Question 1

What are the two subtotals that distinguish the multi-step income statement from the single-step income statement?

Accepted Answer

A)  Income before taxes and income taxes 
B)  Total operating revenues and total operating expenses 
C)  Income from operations and income before taxes 
D)  Total revenues and total expenses

Question 2

Which statement is true concerning an income statement?

Accepted Answer

A)  The income statement shows how much profit the company has earned since it began operations. 
B)  Net income on the income statement should be equal to the amount of cash on the balance sheet. 
C)  The income statement summarizes the results of operations for a point in time. 
D)  None of these choices.

Question 3

The primary responsibility for the preparation and integrity of the financial statements in an annual report belongs to the company's independent accountants (CPAs).

Accepted Answer

A) True 
 B)False

Question 4

Which set of items below are current assets?

Accepted Answer

A)  Accounts receivable, net income, inventory, and dividends 
B)  Cash, accounts receivable, capital stock, and sales 
C)  Net income, cash, office supplies, and inventory 
D)  Cash, accounts receivable, inventory, and office supplies

Question 5

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.
-Accounts receivable

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 6

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 7

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.
-Bonds payable

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 8

Marvel Shoes reported the following items on its statement of cash flows for the current year: $\begin{array}{lc}
\text { Net cash inflows from operating activities } & \$ 70,000 \
\text { Net cash outflows from investing activities } & (20,000) \
\text { Net cash outflows from financing activities } & (40,000) \
\text { Cash balance at the beginning of the year } & 30,000
\end{array}$
-Read the information about Marvel Shoes.What was the cash balance for Marvel Shoes at the end of the current year?

Accepted Answer

A)  $ 10,000 
B)  $ 30,000 
C)  $ 40,000 
D)  $ 70,000

Question 9

As used in accounting, the "Notes to the Financial Statement" should be:

Accepted Answer

A)  Listed with the liabilities on the balance sheet 
B)  Omitted at the option of the company 
C)  Included as an integral part of the financial statements 
D)  Reported as expenses on the Income Statement

Question 10

One primary purpose of a classified balance sheet is to help users evaluate the liquidity of a company.

Accepted Answer

A) True 
 B)False

Question 11

Complete the December 31, 2016 (first year of operation) Balance sheet for Lincoln Company using the following information:
(a) Retained earnings at December 31, 2016 was $51,000.
(b) Total stockholders' equity at January 1, 2016 was $139,000.
(c) On December 30, 2016, additional capital stock was sold for cash, $55,000
(d) The land and building were purchased on December 30, 2016 for $150,000.
​ Lincoln Company
Balance Sheet
December 31,2016
$ \begin{array}{lclc}
\text {Assets }&&\text { Liabilities \& Stockholders' Equity }\ 
\hline \text { Cash } & \$ 80,000 &\text {Liabilities: }&\
 \text { Accounts receivable } & {?}&\text { Notes payable}&? \ 
\text { Land } &{112,000}&\text { Accounts payable}&45,000\
\text { Buildings } &{?}&\text { Total liabilities}&?\
 \text { Equipment }&{30,000}&\text {Stockhol ders' equity: }&\
&&\text {Capital Stock }&?\
&&\text {Retained earnings }&?\
&&\text {Total liabilities and }&\
\text {Total assets }&\$---&\text { stockholders' equity}&\$390,000\
\end{array} $

Accepted Answer

The answer of Complete the December 31, 2016 (first year...

Question 12

In preparing the financial statements for December 31, 2016, an accountant improperly classified the payment of prepaid rent as rent expense.Which of the following amounts would not be affected by this improper classification?

Accepted Answer

A)  Retained earnings, January 1, 2016 
B)  Retained earnings, December 31, 2016 
C)  Net income 
D)  Total assets

Question 13

Tavella Company applies the consistency convention.What does this mean?

Accepted Answer

A)  Tavella Co.uses the same names for all its expenses as its competitors. 
B)  Tavella Co.has selected certain accounting principles that can never be changed. 
C)  Tavella Co.applies the same accounting principles each accounting period. 
D)  Tavella Co.applies the same accounting principles as it competitors.

Question 14

Which of the following is a current asset?

