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Exam 1: Financial Statements and Business Decisions

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Question 61

Multiple Choice

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Which of the following is primarily responsible for the information provided in the financial statements?

A) Chief Executive Officer.
B) External Auditors.
C) Board of Directors.
D) Internal Accounting Staff.

E) B) and D)
F) All of the above

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Question 62

Multiple Choice

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Which of the following best describes the purpose of an audit?

A) To prove the accuracy of an entity's financial statements.
B) To lend credibility to an entity's financial statements.
C) To audit every transaction that an entity entered into.
D) To establish that a corporation's stock is a sound investment.

E) B) and D)
F) A) and B)

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Question 63

Multiple Choice

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Which of the following is not an alternate title for the financial statement that reports revenues and expenses?

Madrid Company has provided the following data (ignore income taxes) : 2019 revenues were $77,500. 2019 net income was $33,900. Dividends declared and paid during 2019 totaled $5,700. Total assets at December 31,2019 were $217,000. Total stockholders' equity at December 31,2019 was $123,000. Retained earnings at December 31,2019 were $83,000. - Which of the following is not correct?

Which of the following is considered to be an expense on the income statement?

Which of the following describes the operating activities section of a cash flow statement?

Which of the following accounts would not be reported on the balance sheet?

The primary responsibility for the content of the financial statements lies with the external auditor.

Which of the following is not a consequence to a company resulting from the issuance of their financial statements?

The International Accounting Standards Board has worked to develop global accounting standards known as:

A decision maker who wants to understand a company's financial statements must carefully read the notes to the financial statements because these disclosures provide useful supplemental information.

Which of the following is represented by elements of the statement of stockholders' equity?

An audit is an examination of the financial statements to ensure that they represent what they claim and to make sure that they are in compliance with generally accepted accounting principles.

Which of the following is not a formal requirement to become a licensed certified public accountant (CPA) ?

For each of the following items that appear on the balance sheet,identify each as an asset (A),liability (L),or element of stockholders' equity (SE).For any item that would not appear on the balance sheet,write the letter,N.

Which of the following would not be reported in the operating activities section of a cash flow statement?

Which of the following accounts is not a liability on the balance sheet?

Sparty Corporation has provided the following information for its most recent year of operation: Revenues earned were $97,000,of which $9,000 were uncollected at the end of the year. Operating expenses incurred were $39,000,of which $7,000 were unpaid at the end of the year. Dividends declared were $11,000,of which $3,000 were unpaid at the end of the year. Income tax expense is $17,400. What is the amount of net income reported on Sparty's income statement?

Which of the following transactions increases both cash and net income?

Parker Pool Supply,Inc.reported the following items for the year ended December 31,2019: Prepare an income statement for the year ended December 31,2019.