Topic: 01-07 External Information Users
Topic: 01-08 Internal Information Users
195. Select the appropriate financial statement for each of the following accounts.(a) Income statement(b) Statement of changes in equity(c) Balance sheet(d) Statement of cash flows ____ (1) Cash ____ (2) Withdrawals ____ (3) Notes payable ____ (4) Service revenue ____ (5) John Jay, capital ____ (6) Accounts receivable ____ (7) Prepaid Rent ____ (8) Supplies Expense
(1) c, d (2) b (3) c (4) a (5) b, c (6) c (7) c (8) a
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-06 Identify and explain the content and reporting aims of financial statements.
Topic: 01-20 Previewing Financial Statements
196. Select the appropriate financial statement for each of the following items.(a) Income statement(b) Statement of changes in equity(c) Balance sheet(d) Statement of cash flows _____ (1) Supplies _____ (2) Profit _____ (3) Ahmad Khan, Capital _____ (4) Advertising Expense _____ (5) Cash paid to employees _____ (6) Withdrawals _____ (7) Fees earned _____ (8) Cash paid for supplies
(1) c (2) a, b, d (3) b, c (4) a (5) d (6) b, d (7) a (8) d
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-06 Identify and explain the content and reporting aims of financial statements.
Topic: 01-20 Previewing Financial Statements
197. List the three main differences between the sole proprietorship and the corporate form of business.
Type of Business Organization
Difference
Sole Proprietorship
Corporation
Equity section on the balance sheet is called:
equity
shareholders' equity
Distribution to owners are called:
withdrawals
dividends
When managers are also owners, their salaries are:
not an expense
an expense
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-06 Identify and explain the content and reporting aims of financial statements.
Topic: 01-05 Business Organizations
198. What is the statement of financial position? What is its purpose?
The statement of financial position, or balance sheet, is a listing of the types and amounts of assets, liabilities, and equity of a business at a specified point in time. The statement's purpose is to provide information that helps users understand the financial status of the business.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-06 Identify and explain the content and reporting aims of financial statements.
Topic: 01-20 Previewing Financial Statements
199. What distinguishes liabilities from equity?
Liabilities are the debts of an entity. They represent claims or rights of creditors to be paid. Creditors can force an entity to liquidate its assets in order to satisfy their claims. Any "residual interest in the assets of an entity after deducting its liabilities" is equity (net assets).
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Hard
Learning Objective: 01-06 Identify and explain the content and reporting aims of financial statements.
Topic: 01-20 Previewing Financial Statements
200. List the three types of activities reported on the statement of cash flows.
The three types of activities reported on the statement of cash flows include (1) operating, (2) financing, and (3) investing.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-06 Identify and explain the content and reporting aims of financial statements.
Topic: 01-20 Previewing Financial Statements
201. Describe the revenue recognition principle.
Revenue should be recorded at the time that it is earned (generally triggered when the service is performed, or the product has been delivered), regardless of whether cash or another asset has been exchanged.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-05 Identify, explain, and apply accounting principles.
Topic: 01-20 Previewing Financial Statements
202. Describe three measurement methods based on current values.
Current cost. Current cost indicates the amount of cash required to acquire that asset or received to take on an equivalent liability today.
Fair value. The asset or liability is reported at the amount of cash that would be received by selling the asset or paying off the liability in the normal course of business