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Exam 1: Introducing Financial Statements

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Question 31

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The three major types of business activities are operating,financing,and investing.

A) True
B) False

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Question 32

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Rico's Taqueria had cash inflows from operating activities of $27,000; cash outflows from investing activities of $22,000,and cash outflows from financing activities of $12,000.Calculate the net increase or decrease in cash.

A) $61,000 increase.
B) $37,000 increase.
C) $7,000 decrease.
D) $7,000 increase.
E) $34,000 decrease.

F) A) and C)
G) None of the above

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Question 33

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An example of an operating activity is:

A company's balance sheet shows: cash $24,000,accounts receivable $30,000,equipment $50,000,and equity $72,000.What is the amount of liabilities?

Distributions of cash or other assets by a business to its stockholders are called:

Net Income:

The ________ assumption states that transactions and events are expressed in money units.

Use the following information as of December 31 to determine equity.

The International Accounting Standards board (IASB)has the authority to impose its standards on companies around the world.

You are reviewing the accounting records of Buddy's Foreign Automotive,owned by Bruce Jones,its sole stockholder.You have uncovered the following situations.List the appropriate accounting principle related to each independent scenario and suggest a correct action for each. 1.In August,a check for $500 was written to Community Sports.This amount represents soccer camp for his daughter Cassie. 2.Bruce plans a Going Out of Business Sale for June,since he will be closing the business for a month-long vacation in July.He plans to reopen August 1 and will continue operating Buddy's Foreign Automotive indefinitely. 3.Buddy received a shipment of tools from Ontario,Canada.The invoice was stated in Canadian dollars. 4.Sandy Lane paid $1,500 for a major repair services.The amount was recorded as revenue.The parts for the repair must be ordered from overseas and the service won't be complete until the following month.

What is the purpose of return on assets as an analytical tool?

Another name for equity is:

The balance sheet shows a company's net income or loss due to earnings activities over a period of time.

Dawson Electronic Services had revenues of $80,000 and expenses of $50,000 for the year.Its assets at the beginning of the year were $400,000.At the end of the year assets were worth $450,000.Calculate its return on assets.

Decreases in equity that represent costs of providing products or services to customers,used to earn revenues are called:

There are at least three types of partnerships that limit the partners' liability.They are 1)________,2)________,and 3)________.

Arrow's net income of $112 million and average assets of $1,400 million results in a return on assets of 8%.

Speedy has net income of $18,955,and assets at the beginning of the year of $200,000.Assets at the end of the year total $246,000.Compute its return on assets.

Understanding generally accepted accounting principles is not necessary to effectively use and interpret financial statements.

Doc's Ribhouse had beginning equity of $52,000; net income of $35,000,and dividends of $12,000.There were no stockholder investments during the year.Calculate the ending equity.