Balance Sheet Knowledge Check - Part A
Assets - Liabilities = Net Assets Assets = Buildings + Cash + Inventory = $55,000 + $6,500 + $12,500 = $74,000 Assets - Liabilities = $74,000 - $5,000 = $69,000
A Better You Wellness Clinic, Inc. has the following accounts: Building = $55,000; Cash = $6,500; Inventory = $12,500; and Accounts Payable = $5,000. What is the amount of its Equity? a) $31,000 b) $35,000 c) $10,500 d) $69,000
Debts or obligations the company owes resulting from past transactions.
Liabilities are best defined as: a) Amounts the company expects to collect in the future from patients / customers. b) Debts or obligations the company owes resulting from past transactions. c) The amounts that owners have invested in the business. d) Payments to stockholders.
Assets - Liabilities = Equity, so $32,000 - ($8,000) = $32,000 + $8,000 = $40,000 increase
Rebecca Smith is the sole owner of Smith Medical Care, Inc. providing internal medicine services to low-income patients. At the end of its accounting period, December 31, 2018, Smith Medical has assets of $375,000 and liabilities of $125,000. What is the amount and change in equity if, during 2019, assets increased by $32,000 and liabilities decreased by $8,000? a) Increase $8,000 b) Decrease $8,000 c) Decrease $40,000 d) Increase $40,000
$250,000
Rebecca Smith is the sole owner of Smith Medical Care, Inc. providing internal medicine services to low-income patients. At the end of its accounting period, December 31, 2018, Smith Medical has assets of $375,000 and liabilities of $125,000. What is the equity on 12/31/2018? a) $500,000 b) $250,000 c) $375,000 d) $125,000
The financial position of the business
The Balance Sheet shows: a) The financial performance and the financial position of the business b) The financial performance of the business c) The cash flow of the business d) The financial position of the business
Accrual Accounting
The method of accounting that recognizes revenue when it is earned, and expenses when they are incurred is called? a) Income Accounting b) Economic Interest Accounting c) Accrual Accounting d) Asset Basis Accounting
Assets - Liabilities = Net Assets, so ($1,000) - $2,000 = ($3,000) decrease
If total assets decreased by $1,000 during a period of time and liabilities increased by $2,000 during the same period, then the amount and direction (increase or decrease) of the period's changes in net assets is: a) $1,000 Increase b) $3,000 Increase c) $3,000 Decrease d) $1,000 Decrease
Assets, Liabilities, and Equity (aka Net Assets)
The Balance Sheet formula contains which self-balancing sections? a) Current Assets, Long Term Assets, Current Liabilities, Noncurrent Liabilities b) Assets, Liabilities, Revenue, Expense c) Assets, Liabilities, Operating Income d) Assets, Liabilities, and Equity (aka Net Assets)
An Investment classified as "Long Term" on the year-end Balance Sheet may not be reclassified or otherwise converted into a Short-Term Investment or Cash Equivalent during the following year.
Which of the following statements regarding Long Term Investments on the Balance Sheet is not true? a) Long Term Investments are not intended to be used in normal operating activities of the organization. b) To be classified as a Long-Term Investment, the organization's management must have intended to hold the investment for more than one year. c) Management may use Long Term Investments to create income outside the organization's scope of normal operations. d) An Investment classified as "Long Term" on the year-end Balance Sheet may not be reclassified or otherwise converted into a Short-Term Investment or Cash Equivalent during the following year.
The Balance Sheet measures financial balances at a specified point in time
Which of the following statements regarding the Balance Sheet is true? a) The Balance Sheet measures financial activity for a specified period of time. b) The Balance Sheet measures financial balances for a specified period of time. c) The Balance Sheet measures financial balances at a specified point in time. d) The Balance Sheet measures financial activity for a specified point in time.
Because the Balance Sheet is self-balancing, Current Assets always equals Current Liabilities.
Which of the following statements regarding the Current Assets section of the Balance Sheet is not true? a) Because the Balance Sheet is self-balancing, Current Assets always equals Current Liabilities. b) Within the Current Assets section of the Balance Sheet, individual accounts are listed in order of liquidity. c) Current Assets provide liquidity to the organization. d) Current Assets provide little to no financial yield to the organization.
Cash and cash equivalents
Which one of the following typically appears first in the Current Assets section of a Balance Sheet report? a) Cash and short-term investments b) Patient Receivables c) Cash and Cash Equivalents d) Inventories
The equipment is valued at the amount paid regardless of funding, which is $10,000 + $65,000 = $75,000.
Equipment with an estimated market value of $80,000 is offered for sale at $85,000. The equipment is acquired for $10,000 in cash and a note payable of $65,000. The amount used in the buyer's accounting records to record this acquisition is: a) $80,000 b) $85,000 c) $75,000 d) $10,000
Accounts payable
When invoice for an accrued expense is received the following month, the accrued expense is re-categorized on the balance sheet as a a) Asset b) Accounts payable c) Short-term investment d) Equity
All of the above.
