Exam 4: Structure of the Balance Sheet and Statement of Cash Flows

Probable future sacrifices of economic benefits arising from an entity's present obligations to transfer resources or provide services to other entities in the future as a result of past transactions or events define

To facilitate global capital flows,balance sheet format and terminology used in most other countries is the same as that used under U.S.GAAP.

Notes to the financial statements typically contain all of the following except

The Barden Company provides the following information from its Year 3 and Year 4 balance sheets: Year 3 Year 4 Accounts receivable \ 115,000 \ 97,500 Inventory 120,000 130,000 Prepaid insurance 7,500 1,500 Prepaid rent 40,000 15,000 Accounts payable 55,000 65,000 The following information is available from the Year 4 income statement: Sales \ 425,000 Cost of goods sold 225,000 Insurance expense 12,000 Rent expense 25,000 -How much cash did Barden pay for rent during Year 4?

The balance sheet amount reported for a long-term debt on the issue date is the

All of the following disclosures would appear in the Summary of Significant Accounting Policies except

Selected data for Kris Corporation's comparative balance sheets for Year 1 and Year 2 are as follows: Assets Year 1 Year 2 Cash \ 100,000 (\ 50,000) Accounts receivable (net) 50,000 100,000 Inventory 100,000 250,000 Equipment (net) \ 300,000 Total assets \ 550,000 \ 650,000 Liabilities and Equity Accounts payable \ 150,000 \ 100,000 Income taxes payable 80,000 30,000 Bonds payable 100,000 80,000 Common stock 100,000 200,000 Retained earnings 120,000 240,000 Total liabilities and Equity \ 550,000 \ 650,000 A brief income statement for Year 2 shows the following: Sales \9 00,000 Cost of goods sold \ 500,000 Operating expenses 100,000 Depreciation 50,000 Income tax expense 100,000 750,000 Net Income \1 50,000 -How much did Kris pay in dividends to shareholders in Year 2?

Selected data for Kris Corporation's comparative balance sheets for Year 1 and Year 2 are as follows: Assets Year 1 Year 2 Cash \ 100,000 (\ 50,000) Accounts receivable (net) 50,000 100,000 Inventory 100,000 250,000 Equipment (net) \ 300,000 Total assets \ 550,000 \ 650,000 Liabilities and Equity Accounts payable \ 150,000 \ 100,000 Income taxes payable 80,000 30,000 Bonds payable 100,000 80,000 Common stock 100,000 200,000 Retained earnings 120,000 240,000 Total liabilities and Equity \ 550,000 \ 650,000 A brief income statement for Year 2 shows the following: Sales \9 00,000 Cost of goods sold \ 500,000 Operating expenses 100,000 Depreciation 50,000 Income tax expense 100,000 750,000 Net Income \1 50,000 -What are Kris' cash flows from investing activities for Year 2?

The balance sheet is an expression of the accounting equation.

The Summary of Significant Accounting Policies would contain an explanation of the company's revenue recognition policies.

Marketable debt and equity securities that a firm expects to hold as a short-term investment are reported on the balance sheet at

Operating activities result from the cash effects of

Operating activities result from the cash effects of producing and delivering goods and services.

For companies having monetary assets denominated in foreign currency units,these assets are converted into dollars at the historical rate of exchange that was in effect at the time of the foreign currency inflow.

Under the direct method to cash flow statement preparation,net cash flows from operations is arrived at by adjusting income for the differences between accrual-basis revenues and expenses and cash inflows and outflows during the period.

Most companies report their cash flow from operating activities using the direct method.

Balance sheets typically contain both "noncurrent liability" and "long-term obligation" sections.

The balance sheet provides critical information for understanding an entity's capital structure.

By comparing return on assets to return on common equity,statement users can determine

Which one of the following equations explains why successive balance sheets can be used to prepare a firm's cash flow statement?