Chapter 01 Smart Book Part 1

Describe the order in which a company prepares financial statements.

1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet 4. Statement of Cash Flows

Select all that apply Identify the items below that reflect the proper heading on a balance sheet. The name of the financial statement is listed after the name of the company The date line shows a specific date The company name is listed on the second line, after the name of the financial statement The company name is listed at the top of the heading The date line shows a period of time

The name of the financial statement is listed after the name of the company The date line shows a specific date The company name is listed at the top of the heading

The correct definition of an income statement includes which of the following?

The statement describes a business's revenues and expenses over a period of time.

Select all that apply The correct definition of a balance sheet includes which of the following statements? The statement reports the equality of the accounting equation at a point in time. The statement reports assets, liabilities and equity at a point in time. The statement explains the changes in equity over a period of time. The statement reports the financial position of a company at a point in time. The statement reports revenues and expenses over a period of time.

The statement reports the equality of the accounting equation at a point in time. The statement reports assets, liabilities and equity at a point in time. The statement reports the financial position of a company at a point in time.

In every financial statement, there exists single and double underlines. Choose the statement below that describes what these are for and when to use them. A single-ruled line denotes an addition or subtraction and double underlines indicate the final totals. Single underlines are used under every account on a statement and double-ruled lines are used to show an addition or subtraction. Double-ruled lines denote an addition or subtraction, and single-ruled lines are used to show the final total on the statement.

A single-ruled line denotes an addition or subtraction and double underlines indicate the final totals.

Net income is calculated using the following formula: ______ (expenses/revenues/assets) - __________(expenses/revenues/assets) = Net income.

Blank 1: revenues Blank 2: expenses

Select all that apply Identify the main sections on a statement of cash flows. Cash flows from owner activities Cash flows from investing activities Cash flows from operating activities Cash flows from borrowing activities Cash flows from financing activities

Cash flows from investing activities Cash flows from operating activities Cash flows from financing activities

Which list of accounts below, identifies only accounts that would appear on a balance sheet. Common Stock, Equipment, Accounts Payable Rental Revenue, Accounts Payable, Accounts Receivable Supplies Expense, Supplies, Dividends Wages Expense, Cash, Supplies

Common Stock, Equipment, Accounts Payable

Which list of accounts below, identifies only accounts that would appear on a balance sheet. Wages Expense, Cash, Supplies Rental Revenue, Accounts Payable, Accounts Receivable Supplies Expense, Supplies, Dividends Common Stock, Equipment, Accounts Payable

Common Stock, Equipment, Accounts Payable

Given the list of accounts below, identify which of them would appear on a balance sheet. Equipment Rent Expense Accounts Payable Rental Revenue Cash Supplies Utilities Expense Retained earnings, 12/31

Equipment Accounts Payable Cash Supplies Retained earnings, 12/31

Statement of Cash Flows

Identifies the cash inflows and outflows over a period of time

A (proprietorship/partnership/corporation/LLC) ____________ is a business entity legally separate from its owners who are called members.

LLC

Balance Sheet

Reports the balance of assets, liabilities and equity at a point in time

Statement of Retained Earnings

Reports the changes in equity during a period of time

Income Statement

Reports the revenues and expenses incurred by a business for a period of time

Identify which of the following lists of accounts would belong on the statement of retained earnings. Retained earnings and Cash Service Revenue and Wages Expense Dividends and Account Payable Retained earnings and Dividends

Retained earnings and Dividends

Select all that apply An income statement reports a company's net income or net loss during a period. Which of the following accounts would appear on an income statement? ( Service Revenue Rent Revenue Accounts Payable Cash Wages Expense Rent Expense

Service Revenue Rent Revenue Wages Expense Rent Expense

Select all that apply Identify the items below that reflect the proper heading on an income statement. (Check all that apply.) The date line shows a period of time The company name is listed at the top of the heading The date line shows a specific day The company name is listed on the second line. The name of the financial statement is listed on the second line, after the name of the company

The date line shows a period of time The company name is listed at the top of the heading The name of the financial statement is listed on the second line, after the name of the company

Select all that apply Identify the items below that reflect the proper heading on a balance sheet. (Check all that apply.) Multiple select question. The name of the financial statement is listed after the name of the company The date line shows a specific date The date line shows a period of time The company name is listed after the name of the financial statement The company name is listed at the top of the heading

The date line shows a specific date The company name is listed at the top of the heading

Select all that apply The heading of every financial statement contains several line items. Identify the correct items from the list below. The date the financial statement was prepared The date or time period the financial statement covers The title of the statement The auditor of the financial statement The company name.

The date or time period the financial statement covers The title of the statement The company name.

The heading of every financial statement contains several line items. Identify the correct items from the list below. (Check all that apply.) The title of the statement The auditor of the financial statement The date the financial statement was prepared The company name. The date or time period the financial statement covers

The title of the statement The company name. The date or time period the financial statement covers

True or False: The date line of a balance sheet depicts a specific day and not a period of time.

True

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time.

dividends

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time. (Select the accounts below which will correctly complete this question.)

dividends

Final totals in a financial statement are___________ underlined.

double

The _____ is the first financial statement to be prepared.

income statement

Buying and selling of long-term assets such as land and equipment would be included in the (operating/investing/financing) ____________activities section of the Statement of Cash Flows.

investing

Select all that apply The three sections of the statement of cash flows includes all of the following: operating investing accounting financing cash

operating investing financing

A (proprietorship/partnership/corporation) ________is a business entity owned by one person.

proprietorship