E.

Owner's Investment.

127 The description of the relation between a company's assets, liabilities, and equity,
.
which is expressed as Assets = Liabilities + Equity, is known as the:

A.
B.
C.
D.
E.

Income statement equation.
Accounting equation.
Return on equity ratio.

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128 Revenues are:
.
A.
B.
C.
D.
E.

The same as net income.

The excess of expenses over assets.
Resources owned or controlled by a company.
The increase in equity from a company's sales of products and services.
The costs of assets or services used.

129 If assets are $99,000 and liabilities are $32,000, then equity equals:
.
A.
B.
C.
D.
E.
130 Another name for equity is:
.
A.
B.
C.
D.
E.
131 When expenses exceed revenues, the resulting change in equity is:
.
A.
B.
C.
D.
E.
132 A resource that the owner takes from the company is called a(n):
.
A.
B.

C.
D.
E.

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133 Distributions of cash or other resources by a business to its owners are called:
.
A.
B.
C.
D.
E.
134 The assets of a company total $700,000; the liabilities, $200,000. What are the net
.
assets?

A.
B.
C.
D.
E.

It is impossible to determine unless the amount of this owners' investment is kn

135 On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows:
.

Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000;
Accounts Payable, $9,300. What is the amount of owner's equity as of May 31 of the
current year?

A.
B.
C.
D.
E.
136 On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as
.
follows: Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable,
$8,500. What is the amount of owner's equity as of August 31 of the current year?

A.
B.
C.
D.
E.
137 Assets created by selling goods and services on credit are:
.
A.
B.
C.
D.
E.

Accounts payab
Accounts receivable.

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138 An exchange of value between two entities that yields a change in the accounting
.
equation is called:

A.
B.
C.
D.
E.

The accounting equation.
Recordkeeping or bookkeeping.
An external transaction.

139 Saddleback Company paid off $30,000 of its accounts payable in cash. What would
.
be the effects of this transaction on the accounting equation?

A.
B.
C.
D.
E.

Assets, $30,000 increase; equity, $30,000 increase.

Assets, $30,000 decrease; liabilities, $30,000 decrease.
Assets, $30,000 decrease; liabilities, $30,000 increase.
Liabilities, $30,000 decrease; equity, $30,000 increase.
Assets, $30,000 decrease; equity $30,000 decrease.

140 If Houston Company billed a client for $10,000 of consulting work completed, the
.
accounts receivable asset increases by $10,000 and:

A.
B.
C.
D.
E.

Accounts payable decreases $10,000.
Accounts payable increases $10,000.
Cash increases $10,000.
Revenue increases $10,000.
Revenue decreases $10,000

141 Alpha Company has assets of $600,000, liabilities of $250,000, and equity of
.
$350,000. It buys office equipment on credit for $75,000. What would be the effects
of this transaction on the accounting equation?

A.
B.
C.
D.

E.

Assets increase by $75,000 and expenses increase by $75,000.
Assets increase by $75,000 and expenses decrease by $75,000.
Liabilities increase by $75,000 and expenses decrease by $75,000.
Assets decrease by $75,000 and expenses decrease by $75,000.
Assets increase by $75,000 and liabilities increase by $75,000.

142 Contessa Company collected $42,000 cash on its accounts receivable. The effects of
.
this transaction as reflected in the accounting equation are:

A.
B.
C.
D.
E.

Total assets decrease and equity increases.
Both total assets and total liabilities decrease.
Neither assets, total liabilities, nor equity are changed.
Both total assets and equity are unchanged and liabilities increase.
Total assets increase and equity decreases.

1-20
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143 If the liabilities of a business increased $75,000 during a period of time and the

.
owner's equity in the business decreased $30,000 during the same period, the assets
of the business must have:

A.
B.
C.
D.
E.

Decreased $105,000.
Decreased $45,000.
Increased $30,0
Increased $45,0
Increased $105,000.

144 If the assets of a business increased $89,000 during a period of time and its liabilities
.
increased $67,000 during the same period, equity in the business must have:

A.
B.
C.
D.
E.

Increased $22,000
Decreased $22,000.
Increased $89,0
Decreased $156,000.

Increased $156,000.

145 If the liabilities of a company increased $74,000 during a period of time and equity in
.
the company decreased $19,000 during the same period, what was the effect on the
assets?

A.
B.
C.
D.
E.

Assets would have increased $55,000.
Assets would have decreased $55,000.
Assets would have increased $19,000.
Assets would have decreased $19,000.

146 If a company paid $38,000 of its accounts payable in cash, what was the effect on
.
the accounting equation?

A.
B.
C.
D.
E.

Assets would decrease $38,000, liabilities would decrease $38,000, and equity wo
Assets would decrease $38,000, liabilities would decrease $38,000, and equity wo

Assets would decrease $38,000 and liabilities would decrease $38,000.
There would be no effect on the accounts because the accounts are affected by t
Assets would increase $38,000 and liabilities would decrease $38,000.

