Question 1

An accountant is uncertain about the best estimate of an amount for a business transaction. If two amounts are about equally likely, the amount least likely to overstate assets and income is selected. Which of the following qualities is characterized by this action?

Accepted Answer

A)  Comparability 
B)  Conservatism 
C)  Materiality 
D)  Neutrality

Question 2

Income from operations does not include interest revenue and interest expense because these items are considered to be non-operating in nature.

Accepted Answer

A) True 
 B)False

Question 3

Carnival Bakery borrowed $500,000 from Front Street Bank. Carnival then hired a contractor to build a new cookie distribution outlet. In which section of Carnival's statement of cash flows would you find information that indicated that Carnival acquired the new cookie distribution outlet?

Accepted Answer

A)  Operating Activities 
B)  Investing Activities 
C)  Financing Activities 
D)  Profit Activities

Question 4

What financial statement items are investors and creditors most interested in and why?

Accepted Answer

The answer of What financial statement items are investors and...

Question 5

Oreo Company has current assets of $20,000, current liabilities of $8,000, and long-term liabilities of $3,000. Oreo wants to buy new equipment. How much of its existing cash can Oreo use to acquire equipment without allowing its current ratio to decline below 2.0 to 1?

Accepted Answer

A)  $4,000 
B)  $8,000 
C)  $10,000 
D)  $12,000

Question 6

Webb Company
Selected data from the accounting records of Webb Company are listed below:
 
-Read the information about Webb Company. By what amount will net income on a single-step income statement differ from net income on a multi-step income statement if Webb Company prepares both formats?

Accepted Answer

A)  $800 
B)  $600 
C)  $200 
D)  $-0-

Question 7

Although businesses engage in a wide variety of activities, all of these activities can be categorized into three types. Which of the following choices best reflects these three types of business activities?

Accepted Answer

A)  Operating, financing, reporting 
B)  Investing, reporting, financing 
C)  Operating, financing, investing 
D)  Investing, reporting, operating

Question 8

If an investor can use accounting information for two different companies to evaluate the types and amounts of expenses, the information is said to have the quality of:

Accepted Answer

A)  Comparability. 
B)  Consistency. 
C)  Neutrality. 
D)  Understandability.

Question 9

Moss Company
Moss Company has provided the following information from its accounting records for the current year:
 
-Read the information for Moss Company. What are Moss' current liabilities?

Accepted Answer

A)  $50,000 
B)  $125,000 
C)  $200,000 
D)  $230,000

Question 10

Read the information about Fasoli, Inc.
Required:
Prepare the Liabilities section of the classified balance sheet, including total liabilities balance.

Accepted Answer

The answer of Read the information about Fasoli, Inc.
Required:
Prepare the...

Question 11

Assume that you want to determine the profit margin for a company. Which one of the following financial statements is the best source of this information?

Accepted Answer

A)  Statement of retained earnings 
B)  Statement of cash flows 
C)  Statement of stockholders' equity 
D)  Income statement

Question 12

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Capital stock

Accepted Answer

A) Current Assets balance sheet 
B) Property, Plant, & Equipment balance sheet 
C) Current Liabilities balance sheet 
D) Long-term Liabilities balance sheet 
E) Stockholders' Equity balance sheet
F)Operating Revenue income statement
G)Operating Expenses income statement
H)Other Revenue & Expenses income statement
I)Income Taxes income statement

Question 13

For each item listed, select the section of the balance sheet in which the item would be reported.
-Land

Accepted Answer

A) Current Assets 
B) Property. Plant, and Equipment 
C) Current Liabilities 
D) Long-term Liabilities 
E) Stockholders' Equity

Question 14

From the following list, select the proper section from the statement of cash flows in which it would be classified.
-Received cash from the sale of a building

Accepted Answer

A) Operating Activities 
B) Investing Activities 
C) Financing Activities

Question 15

is the quality of accounting information that makes it dependable in representing the events that it purports to represent.

Accepted Answer

The answer of is the quality of accounting information that...

Question 16

A bank loaned $62 million to Apex Corporation to finance the construction of a new distribution warehouse. In which section of Apex's statement of cash flows would you be able to determine whether the company repaid any portion of the debt during the year?

Accepted Answer

A)  Operating Activities 
B)  Investing Activities 
C)  Financing Activities 
D)  Profit Activities

Question 17

During 2014, Wimbrow Images reported $60,000 of net income and generated $80,000 of cash from operations.
During the year, Wimbrow Images paid $15,000 to purchase a new delivery truck and also paid dividends in the amount of $30,000. Wimbrow Images borrowed $40,000 cash from the bank. At the beginning of the year, cash amounted to $50,000.
A Prepare a statement of cash flows for the year ended December 31, 2014.
B How much more cash does Wimbrow Images have available at the end of the year than at the beginning?
C Why is there a difference between net income and cash flows from operations?

Accepted Answer

The answer of During 2014, Wimbrow Images reported $60,000 of...

Question 18

The statement of explains changes in the components of owners' equity during the
period.

Accepted Answer

The answer of The statement of explains changes in the...

Question 19

What is conservatism and why is it important in accounting?

Accepted Answer

The answer of What is conservatism and why is it...

Question 20

Property, plant and equipment are classified as assets on the balance sheet.

Accepted Answer

The answer of Property, plant and equipment are classified as...

Exam 2: Financial Statements and the Annual Report

An accountant is uncertain about the best estimate of an amount for a business transaction. If two amounts are about equally likely, the amount least likely to overstate assets and income is selected. Which of the following qualities is characterized by this action?

Income from operations does not include interest revenue and interest expense because these items are considered to be non-operating in nature.

Carnival Bakery borrowed $500,000 from Front Street Bank. Carnival then hired a contractor to build a new cookie distribution outlet. In which section of Carnival's statement of cash flows would you find information that indicated that Carnival acquired the new cookie distribution outlet?

What financial statement items are investors and creditors most interested in and why?

Oreo Company has current assets of $20,000, current liabilities of $8,000, and long-term liabilities of $3,000. Oreo wants to buy new equipment. How much of its existing cash can Oreo use to acquire equipment without allowing its current ratio to decline below 2.0 to 1?

Webb Company Selected data from the accounting records of Webb Company are listed below: -Read the information about Webb Company. By what amount will net income on a single-step income statement differ from net income on a multi-step income statement if Webb Company prepares both formats?

Although businesses engage in a wide variety of activities, all of these activities can be categorized into three types. Which of the following choices best reflects these three types of business activities?

If an investor can use accounting information for two different companies to evaluate the types and amounts of expenses, the information is said to have the quality of:

Moss Company Moss Company has provided the following information from its accounting records for the current year: -Read the information for Moss Company. What are Moss' current liabilities?

Read the information about Fasoli, Inc. Required: Prepare the Liabilities section of the classified balance sheet, including total liabilities balance.

Assume that you want to determine the profit margin for a company. Which one of the following financial statements is the best source of this information?

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Capital stock

For each item listed, select the section of the balance sheet in which the item would be reported. -Land

From the following list, select the proper section from the statement of cash flows in which it would be classified. -Received cash from the sale of a building

is the quality of accounting information that makes it dependable in representing the events that it purports to represent.

A bank loaned $62 million to Apex Corporation to finance the construction of a new distribution warehouse. In which section of Apex's statement of cash flows would you be able to determine whether the company repaid any portion of the debt during the year?

The statement of explains changes in the components of owners' equity during the period.

What is conservatism and why is it important in accounting?

Property, plant and equipment are classified as assets on the balance sheet.