Chapter 1 Financial Statements

On which financial statement(s) can you find retained earnings?

Balance Sheet and Statement of Stockholders' Equity

If net income is incorrectly reported which financial statement(s) will be incorrect?

Income Statement, Cash Flows Statement and Statement of Stockholders' Equity

If assets decrease by $87,000 and liabilities decrease by $21,000 what will the impact on equity be?

Equity will decrease by $66,000

Which of the following is the best definition of an asset?

Resources that are expected to benefit an entity in the future

If retained earnings is incorrectly reported which financial statement(s) will be incorrect?

Statement of Stockholders' Equity and Balance Sheet

If assets increase by $72,000 and liabilities decrease by $31,000 what will the impact on equity be?

Equity will increase by $103,000

Calculate net income given the following information: Revenues are $12,000; assets are $15,000; liabilities are $5,000; expenses are $4,000 and cash is $6,000.

8,000

According to the accounting conceptual framework, what 2 fundamental qualitative characteristics must information have in order to be useful?

Relevance and Faithful Representation

On which financial statement(s) can you find total revenues?

Income Statement

On which financial statement(s) can you find dividends payable?

Balance Sheet

On which financial statement(s) can you find net income?

Income Statement, Cash Flows Statement and Statement of Stockholders' Equity

On which financial statement(s) can you find the total amount of cash generated from investing activities?

Cash Flows Statement

On which financial statement(s) can you find other comprehensive income?

Statement of Comprehensive Income

You have been given a number of balance sheets showing total assets, liabilities and equity amounts. Which of these balance sheets could be correct?

This balance sheet shows assets of $250,000; liabilities of $345,000 and equity of a negative $95,000

If cash is incorrectly reported which financial statement(s) will be incorrect?

Cash Flow Statement and Balance Sheet

On which financial statement(s) can you find common stock?

Balance Sheet and Statement of Stockholders' Equity

Calculate liabilities given the following information: Equity is $37,000; revenues are $70,000; assets are $85,000; expenses are $43,000 and cash is $56,000.

48,000

On which financial statement(s) can you find cost of goods sold?

Income Statement

Calculate dividends given the following information: Beginning retained earnings are $18,000; revenues are $21,000; assets are $57,000; liabilities are $26,000; expenses are $13,000 and ending retained earnings are $20,000

6,000

On which financial statement(s) can you find operating income?

Income Statement

On which financial statement(s) can you find net sales?

Income Statement

On which financial statement(s) can you find the total amount of assets?

Balance Sheet

What 2 components make-up equity?

Paid-in-capital and retained earnings

On which financial statement(s) can you find net income before taxes?

Income Statement

Which of the following is the best definition of a liability?

A current obligation or debt to be settled in the future

On which financial statement(s) can you find the total of current assets?

Balance Sheet

On which financial statement(s) can you find cash?

Balance Sheet and Cash Flows Statement

On which financial statement(s) can you find total expenses?

Income Statement

Calculate ending retained earnings given the following information: Beginning retained earnings are $13,000; revenues are $23,000; dividends are $10,000; liabilities are $18,000; expenses are $11,000 and cash is $9,000

15,000

Which of the following best describes the entity assumption in accounting?

This assumption assumes that the entity stands apart as a separate economic unit, keeping its affairs apart from the affairs of others