147 If assets are $365,000 and equity is $120,000, then liabilities are:
.
A.
B.
C.
D.
E.

1-21
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148 Rushing had income of $150 million and average invested assets of $1,800 million.
.
Its return on assets is:

A.
B.
C.
D.
E.
149 Cage Company had income of $350 million and average invested assets of $2,000
.
million. Its return on assets (ROA) is:

A.
B.
C.
D.
E.
150 Speedy has net income of $18,955, and assets at the beginning of the year of
.
$200,000. Assets at the end of the year total $246,000. Compute its return on
assets.

A.
B.
C.
D.
E.
151 Chou Co. has a net income of $43,000, assets at the beginning of the year are
.
$250,000 and assets at the end of the year are $300,000. Compute its return on
assets.

A.
B.
C.
D.
E.
152 U.S. government bonds are:
.
A.
B.
C.

D.
E.

High-risk and high-return investments.
Low-risk and low-return investments.
High-risk and low-return investments.
Low-risk and high-return investments.
High risk and no-return investments.

1-22
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McGraw-Hill Education.


153 Risk is:
.
A.
B.
C.
D.
E.

Net income divided by average total assets.
The reward for investment.
The uncertainty about the return expected to be earned.
Unrelated to return expected.
Derived from the idea of getting something back from an investment.

154 The statement of cash flows reports all of the following except:
.

A.
B.
C.
D.
E.

Cash flows from operating activities.
Cash flows from investing activities.
Cash flows from financing activities.
The net increase or decrease in assets for the period reported.
The net increase or decrease in cash for the period reported.

155 The basic financial statements include all of the following except:
.
A.
B.
C.
D.
E.

Income Statemen
Statement of Owner's Equity.
Statement of Cash Flows.
Statement of Changes in Assets.

156 The statement of owner's equity:
.
A.
B.
C.

D.
E.

Reports how equity changes at a point in time.
Reports how equity changes over a period of time.
Reports on cash flows for operating, financing, and investing activities over a pe
Reports on cash flows for operating, financing, and investing activities at a poin
Reports on amounts for assets, liabilities, and equity at a point in time.

157 The financial statement that reports whether the business earned a profit and also
.
lists the revenues and expenses is called the:

A.
B.
C.
D.
E.

Statement of owner's equity.
Statement of cash flows.
Statement of financial position.

1-23
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158 A balance sheet lists:
.

A.
B.
C.
D.
E.

The types and amounts of the revenues and expenses of a business.
Only the information about what happened to equity during a time period.
The types and amounts of assets, liabilities, and equity of a business as of a spe
The inflows and outflows of cash during the period.
The assets and liabilities of a company but not the owner's equity.

159 A financial statement providing information that helps users understand a company's
.
financial status, and which lists the types and amounts of assets, liabilities, and
equity as of a specific date, is called a(n):

A.
B.
C.
D.
E.

Income stateme
Statement of cash flows.
Statement of owner's equity.
Financial Status Statement.

160 The financial statement that identifies a company's cash receipts and cash payments
.

over a period of time is the:

A.
B.
C.
D.
E.

Statement of financial position.
Statement of cash flows.

Statement of changes in owner's equity.

161 The financial statement that shows the beginning balance of owner's equity; the
.
changes in equity that resulted from new investments by the owner, net income (or
net loss); withdrawals; and the ending balance, is the:

A.
B.
C.
D.
E.

Statement of financial position.
Statement of cash flows.

Statement of owner's equity.

162 Cash investments by owners are listed on which of the following statements?

.
A.
B.
C.
D.
E.

Income stateme
Statement of owner's equity only.
Statement of cash flows only.
Statement of owner's equity and statement of cash flows.

1-24
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163 Accounts payable appear on which of the following statements?
.
A.
B.
C.
D.
E.

Income stateme
Statement of owner's equity.
Statement of cash flows.
Transaction statement.

164 The income statement reports all of the following except:
.
A.
B.
C.
D.
E.

Revenues earned by a business.
Expenses incurred by a business.
Assets owned by a business.
Net income or loss earned by a business.
The time period over which the earnings occurred.

165 Use the following information as of December 31 to determine equity.
.
Cash

57,000

Buildings

175,000

Equipment

206,000

Liabilities

$141,000

A.
B.
C.
D.
E.
166 Use the following information for Meeker Corp. to determine the amount of equity to
.
report.
Cash
Buildings
Land
Liabilities

70,000
125,000
205,000
$130,000

A.
B.
C.
D.
E.

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