Accepted Answer

A)  Building 
B)  Office supplies 
C)  Land 
D)  Truck

Question 15

Which of the following represents the correct sequence of the three business activities on the Statements of Cash Flows?

Accepted Answer

A) Financing - Operating - Investing 
B)  Investing - Operating - Financing 
C)  Operating - Investing - Financing 
D)  Financing - Investing - Operating

Question 16

On the statement of cash flows, the ______________________________ section involves the issuance and repayment of long term liabilities and stock transactions.

Accepted Answer

The answer of On the statement of cash flows, the...

Question 17

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.
-Buildings

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 18

The SEC created the objectives of financial reporting.

Accepted Answer

A) True 
 B)False

Question 19

Guinther & Sons, Inc.a retailer of men's clothing, earned a net profit of $77,000 for 2016.The balance sheet for Guinther & Sons includes the following items: $$\begin{array} { l r l r } 
\text { Cash } & \$ 29,000 & \text { Accounts receivable } & \$ 39,000 \
\text { Inventory } & 79,000 & \text { Prepaid insurance } & 3,000 \
\text { Land } & 90,000 & \text { Accounts payable } & 14,000 \
\text { Taxes payable } & 29,000 & \text { Capital stock } & 50,000 \
\text { Retained earnings } & 97,000 & \text { Long-term notes payable } & 43,000
\end{array}$$ ​
-Read the information for Guinther & Sons, Inc.The average current ratio for stores such as Guinther & Sons is 2.4 to 1.What does this comparison tell you about its liquidity?

Accepted Answer

A)  It is more liquid than its competitors. 
B)  It has more long-term assets than its competitors. 
C)  Since a rule of thumb for current ratios is 2 to 1, neither Guinther & Sons, Inc.nor its competitors is liquid. 
D)  Guinther & Sons, Inc.is more profitable than its competitors.

Question 20

The following balance sheet items from Fasoli, Inc.are listed for December 31, 2016: $$\begin{array} { l r } 
\text { Accounts payable } & \$ 32,650 \
\text { Interest payable } & 2,200 \
\text { Accounts receivable } & 26,500 \
\text { Land } & 250,000 \
\text { Accumulated depreciation-buil dings } & 40,000 \
\text { Marketable securities } & 15,000 \
\text { Merchandise inventory } & 112,900 \
\text { Accumulated depreciation-equipment } & 12,500 \
\text { Notes payable, due April } 15,2017 & 6,500 \
\text { Office supplies } & 200 \
\text { Notes payable, due December } 31,2020 & 251,630 \
\text { Paid-in capital in excess of par value } & 75,000 \
\text { Buil dings } & 150,000 \
\text { Patents } & 45,000 \
\text { Capital stock, } \$ 1 \text { par value } & 200,000 \
\text { Prepaid rent } & 3,800 \
\text { Cash } & 60,990 \
\text { Retained earnings } & 113,510 \
\text { Equipment } & 84,500 \
\text { Sal aries payable } & 7,400 \
\text { Income taxes payable } & 7,500
\end{array}$$
-Read the information about Fasoli, Inc.
Required:
Compute Fasoli's current ratio.On the basis of your answer, does Fasoli appear to be liquid? What other information do you need to fully answer that question?

Accepted Answer

The answer of The following balance sheet items from Fasoli,...

Exam 2: Financial Statements and the Annual Report

What are the two subtotals that distinguish the multi-step income statement from the single-step income statement?

Which statement is true concerning an income statement?

The primary responsibility for the preparation and integrity of the financial statements in an annual report belongs to the company's independent accountants (CPAs).

Which set of items below are current assets?

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. -Accounts receivable

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

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. -Bonds payable

As used in accounting, the "Notes to the Financial Statement" should be:

One primary purpose of a classified balance sheet is to help users evaluate the liquidity of a company.

In preparing the financial statements for December 31, 2016, an accountant improperly classified the payment of prepaid rent as rent expense.Which of the following amounts would not be affected by this improper classification?

Tavella Company applies the consistency convention.What does this mean?

Which of the following is a current asset?

Which of the following represents the correct sequence of the three business activities on the Statements of Cash Flows?

On the statement of cash flows, the ______________________________ section involves the issuance and repayment of long term liabilities and stock transactions.

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. -Buildings

The SEC created the objectives of financial reporting.