Accounting Quiz Chapter 2

The accounting equation is expressed as ___

Assets = Liabilities + Owner's Equity

What is the correct order of preparing the financial statements?

Income statement, statement of owner's equity, balance sheet, statement of cash flows

Typical accounting tasks include all of the following tasks except _____ auditing purchasing direct materials consulting tax compliance and planning

purchasing direct materials

Identify the correct components of the income statement revenues, expenses, investments by owners, distributions to owners assets, liabilities, and dividends assets, liabilities, and owner's equity revenues, losses, expenses, and gains

revenues, losses, expenses, and gains

Which of these statements is not one of the financial statements? statement of cash flows balance sheet statement of owner investments income statement

statement of owner investments

All of the following are sustainable methods businesses can use to raise capital (funding) except for ______ selling ownership shares tax refunds profitable operations borrowing from lenders

tax refunds

Assume a company has a $350 credit (not cash) sale. How would the transaction appear if the business uses accrual accounting?

$350 would show up on the income statement as a sale

Owners have no personal liability under which legal business structure?

A corporation

Which of the following statements is true? Tangible assets lack physical substance Tangible assets will be consumed in a year or less Tangible assets have physical substance Tangible assets will be consumed in over a year

Tangible assets have physical substance

The balance sheet lists which of the following? assets, liabilities, and owner's equity revenues, expenses, gains, and losses revenues, expenses, gains, and distributions to owners assets, liabilities, and investments by owners

assets, liabilities, and owner's equity

Which financial statement shows the financial performance of the company on a cash basis? statement of owner's equity balance sheet income statement statement of cash flows

balance sheet

Which financial statement shows the financial position of the company? income statement solution statement of owner's equity statement of cash flows balance sheet

balance sheet

The three heading lines of financial statements typically include which of the following?

company, statement title, time period of report

Stakeholders are less likely to include which of the following groups? owners community leaders competitors employees

competitors

All of the following increase owner's equity except for which one? investments by owners gains acquisitions of assets by incurring liabilities revenues

Acquisitions of assets by incurring liabilities

Which of the following is not an element of the financial statements? equity assets liabilities future potential sales price of inventory

future potential sales price of inventory

Stockholders can be defined as which of the following? investors who purchase an ownership in the business investors who lend money to a business for a long period of time analysts who rate the financial performance of the business investors who lend money to a business for a short period of time

investors who purchase an ownership in the business

Working capital is an indication of the firm's ___________

liquidity

Which of the following decreases owner's equity? gains short-term loans investments by owners losses

losses

Exchanges of assets for assets have what effect on equity?

may have no impact on equity