Which condition must be met for an item to be recorded in Accounts Payable? a) The item must have been received by the entity / the service must have been provided. b) The invoice must have been received from the vendor. c) The item must have been ordered / the service must have been requested by the entity but not yet paid for. d) All of the above.
All of the above
Which of the following are required for an asset to be classified as a Cash Equivalent on the Balance Sheet? a) Has a known market price not subject to price fluctuation b) Matures within three months. c) Is readily converted to cash. d) All of the above.
Acquires Financing, Purchases Supplies & Assets, Creates Services & Products, Sells Services & Products
Which of the following best describes the fundamental business activities undertaken by all organization types within the healthcare industry? a) Acquires Financing, Creates Services & Products, Sells Services/Products, Bills Third-Party Payers b) Acquires Products, Sells Services/Products, Pays Employees, Collects from Payers c) Acquires Financing, Purchases Supplies & Assets, Creates Services & Products, Sells Services & Products d) None of the above
Total Assets = Total Liabilities - Total Equity
Which of the following does not express the correct balancing relationship between Total Assets, Total Liabilities, and Total Equity on the Balance Sheet? a) Total Assets - Total Equity = Total Liabilities b) Total Liabilities = Total Assets - Total Equity c) Total Assets = Total Liabilities - Total Equity d) Total Equity = Total Assets - Total Liabilities
Statement of Financial Position
Which of the following is an alternative name used by some organizations to describe the Balance Sheet? a) Net Assets Statement b) Statement of Net Resources c) Statement of Financial Position d) Trial Balance
Office supplies ordered, invoiced and payable this month
Which of the following is an example of an account payable? a) Office supplies ordered this month which will be received next month b) Office supplies ordered, invoiced and payable this month c) Medications received this month which will be invoiced next month d) This month's portion of a vehicle loan
d) None of the above
Which of the following is false? a) Commercial businesses can acquire financing from lenders, stockholders, and bondholders. b) Not-for-Profit entities can acquire financing from lenders, donors, and grantors. c) Governmental agencies can acquire financing from bondholders and governmental appropriations. d) None of the above
Checks received, not deposited in the bank
Which of the following is generally not classified as a Cash Equivalent? (Assume that no restrictions have been imposed). a) Checks received, not deposited in the bank b) Treasury Bills maturing within 30 days. c) Money Market Funds maturing within 30 days. d) Government Bonds maturing within 30 days.
Preliminary opinion
Which of the following is not a type of opinion rendered by an auditor in relation to an evaluation of financial statements? a) Qualified opinion b) Adverse opinion c) Preliminary opinion d) Unqualified opinion
Budget
Which of the following is not one of the "principal financial statements"? a) Balance Sheet b) Budget c) Income Statement d) Statement of Cash Flows
Conservation
Which of the following is not one of the 12 generally accepted accounting principles? a) Conservation b) Materiality c) Objectivity d) Revenue Recognition
All of the above.
Which of the following is true about Generally Accepted Accounting Principles (GAAP)? a) All entities which sell stock on a United States stock exchange are required to issue GAAP compliant financial statements. b) Regulatory agencies, lenders, and other entities frequently require GAAP compliant financial statements of large entities because adherence to GAAP provides uniformity standards in financial statement reporting. c) GAAP only applies to entities in the United States. d) All of the above.
The Balance Sheet reports the financial position of the organization at a specified point in time.
Which of the following is true regarding the Balance Sheet? a) The Balance Sheet communicates the organization's economic profitability at a single point in time. b) The Balance Sheet describes the organization's Revenues and Expenses for a specified period of time. c) The Balance Sheet reports the financial position of the organization at a specified point in time. d) The Balance Sheet includes only Temporary accounts.
The Balance Sheet describes the organization's resources and the ownership claims of stakeholders relative to those resources.
Which of the following is true regarding the Balance Sheet? a) The Balance Sheet reports the financial position of the organization for a specified period of time. b) The Balance Sheet describes the organization's resources and the ownership claims of stakeholders relative to those resources. c) The Balance Sheet is sometimes referred to as the Trial Balance because it is a self-balancing statement. d) The Balance Sheet contains both Temporary and Permanent accounts.
All the above are true.
Which of the following statements regarding Investments on the Balance Sheet is true? a) Held to Maturity securities are recorded on the Balance Sheet at amortized cost. b) Available for Sale securities are recorded on the Balance Sheet at a value that is adjusted for changes in fair market value. c) Trading Securities are recorded on the Balance Sheet at a value that is adjusted for changes in fair market value. d) All the above are true.
The Equity section is divided into Short Term Equity and Long-Term Equity.
Which of the following statements regarding the Equity section of the balance sheet is not true? a) The Equity section expresses the residual value of organizational resources resulting from subtracting Liabilities from Assets. b) The Equity section is divided into Short Term Equity and Long-Term Equity. c) The Equity section may also be referred to as the Net Assets section. d) The Equity section represents the difference of the Assets and Liabilities sections at a specific point in time.