142. Distributions to stockholders are called
a. expenses.
b. liabilities.
c. dividends.
d. distributions.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
143. Common stock is reported on the
a. statement of cash flows.
b. retained earnings statement.
c. income statement.
d. balance sheet.
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
144. Stockholders’ equity is comprised of
a. common stock and dividends.
b. common stock and retained earnings.
c. dividends and retained earnings.
d. net income and retained earnings.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
145. Stockholders’ equity
a. is usually equal to cash on hand.
b. is equal to liabilities and retained earnings.
c. includes retained earnings and common stock.
d. is shown on the income statement.
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
146. Retained earnings is
a. the stockholders’ claim on total assets.
b. equal to cash.
c. equal to revenues.
d. the amount of net income kept in the corporation for future use.
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
147. Which financial statement would best indicate whether the company relies on debt or stockholders’ equity to finance its assets?
a. Statement of cash flows
b. Retained earnings statement
c. Income statement
d. Balance sheet
Ans: D, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: Business Economics
148. The primary purpose of the statement of cash flows is to report
a. a company's investing transactions.
b. a company's financing transactions.
c. information about cash receipts and cash payments of a company.
d. the net increase or decrease in cash.
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
149. Claims of owners are called
a. dividends.
b. stockholders’ equity.
c. liabilities.
d. income payable.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
150. Which of the following is not a common way that managers use the balance sheet?
a. To analyze the balances of assets, liabilities, and stockholders’ equity throughout the accounting period
b. To determine if the cash balance is sufficient for future needs
c. To analyze the balance between debt and common stock financing
d. To analyze the balance of accounts receivable on the last day of the accounting period
Ans: A, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
151. Why are financial statement users interested in the statement of cash flows?
a. It is the easiest financial statement to evaluate.
b. It provides information about an important company resource.
c. It is the first statement that is presented to users.
d. It helps users decide whether assets such as office equipment should be replaced.
Ans: B, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting