Accounting Final 6

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Question 10 / 1 pts Mod 6.1: If creditors could receive one financial statement that would best help them know what resources a given business had and how such resources were financed, which of the following financial statements would s/he request? You Answered Statement of Cash Flows Incorrect. The Statement of Cash Flows describes how cash changed from one period to the next using the formula Beginning Cash + Operating Cash Flows + Investing Cash Flows + Financing Cash Flows = Ending Cash. It only focuses on one resource and how it was financed, so this is not the best answer. Correct Answer Statement of Financial Position Statement of Shareholder Equity Income Statement Incorrect. The Statement of Financial Position, also known as the Balance Sheet indicates what resources a business has and how they were financed using the formula Assets = Liabilities + Equity. Question 20 / 1 pts Mod 6.1: Which of the following statements focuses primarily on indicating a company's profitability for a given period of time? Statement of Taxes Paid Correct Answer Income Statement Balance Sheet You Answered Statement of Cash Flows Incorrect. The Statement of Cash Flows describes how and why a business' cash changed from the beginning of the year to the end of the year. Although, depending on the format provided, it may indicate the business' Net Income, it does not provide all the details that describe how the Net Income was earned, that is why the creditor would need the Income Statement which provides those details. Incorrect. The correct answer is the Income Statement, which is also known as the Statement of Operations. It indicates a business' profitability for a given period of time. Question 30.67 / 1 pts Mod 6.1: Which of the following financial statements must US publicly traded companies provide to the SEC each year? Choose all that apply. Correct! Statement of Shareholder Equity Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Statement of Working Capital Correct! Statement of Financial Position Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Correct Answer Income Statement Question 41 / 1 pts Mod 6.2: How does the Net Income, as reported on the Income Statement, articulate with the Balance Sheet? The amount of Net Income earned during the year appears directly on the Balance Sheet. The amount of Net Income earned during the year appears on the Statement of Operations and then is added to the Investing Activities on the Statement of Cash Flows. The amount of Net Income earned during the year is added to Capital Contributions as is reported on the Statement of Shareholder Equity and the ending balance of Capital Contributions appears directly on the ending Balance Sheet. Correct! The amount of Net Income earned during the year is added to Retained Earnings and is reported on the Statement of Shareholder Equity and then the ending balance of Retained Earnings appears directly on the ending Balance Sheet. Correct. Net Income is added to Retained Earnings (as would appear on the Statement of Shareholder Equity) and then the ending Retained Earnings appears directly on the Balance Sheet. Correct. Net Income is added to Retained Earnings (as would appear on the Statement of Shareholder Equity) and then the ending Retained Earnings appears directly on the Balance Sheet. Question 50 / 1 pts Mod 6.2: Choose the statements from the list below that will be labeled "As of" or "As at" a specific point in time and are described as being a "financial photograph" or "financial snapshot" of the company as opposed to being a financial video covering a period of time. Statement of Cash Flows Correct! Balance Sheet Correct. Balance sheets are like a financial photograph because they provide a listing of all of a company's assets, liabilities and equity as of a point in time, as if you took a photograph and then, based on the photograph went and wrote down all the assets, liabilities and equity that existed as of that point in time. Statement of Retained Earnings Correct Answer Statement of Financial Position You Answered Income Statement Incorrect. The Income Statement is prepared to cover a period of time. Its purpose is to describe the operations and other income producing activities (Revenues - Expenses) that caused a company's equity (particularly Retained Earnings) to change from the beginning equity balance, as noted on the beginning balance sheet, to the ending equity balance, as noted on the ending balance sheet. Income Statements are like a motion picture describing the Revenues and Expenses that helped increase and decrease Retained Earnings over a period of time. Incorrect. The Statement of Shareholder Equity, which includes the Statement of Retained Earnings, the Income Statement, and the Statement of Cash Flows are the three financial statements that articulate into the Balance Sheet and help describe how the balances on the Balance Sheet changed from the beginning of the period to the end of the period. Question 60 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. owners contributed cash of $70. What is the balance in Charlie Co.'s liabilities at the end of Day 1? You Answered Correct Answers20 (with margin: 0)0 (with margin: 0) Incorrect. In this case Charlie Co. did not increase or decrease its borrowings, so liabilities are not affected and therefore remain at $20. FYI: Assets and equity will increase by the amount the owners contributed (assets increase because cash was received and equity increases because the owners are the ones who financed the increase in assets). Question 70 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $9. What is the balance in Charlie Co.'s liabilities at the end of Day 1? You Answered Correct Answer11 Incorrect. Liabilities of $20 will be reduced by the payment on the account payable because accounts payable are liabilities and they reduce when they are paid off. Question 80 / 1 pts Mod 6.3: At the beginning of Day 1, Customer Bob still owed Company Z $100 related to a purchase Bob made last year. During Day 1, Bob paid $80 of the amount he owed. What will be the NET effect on Company Z's assets, liabilities and equity resulting from Bob's cash payment? You Answered Assets (decrease), Liabilities (decrease), Equity (no NET effect) Incorrect. Assets of $100 will be increased by the $80 of cash received BUT in the same transaction, assets will decrease by $80 because Company B's accounts receivable from Customer Bob will be reduced by $80, thus resulting in no NET effect on assets because assets remain the same at $100. Liabilities and Equity have nothing to do with this transaction and therefore are unaffected. Assets (increase), Liabilities (decrease), Equity (no NET effect) Assets (no NET effect), Liabilities (decrease), Equity (increases) Correct Answer Assets (no NET effect), Liabilities (no NET effect), Equity (no NET effect) Incorrect. Assets of $100 will be increased by the $80 of cash received BUT in the same transaction, assets will decrease by $80 because Company B's accounts receivable from Customer Bob will be reduced by $80, thus resulting in no NET effect on assets because assets remain the same at $100. Liabilities and Equity have nothing to do with this transaction and therefore are unaffected. Question 90 / 1 pts Mod 6.4: Which of the following is a reliable, free source for obtaining a company's audited financial statements? Form Retrieval Evidence Exhibits (FREE) You Answered Annual Report Filing Service (ARFS) Incorrect. This is a garbage answer that I just made up from scratch. The correct answer is EDGAR. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Complete Electronic Form Filings Service (CEFFS) Correct Answer Electronic Data Gathering, Analysis and Retrieval (EDGAR) Incorrect. This is a garbage answer that I just made up from scratch. The correct answer is EDGAR. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Question 100 / 1 pts Mod 6.4: The management of publicly-traded companies (particularly the CEO and CFO) are required to submit personal certifications that, according to their knowledge: (there may be more than one, choose all that apply) Correct Answer The internal controls over financial reporting are reliable. You Answered The auditor who performed the audit is independent of the company. Incorrect. Although it is a requirement that the external auditors of a company be independent in fact and in appearance of the company, the management of the company is not required to certify to such fact. Correct! The financial statements are not materially misstated. Correct. This is one of the key certifications that the CEO and CFO must include in the Form 10-K filing. The shareholders' stock value will increase in the future. Inorrect. See explanations above.

Question 10 / 1 pts Mod 6.1: Which of the following financial statement names are used to describe the statement that would be best to use when analyzing a business' profitability for a specific period of time? You Answered Statement of Financial Position Incorrect. The Statement of Financial Position is another name for the Balance Sheet. It includes the business' assets and who has claim to those assets (i.e. Liabilities and Equity). It does not focus on the Revenues and Expenses that lead to profitability. Correct! Profit and Loss Account Correct. The Profit and Loss Account is the word used internationally for the Income Statement. It details all of a business' revenues and expenses that led up to its Net Income for a specific period of time. Correct! Income Statement Correct. The Income Statement details all of a business' revenues and expenses that led up to its Net Income for a specific period of time. Statement of Retained Earnings Correct Answer Statement of Operations You Answered Statement of Cash Flows Incorrect. The Statement of Cash Flows focuses on the operating, investing and financing activities that resulted in changes in the business' cash flow balance. Although an analyzing the operating cash flows you can get a feel for a business' profitability, such does not focus on the earnings of income, but rather the cash flows of such income, so this would not be the best answer. Balance Sheet Incorrect. See the explanations above. Question 21 / 1 pts Mod 6.1: Choose all of the statements in the following list that represent one of the common names used to describe the four general-purpose financial statements as required by US GAAP. Make sure you click on ALL that apply because some of these are synonyms. When you are done, you could have more or less than four names selected. Correct! Statement of Cash Flows Correct. The Statement of Cash Flows is one of the four general purpose financial statements. Correct! Income Statement Correct. The Income Statement is one of the four general purpose financial statements and is also known as the Statement of Operations. Correct! Statement of Operations Correct. The Statement of Operations is one of the four general purpose financial statements and is also known as the Income Statement. Statement of Taxes Paid Correct! Statement of Financial Position Correct. The Statement of Financial Position is one of the four general purpose financial statements and is also known as the Balance Sheet. Correct! Balance Sheet Correct. The Balance Sheet is one of the four general purpose financial statements and is also known as the Statement of Financial Position. Correct! Statement of Shareholder Equity Correct. The Statement of Shareholder Equity is one of the four general purpose financial statements, it is also known as the Statement of Stockholder Equity. A sub-statement of the Statement of Shareholder Equity is known as the Statement of Retained Earnings. Statement of Changes in Working Capital Correct. See the individual explanations above. Question 30 / 1 pts Mod 6.1: Based on the following account balances as of and for the year ended 12/31/X4, compute Company A's Net Income. Assets $8, Shareholder Equity $10, Revenues $10, Liabilities $3, Expenses $8, Dividends $7. You Answered Correct Answer2 Incorrect. The standard equation to compute Net Income is Revenues - Expenses. Just take the amount of Revenues provided and deduct the amount of Expenses provided. Please note that Dividends are NOT an expense. They are a direct reduction of a company's equity in its Retained Earnings account. Question 41 / 1 pts Mod 6.2: What does it mean for the general purpose financial statements to "articulate"? The financial statements have been audited by an auditor. The financial statements result in ever increasing amounts. The financial statements are written in English. Correct! The financial statements interrelate to each other. Correct answer comments Correct. The financial statements articulate because changes in one financial statement, such as the Income Statement influences other financial statements such as the Statement of Retained Earnings and the Balance Sheet. Correct. The financial statements articulate because changes in one financial statement, such as the Income Statement influences other financial statements such as the Statement of Retained Earnings and the Balance Sheet. Question 51 / 1 pts Mod 6.2: Choose all of the financial statements below that describe changes in accounts over a period of time that would include a title indicating "For the period ended..." Choose all that apply. Correct! Statement of Cash Flows Correct. The Statement of Cash Flows tracks changes in the company's cash balances over a given period of time as caused by operating, investing and financing activities. Correct! Profit and Loss Account Correct. The Profit and Loss Account is just another name for the Income Statement, which is also known as the Statement of Operations and the Statement of Comprehensive Income. The Income Statement tracks changes in the Owner's Equity (particularly Retained Earnings) resulting from Revenues and Expenses over a period of time. Statement of Financial Position Correct! Statement of Comprehensive Income Correct. The Statement of Comprehensive Income is just another name for the Income Statement, which is also known as the Statement of Operations and the Profit and Loss Account. The Income Statement tracks changes in the Owner's Equity (particularly Retained Earnings) resulting from Revenues and Expenses over a period of time. Balance Sheet Correct. The Income Statement, Statement of Cash Flows, and Statement of Shareholder Equity (which includes the Statement of Retained Earnings) all provide information describing changes in account balances over a period of time. Question 60 / 1 pts Mod 6.3: Bunson Co. began Day 1 with $1,000 of assets ($300 of which was inventory). It also had $300 of liabilities and $700 of equity. On Day 1 it ordered $200 of inventory to be delivered in 5 days. Compute Bunson Co.'s ending balances for assets, liabilities and equity. You Answered Assets $1,200; Liabilities $300, Equity $900. Assets $800; Liabilities $300, Equity $500. Correct Answer Assets $1,000; Liabilities $300, Equity $700. Assets $1,200; Liabilities $500, Equity $700. Incorrect. All the balance sheet balances remain unchanged. Assets are $1,000, Liabilities are $300, and Equity is $700. A purchase order to receive inventory some time in the future has no direct impact on the balance sheet because 1) you have not obtained control of the inventory yet, so assets are unaffected and 2) you are not obligated to pay for the inventory yet, so liabilities are unaffected, and 3) you have not sold the inventory to customers yet, so equity is not affected. Question 70 / 1 pts Mod 6.3: At the end of the prior month Sage Co's balance sheet had the following balances: Assets $200, Liabilities $160, Equity $40 On Day 1, Sage Co. sold $53 of inventory to customers for $83 on account (i.e. on credit) What is the balance in Sage Co.'s equity at the end of Day 1? You Answered Correct Answer70 Incorrect. Equity will increase by the gross margin earned on this sale as follows: Beginning Equity $40 + Net Income (i.e. in this case the only net income we have was generated by this sale with Sales Revenues Less the Cost of the Goods Sold) = Ending Equity Question 80 / 1 pts Mod 6.3: When a company orders product from a supplier to be delivered at a later date, what impact will such order have on the company's income statement, statement of owners' equity, balance sheet and statement of cash flows? Correct Answer Income statement (none), statement of owners' equity (none), balance sheet (none) and statement of cash flows (none). You Answered Income statement (reduce income), statement of owners' equity (none), balance sheet (increase assets, increase liabilities, no change to equity) and statement of cash flows (none). Incorrect. Product that simply has been ordered has no effect on the company's financial statements because no asset has been received and no obligations have been incurred. Income statement (none), statement of owners' equity (none), balance sheet (increase assets, increase liabilities, no change to equity) and statement of cash flows (none). Income statement (increase expenses), statement of owners' equity (reduce owners' equity), balance sheet (reduce assets, reduce liabilities, reduce equity) and statement of cash flows (reduce cash). Incorrect. Product that simply has been ordered has no effect on the company's financial statements because no asset has been received and no obligations have been incurred. Question 91 / 1 pts Mod 6.4: Assume that you are an investor that just lost $1 million because you invested in a company whose Net Income was fraudulently overstated by a material amount. Which of the following groups is most likely at fault for the preparation of the fraudulent financial statements that you relied on to your detriment? The external auditor (i.e. the CPA) The Public Company Accounting Oversight Board (PCAOB) The company's shareholders Correct! The company's management Correct. Management is responsible for preparing the financial statements; therefore, if you want to sue someone for poor preparation, it would have to be company management. The Securities and Exchange Commission (SEC) Correct. Management is responsible for preparing the financial statements; therefore, if you want to sue someone for poor preparation, it would have to be company management. Question 101 / 1 pts Mod 6.4: In a large, publicly-traded corporation, who is directly responsible for selecting, and approving the hiring of, the core management team (i.e. the CEO, CFO, COO, etc.)? The shareholders of the company The auditor (CPA) Correct! The board of directors of the company Correct. The shareholders elect the board of directors then the board of directors select and approve the hiring of the core management team. The human resources manager Correct. The shareholders elect the board of directors then the board of directors select and approve the hiring of the core management team.

Question 10 / 1 pts Mod 6.3: At the beginning of Day 1, Customer Bob still owed Company Z $100 related to a purchase Bob made last year. During Day 1, Bob paid $80 of the amount he owed. What will be the NET effect on Company Z's assets, liabilities and equity resulting from Bob's cash payment? Correct Answer Assets (no NET effect), Liabilities (no NET effect), Equity (no NET effect) You Answered Assets (decrease), Liabilities (decrease), Equity (no NET effect) Incorrect. Assets of $100 will be increased by the $80 of cash received BUT in the same transaction, assets will decrease by $80 because Company B's accounts receivable from Customer Bob will be reduced by $80, thus resulting in no NET effect on assets because assets remain the same at $100. Liabilities and Equity have nothing to do with this transaction and therefore are unaffected. Assets (no NET effect), Liabilities (decrease), Equity (increases) Assets (increase), Liabilities (decrease), Equity (no NET effect) Incorrect. Assets of $100 will be increased by the $80 of cash received BUT in the same transaction, assets will decrease by $80 because Company B's accounts receivable from Customer Bob will be reduced by $80, thus resulting in no NET effect on assets because assets remain the same at $100. Liabilities and Equity have nothing to do with this transaction and therefore are unaffected. Question 21 / 1 pts Mod 6.3: Spencer Co. started the current month with Assets of $90, Liabilities of $70, Equity of $20. Because he needed more assets he borrowed $26 from the bank at 8% simple interest to be repaid in full in 5 years. How much in assets does Spencer Co. have immediately after obtaining the loan from the bank? Correct! Correct Answer116 Correct. Spencer Co. started with $90 in assets and then obtained a loan from the bank, thus increasing assets (in the form of cash). Therefore, the ending cash balance is $90 + the new cash obtained from the bank loan. Question 30 / 1 pts Mod 6.3: When a company orders product from a supplier to be delivered at a later date, what impact will such order have on the company's income statement, statement of owners' equity, balance sheet and statement of cash flows? Correct Answer Income statement (none), statement of owners' equity (none), balance sheet (none) and statement of cash flows (none). You Answered Income statement (none), statement of owners' equity (none), balance sheet (increase assets, increase liabilities, no change to equity) and statement of cash flows (none). Incorrect. Product that simply has been ordered has no effect on the company's financial statements because no asset has been received and no obligations have been incurred. Income statement (reduce income), statement of owners' equity (none), balance sheet (increase assets, increase liabilities, no change to equity) and statement of cash flows (none). Income statement (increase expenses), statement of owners' equity (reduce owners' equity), balance sheet (reduce assets, reduce liabilities, reduce equity) and statement of cash flows (reduce cash). Incorrect. Product that simply has been ordered has no effect on the company's financial statements because no asset has been received and no obligations have been incurred. Question 40 / 1 pts Mod 6.3: At the end of the prior month Sage Co's balance sheet had the following balances: Assets $200, Liabilities $160, Equity $40 On Day 1, Sage Co. sold $8 of inventory to customers for $84 on account (i.e. on credit) What is the balance in Sage Co.'s assets at the end of Day 1? You Answered Correct Answer276 Incorrect. Sage Co's ending assets would be computed as follows: Beginning Assets: $Correct. Sage Co's ending assets would be computed as follows: Beginning Assets: $200 + Increase in accounts receivable for sales price charged to the customer for the inventory - Decrease in inventory for the cost of the goods (i.e. inventory) sold to the customer = Ending Assets200 + Increase in accounts receivable for sales price charged to the customer for the inventory - Decrease in inventory for the cost of the goods (i.e. inventory) sold to the customer = Ending Assets Question 50 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $12. What is the balance in Charlie Co.'s liabilities at the end of Day 1? You Answered Correct Answer8 Incorrect. Liabilities of $20 will be reduced by the payment on the account payable because accounts payable are liabilities and they reduce when they are paid off.

Question 10 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $8. What is the balance in Charlie Co.'s liabilities at the end of Day 1? You Answered Correct Answer12 Incorrect. Liabilities of $20 will be reduced by the payment on the account payable because accounts payable are liabilities and they reduce when they are paid off. Question 20 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $18. What is the balance in Charlie Co.'s assets at the end of Day 1? You Answered Correct Answer82 Incorrect. Assets of $100 will be reduced by the payment on the account payable because cash (which is an asset) would have been used to make such payment. Question 30 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $7. Enter the balance in Charlie Co.'s equity at the end of Day 1 into the box below (do not enter $ symbols): You Answered Correct Answer80 Incorrect. Equity is unaffected in this case because assets (i.e. cash) and liabilities (i.e. accounts payable) reduced by the same amount of the payment. This transaction does not impact the owner's equity in the company, in fact it remains identical to what it was just prior to the payment. Question 41 / 1 pts Mod 6.3: Compute the ending asset, liability and equity balances for a company that began the month with the following balances: Assets $700, Liabilities $140, Equity $560 And then issued $400 of stock to investors in exchange for cash. Type the dollar amount of your desired answers into the blank boxes below (Example: 700): Total Assets: Total Liabilities: Total Equity: Answer 1:Correct!1100Correct AnswerCorrect. Beginning assets were $700 and then additional assets of $400 were received when the investors paid the company cash in exchange for stock (i.e. ownership shares, the term stock is used here in the American form indicating ownership shares) thus resulting in ending equity of $1,100.Correct Answer$1,100 Correct Answer1,100 Correct Answer$1100 Answer 2:Correct!140Correct AnswerCorrect. The issuance of ownership shares to investors in exchange for cash has no effect on liabilities, therefore, liabilities remain at $140.Correct Answer$140 Answer 3:Correct!960Correct AnswerIncorrect. Beginning equity was $560 and $400 of additional equity shares were issued resulting in ending equity of $960.Correct Answer$960 Correct. Beginning assets were $700 + $400 of cash = $1,100. Beginning liabilities were $140 and the issuance of stock to investors had no impact on liabilities because the company did not borrow any money from the investors, but rather provided them ownership shares instead. Beginning equity was $560 and $400 of additional equity shares were issued resulting in ending equity of $960. Question 50.67 / 1 pts Mod 6.3: Compute the ending balances for the following accounts assuming the company started the month with $200 of cash, $300 of inventory, $100 of liabilities and $400 of Partners' Capital and then submitted an order to its supplier to purchase $900 of inventory. Type the dollar amount of your desired answer into the blank boxes below (Example: 700): Total Assets: Total Liabilities: Total Equity: Answer 1:You Answered900Correct Answer$500 Correct Answer500 Answer 2:Correct!100Correct AnswerCorrect. Because the company has not obtained the inventory yet, it is not yet obligated to pay, therefore, none of the balance sheet accounts are affected. Total liabilities are still $100.Correct Answer$100 Answer 3:Correct!400Correct AnswerTotal equity of $400 is not affected by purchase orders. When the inventory is received (depending on when the company obtains possession as indicated in the shipping terms) its assets and liabilities will increase by the same amount assuming the company purchased the inventory on credit but the equity will still remain unchanged until the inventory is sold, stolen or damaged.Correct Answer$400

Question 10 / 1 pts Mod 6.4: Corporate management is often expected to meet the expectations of its employees, its stakeholders, board of directors and its shareholders. Which of these noted groups is the largest of the four and includes all of the other three groups? You Answered shareholders Incorrect. Shareholders are those individuals or entities who own all of the company's shares. Shareholders own the company and are impacted by the company's decisions so they are an example of a "stakeholder", but they are only one group of many that make up all stakeholders who are impacted by the company's decisions. board of directors Correct Answer stakeholders employees Incorrect. See explanations above. Stakeholders encompass anyone and everyone impacted by the decisions of the company. This is the largest, most all-encompassing group of those listed. Question 20 / 1 pts Mod 6.4: Which of the following reports includes all others in the list below: Financial statements and related footnotes Report of Management of Internal Control over Financial Reporting Annual report to shareholders You Answered Auditors' reports on the financial statements and on the effectiveness of internal control over financial reporting Incorrect. The auditors' reports on the financial statements and on the effectiveness of internal control over financial reporting focuses solely on the auditors' assessment of the company's financial statements and internal controls. They do not include any of the other listed reports. The Form 10-K includes all of the listed reports and certifications and is the best answer. Correct Answer Form 10-K Incorrect. The Form 10-K includes all of the other listed reports and certifications and is to be submitted to the SEC each year. Question 30.25 / 1 pts Mod 6.4: Use the drop-down lists next to each report or certification below to indicate who is required to prepare the noted item. Annual report to shareholders [ Select ] ["Company management", "External auditor"] Form 10-K [ Select ] ["Company management", "External auditor"] Financial Statements and related footnotes Company management Management certifications External auditor Answer 1:Correct AnswerCompany management You AnsweredExternal auditor Incorrect. The external auditor does not PREPARE the annual report but may audit components of it. Answer 2:Correct AnswerCompany management You AnsweredExternal auditor Incorrect. The external auditor does not PREPARE the Form 10-K but may audit components of it. Answer 3:Correct!Company management Correct. Answer 4:You AnsweredExternal auditor Incorrect. The external auditor is not involved in the preparation of the management certifications.Correct AnswerCompany management (particularly the CEO and CFO) Question 41 / 1 pts Mod 6.4: If you were a potential investor in a publicly-traded company and you could only request the company to provide you one of the following documents to assist you in making your investment decision, which one would provide you the most extensive and reliable information? Correct! Form 10-K Correct. The Form 10-K includes all of the other items listed in this question as well as many other things. It is the most extensive and reliable information available on the list. Management certifications Financial statements and related footnotes Annual Report to Shareholders Auditors' report on the financial statements Correct. The Form 10-K includes all of the other items listed in this question as well as many other things. It is the most extensive and reliable information available on the list. Question 51 / 1 pts Mod 6.4: Publicly traded companies in the United States MUST be audited by: Certified Public Accountants (CPAs) Correct! Certified Public Accountants (CPAs) who are registered with the Public Accounting Oversight Board (PCAOB) Correct. If a state-licensed CPA wants to perform an audit of a publicly-traded company subject to SEC regulations, the CPA must comply with additional rules and register with the Public Company Accounting Oversight Board (PCAOB). Because of these additional registration requirements, many smaller CPA firms do not perform audits of publicly-traded companies. Certified Public Accountants (CPAs) who are also members of the American Institute of Certified Public Accountants (AICPA) Members of the Institute of Internal Auditors (IIA) Correct. If a state-licensed CPA wants to perform an audit of a publicly-traded company subject to SEC regulations, the CPA must comply with additional rules and register with the Public Company Accounting Oversight Board (PCAOB). Because of these additional registration requirements, many smaller CPA firms do not perform audits of publicly-traded companies.

Question 10 / 1 pts Mod 6.4: Choose the best possible answer. In order to perform an audit of a publicly-traded company an individual must, at a minimum be a: Stakeholder in the company CEO Correct Answer CPA CFO You Answered Shareholder in the company Incorrect. It is illegal for a Shareholder to audit the company that s/he holds shares in because s/he would not be independent in fact or in appearance. They might choose to all a company to overstate its income and get a clean audit report just so that their stock price in the company would rise. Incorrect. See explanations above. Question 21 / 1 pts Mod 6.4: Assume that you are an investor that just lost $1 million because you invested in a company whose Net Income was fraudulently overstated by a material amount. Which of the following groups is most likely at fault for the preparation of the fraudulent financial statements that you relied on to your detriment? The Securities and Exchange Commission (SEC) The external auditor (i.e. the CPA) The Public Company Accounting Oversight Board (PCAOB) Correct! The company's management Correct. Management is responsible for preparing the financial statements; therefore, if you want to sue someone for poor preparation, it would have to be company management. The company's shareholders Correct. Management is responsible for preparing the financial statements; therefore, if you want to sue someone for poor preparation, it would have to be company management. Question 31 / 1 pts Mod 6.4: Publicly traded companies in the United States MUST be audited by: Correct! Certified Public Accountants (CPAs) who are registered with the Public Accounting Oversight Board (PCAOB) Correct. If a state-licensed CPA wants to perform an audit of a publicly-traded company subject to SEC regulations, the CPA must comply with additional rules and register with the Public Company Accounting Oversight Board (PCAOB). Because of these additional registration requirements, many smaller CPA firms do not perform audits of publicly-traded companies. Certified Public Accountants (CPAs) who are also members of the American Institute of Certified Public Accountants (AICPA) Certified Public Accountants (CPAs) Members of the Institute of Internal Auditors (IIA) Correct. If a state-licensed CPA wants to perform an audit of a publicly-traded company subject to SEC regulations, the CPA must comply with additional rules and register with the Public Company Accounting Oversight Board (PCAOB). Because of these additional registration requirements, many smaller CPA firms do not perform audits of publicly-traded companies. Question 41 / 1 pts Mod 6.4: Which of the following is a reliable, free source for obtaining a company's audited financial statements? Correct! Electronic Data Gathering, Analysis and Retrieval (EDGAR) Correct. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Form Retrieval Evidence Exhibits (FREE) Complete Electronic Form Filings Service (CEFFS) Annual Report Filing Service (ARFS) Incorrect. This is a garbage answer that I just made up from scratch. The correct answer is EDGAR. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Question 50 / 1 pts Mod 6.4: Which of the following groups has the primary responsibility to prepare and submit a corporation's audited financial statements to the Securities and Exchange Commission (SEC)? the corporation's independent accountant (CPA) the board of directors Correct Answer corporate management You Answered the shareholders Incorrect. Management is responsible to prepare the financial statements, so that they can be submitted to the SEC, which then makes them available to the shareholders. Sometimes management also holds shares and therefore are shareholders, but it is in their role of management that they are required to prepare the financial statements. Incorrect. Corporate management is required to prepare, have audited and submit their corporation's financial statements each year.

Question 10 / 1 pts Mod 6.1: Which of the following statements focuses primarily on indicating a company's profitability for a given period of time? Balance Sheet Statement of Taxes Paid Correct Answer Income Statement You Answered Statement of Cash Flows Incorrect. The Statement of Cash Flows describes how and why a business' cash changed from the beginning of the year to the end of the year. Although, depending on the format provided, it may indicate the business' Net Income, it does not provide all the details that describe how the Net Income was earned, that is why the creditor would need the Income Statement which provides those details. Incorrect. The correct answer is the Income Statement, which is also known as the Statement of Operations. It indicates a business' profitability for a given period of time. Question 20 / 1 pts Mod 6.1: Based on the following account balances as of and for the year ended 12/31/X4, compute Company A's Net Income. Assets $8, Shareholder Equity $10, Revenues $10, Liabilities $3, Expenses $8, Dividends $7. You Answered Correct Answer2 Incorrect. The standard equation to compute Net Income is Revenues - Expenses. Just take the amount of Revenues provided and deduct the amount of Expenses provided. Please note that Dividends are NOT an expense. They are a direct reduction of a company's equity in its Retained Earnings account. Question 30 / 1 pts Mod 6.1: If you wanted to clearly see the total that all owners had invested in a given company at the beginning of a year and see how such total investment had changed during the year to arrive at the owners' ending balance, which of the following statements would be most helpful to you? Statement of Comprehensive Income You Answered Statement of Financial Position Incorrect. Although the Balance Sheet, also known as the Statement of Financial Position, does indicate an owner's beginning and ending equity in a company, it does not clearly indicate what caused the changes in the owner's equity during the year. Balance Sheet Correct Answer Statement of Shareholder Equity Incorrect. The purpose of the Statement of Shareholder Equity is to provide information about the shareholders' beginning equity balances, changes in those balances during the year, and the ending balances. See additional explanations above as to why your response was not the best of those provided. Question 40 / 1 pts Mod 6.2: Assume GHI company's beginning Retained Earnings was $38 and its ending Retained Earnings was $83. In addition, during the year its accounts receivable increased by $3, its owners contributed an additional $2 to increase their ownership stake in the company, it had Expenses of $2 and declared and paid $8 of dividends. Compute the amount of Revenues that GHI must have earned during the year. You Answered Correct Answer55 Correct. Hopefully you just put in the known information in the Retained Earnings formula and Income Statement formulas below and solved for the unknown Revenues as follows: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings And the Net Income to be used above, is computed as follows: Revenues - Expenses = Net Income This is a great example of how revenues, expenses and dividends articulate into and influence the year-end balances on the balance sheet. The other information provided in this problem about Capital Contributions and the change in Accounts Receivable have no direct effect on the computation of Retained Earnings. They are "smoke" and irrelevant to this solution. Question 50.33 / 1 pts Mod 6.2: Here is a list of financial statements. Click on all of the financial statements listed below that provide information about changes in accounts over a period of time and would NOT be dated "As of" a given date, but rather "For the period ended" a given date. Correct Answer Statement of Shareholder Equity Correct! Income Statement Correct. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Balance Sheet Correct! Statement of Cash Flows Correct. The Statement of Cash Flows provides information about the impact on the company's beginning to ending cash balances as caused by its operating, investing and financing cash flows over a period of time, such as "For the year ended 12/31/X1". You Answered Statement of Financial Position Incorrect. The Statement of Financial Position is just another name for the balance sheet. It provides a financial snapshot of all of a company's assets, liabilities and equity "As of" a point in time, such as "As of 12/31/X1". Question 60 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. owners contributed cash of $15. What is the balance in Charlie Co.'s equity at the end of Day 1? You Answered Correct Answer95 Incorrect. Charlie Co. started with $80 in Equity and then the owners made additional contributions. Therefore, the new ending equity balance is $80 + the new contributions from the owners. Question 70.33 / 1 pts Mod 6.3: Compute the ending asset, liability and equity balances for a company that began the month with the following balances: Assets $700, Liabilities $140, Equity $560 And then issued $400 of stock to investors in exchange for cash. Type the dollar amount of your desired answers into the blank boxes below (Example: 700): Total Assets: Total Liabilities: Total Equity: Answer 1:You Answered700Correct Answer1100 Correct Answer$1,100 Correct Answer1,100 Correct Answer$1100 Answer 2:Correct!140Correct AnswerCorrect. The issuance of ownership shares to investors in exchange for cash has no effect on liabilities, therefore, liabilities remain at $140.Correct Answer$140 Answer 3:You Answered560Correct Answer$960 Correct Answer960 Question 80 / 1 pts Mod 6.3: At the beginning of Day 1, Company D had receivables of $200, then during Day 1, one of its customers showed up and paid off receivables in the amount of $70. Assuming Company D started the day with Assets of $500, Liabilities of $200 and Equity of $300, what will be Company D's TOTAL assets at the end of Day 1? You Answered Correct Answers500 (with margin: 0) Incorrect. NET Assets remain unchanged because the decrease in the receivable (which is an asset) resulting from the payment is perfectly offset by the increase in cash (which is also an asset) resulting from the payment. Question 90.5 / 1 pts Mod 6.4: Use the drop-down lists next to each report or certification below to indicate who is required to prepare the noted item. Annual report to shareholders [ Select ] ["External auditor", "Company management"] Form 10-K [ Select ] ["External auditor", "Company management"] Financial Statements and related footnotes External auditor Management certifications [ Select ] ["Company management (particularly the CEO and CFO)", "External auditor"] Answer 1:You AnsweredExternal auditor Incorrect. The external auditor does not PREPARE the annual report but may audit components of it.Correct AnswerCompany management Answer 2:Correct!Company management Correct. Answer 3:You AnsweredExternal auditor Incorrect. The external auditor does not PREPARE the financial statements and related footnote disclosures does audit them.Correct AnswerCompany management Answer 4:Correct!Company management (particularly the CEO and CFO) Correct. Question 100 / 1 pts Mod 6.4: Choose the true statement from those listed below: Internal auditors are required to issue an annual audit report on their company's financial statements to be submitted to the SEC each year. The "Annual Report to Shareholders" is required to include the company's audited financial statements and footnotes. You Answered Management is required to certify to the reliability of the company's financial statements and to the auditors' independence. Incorrect. Management certifications are signed statements by a company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO) in which they certify to the reliability of the company's financial statements and to the internal controls that were put in place to help ensure the reliability of such statements. Correct Answer Auditors of publicly traded company's are required to submit two audit reports for their public-clients each year 1) on the reliability of the company's financial statements and 2) on the effectiveness of the company's internal controls over financial reporting. Incorrect. Auditors of publicly traded company's are required to submit two audit reports for their public-clients each year 1) on the reliability of the company's financial statements and 2) on the effectiveness of the company's internal controls over financial reporting. Before the new regulations introduced in the Sarbanes-Oxley Act of 2002, auditors only had to issue an audit report on the company's financial statements, now they must also issue an audit report on the effectiveness of a company's internal controls over financial reporting. See additional explanations above.

Question 10.75 / 1 pts Mod 6.1: Match the name of the financial statement on the left with its respective equation on the right. You AnsweredBalance Sheet Assets + Liabilities = Equity Correct. The Balance Sheet equation is: Assets = Liabilities + Equity Assets = Liabilities + Equity Correct!Income Statement Revenues - Expenses = Net Income Correct!Statement of Shareholder Equity Beginning Shareholder Equity + Additions to Shareholder Equity - Subtractions from Shareholder Equity = Ending Shareholder Equity Correct!Statement of Cash Flows Beginning Cash +or- Operating Cash Flows +or- Investing Cash Flows +or- Financing Cash Flows = Ending Cash Other Incorrect Match Options:Assets + Liabilities = EquityRevenues + Expenses = Net Income Question 20 / 1 pts Mod 6.1: Based on the following account balances as of and for the year ended 12/31/X4, compute Company A's Net Income. Assets $3, Shareholder Equity $8, Revenues $8, Liabilities $4, Expenses $2, Dividends $8. You Answered Correct Answer6 Incorrect. The standard equation to compute Net Income is Revenues - Expenses. Just take the amount of Revenues provided and deduct the amount of Expenses provided. Please note that Dividends are NOT an expense. They are a direct reduction of a company's equity in its Retained Earnings account. Question 30 / 1 pts Mod 6.1: Which of the following statements focuses primarily on indicating a company's profitability for a given period of time? You Answered Statement of Cash Flows Incorrect. The Statement of Cash Flows describes how and why a business' cash changed from the beginning of the year to the end of the year. Although, depending on the format provided, it may indicate the business' Net Income, it does not provide all the details that describe how the Net Income was earned, that is why the creditor would need the Income Statement which provides those details. Correct Answer Income Statement Statement of Taxes Paid Balance Sheet Incorrect. The correct answer is the Income Statement, which is also known as the Statement of Operations. It indicates a business' profitability for a given period of time. Question 40 / 1 pts Mod 6.2: Here is a list of financial statements. Click on all of the financial statements listed below that provide information about changes in accounts over a period of time and would NOT be dated "As of" a given date, but rather "For the period ended" a given date. Correct Answer Income Statement You Answered Statement of Financial Position Incorrect. The Statement of Financial Position is just another name for the balance sheet. It provides a financial snapshot of all of a company's assets, liabilities and equity "As of" a point in time, such as "As of 12/31/X1". Balance Sheet Correct! Statement of Shareholder Equity Correct. The Statement of Shareholder Equity provides information about the changes in the Shareholders' Equity over a period of time from the beginning balance sheet date to the ending balance sheet date. Because it provides information regarding changes in balances over a period of time, it will be labeled similar to "For the year ended 12/31/X1". Correct Answer Statement of Cash Flows Incorrect. The balance sheet provides a financial snapshot of all of a company's assets, liabilities and equity "As of" a point in time, such as "As of 12/31/X1". Question 50 / 1 pts Mod 6.2: Assume GHI company's beginning Retained Earnings was $36 and its ending Retained Earnings was $87. In addition, during the year its accounts receivable increased by $5, its owners contributed an additional $6 to increase their ownership stake in the company, it had Expenses of $9 and declared and paid $7 of dividends. Compute the amount of Revenues that GHI must have earned during the year. You Answered Correct Answer67 Correct. Hopefully you just put in the known information in the Retained Earnings formula and Income Statement formulas below and solved for the unknown Revenues as follows: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings And the Net Income to be used above, is computed as follows: Revenues - Expenses = Net Income This is a great example of how revenues, expenses and dividends articulate into and influence the year-end balances on the balance sheet. The other information provided in this problem about Capital Contributions and the change in Accounts Receivable have no direct effect on the computation of Retained Earnings. They are "smoke" and irrelevant to this solution. Question 60 / 1 pts Mod 6.3: When a company pays off an account payable for inventory that it purchased in the past, what impact will the payment have on its balance sheet equation? You Answered Assets will decrease, Liabilities will be unaffected, Equity will decrease. Incorrect. Assets will decrease because cash (which is an asset) will be given away to the supplier. Liabilities will decrease because when you pay off the supplier your liabilities (i.e. accounts payable) to the supplier must necessarily decrease. Equity will be unaffected because the owners' equity is not impacted in any way. The decrease in assets is exactly equal to the decrease in liabilities so the balance sheet already balances without affecting equity. Assets will be unaffected, Liabilities will decrease, Equity will be unaffected. Assets will increase, Liabilities will decrease, Equity will increase. Correct Answer Assets will decrease, Liabilities will decrease, Equity will be unaffected. Incorrect. Assets will decrease because cash (which is an asset) will be given away to the supplier. Liabilities will decrease because when you pay off the supplier your liabilities (i.e. accounts payable) to the supplier must necessarily decrease. Equity will be unaffected because the owners' equity is not impacted in any way. The decrease in assets is exactly equal to the decrease in liabilities so the balance sheet already balances without affecting equity. Question 70 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. owners contributed cash of $32. What is the balance in Charlie Co.'s assets at the end of Day 1? You Answered Correct Answer132 Incorrect. Charlie Co. started with $100 in assets and then received additional cash from the owners. Therefore, the ending asset balance is $100 + the new cash contributions from the owners. Question 81 / 1 pts Mod 6.3: It is possible that a company can report positive net income on the income statement, but have negative cash flows from operating activities on the statement of cash flows. Correct! True Correct. This is a true statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. False Correct. This is a true statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. Question 90 / 1 pts Mod 6.4: In the United States, when someone with an auditing background receives a license to perform external audits, s/he becomes a: You Answered CFO Incorrect. Chief Financial Officers (CFOs) manage the finances of their companies, they do not perform external audits on their companies. CEO Correct Answer CPA COO Incorrect. See explanations above. Question 101 / 1 pts Mod 6.4: The most important stewardship of company management is to: Comply with government regulations Sell products File tax returns Correct! Increase shareholder value Correct. The primary responsibility of company management is to manage the company in a manner that increases shareholder value. The discussion of increasing stakeholder value is broader than this question is asking and that is why I left "stakeholder value" out of the list of possible answers. Prepare financial statements Correct. The primary responsibility of company management is to manage the company in a manner that increases shareholder value. The discussion of increasing stakeholder value is broader than this question is asking and that is why I left "stakeholder value" out of the list of possible answers.

Question 11 / 1 pts Mod 6.1: Match the name of the financial statement on the left with its respective equation on the right. Correct!Balance Sheet Assets = Liabilities + Equity Correct!Income Statement Revenues - Expenses = Net Income Correct!Statement of Shareholder Equity Beginning Shareholder Equity + Additions to Shareholder Equity - Subtractions from Shareholder Equity = Ending Shareholder Equity Correct!Statement of Cash Flows Beginning Cash +or- Operating Cash Flows +or- Investing Cash Flows +or- Financing Cash Flows = Ending Cash Other Incorrect Match Options:Assets + Liabilities = EquityRevenues + Expenses = Net Income Correct. See an explanation of why this is correct above. Question 21 / 1 pts Mod 6.1: Which of the following financial statements must US publicly traded companies provide to the SEC each year? Choose all that apply. Statement of Working Capital Correct! Statement of Shareholder Equity Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Correct! Income Statement Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Correct! Statement of Financial Position Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Question 31 / 1 pts Mod 6.1: Which of the following financial statement names are used to describe the statement that would be best to use when analyzing a business' profitability for a specific period of time? Correct! Income Statement Correct. The Income Statement details all of a business' revenues and expenses that led up to its Net Income for a specific period of time. Correct! Statement of Operations Correct. The Statement of Operations is another word for the Income Statement. It details all of a business' revenues and expenses that led up to its Net Income for a specific period of time. Statement of Financial Position Balance Sheet Statement of Retained Earnings Correct! Profit and Loss Account Correct. The Profit and Loss Account is the word used internationally for the Income Statement. It details all of a business' revenues and expenses that led up to its Net Income for a specific period of time. Statement of Cash Flows Correct. The Income Statement, Statement of Operations and the Profit and Loss Account are all names for the statement that focuses on the business' profitability for a specific period. Question 41 / 1 pts Mod 6.2: The number on the right indicates the sequential order in which the financial statements on the left should be prepared as of and for the year ended 12/31/X1. For each financial statement on the left, choose its respective order number from the right. Correct!Balance Sheet as of 1/1/X1 1 Correct!Statement of Retained Earnings for the Year Ended 12/31/X1 3 Correct!Income Statement for the Year Ended 12/31/X1 2 Correct!Balance Sheet as of 12/31/X1 4 Correct. You always needs to start with the prior balance sheet (1/1/X1) and then you prepare the income statement, which provides the net income so you can prepare the statement of retained earnings which then allows you to compute the ending retained earnings which will appear on the ending balance sheet. Question 50.6 / 1 pts Mod 6.2: Choose all of the statements below that help users understand what caused a company's assets, liabilities and equity to change over a period of time. Correct! Statement of Operations Correct. The Statement of Operations is just another name for the Income Statement. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Correct! Income Statement Correct. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Balance Sheet Correct! Profit and Loss Account Correct. The Profit and Loss Account is just an international name for the Income Statement. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Correct Answer Statement of Cash Flows Correct Answer Statement of Shareholder Equity Question 61 / 1 pts Mod 6.3: Bunson Co. began Day 1 with $1,000 of assets ($300 of which was inventory). It also had $300 of liabilities and $700 of equity. On Day 1 it ordered $200 of inventory to be delivered in 5 days. Compute Bunson Co.'s ending balances for assets, liabilities and equity. Assets $800; Liabilities $300, Equity $500. Assets $1,200; Liabilities $500, Equity $700. Assets $1,200; Liabilities $300, Equity $900. Correct! Assets $1,000; Liabilities $300, Equity $700. Correct. All the balance sheet balances remain unchanged. Assets are $1,000, Liabilities are $300, and Equity is $700. A purchase order to receive inventory some time in the future has no direct impact on the balance sheet because 1) you have not obtained control of the inventory yet, so assets are unaffected and 2) you are not obligated to pay for the inventory yet, so liabilities are unaffected, and 3) you have not sold the inventory to customers yet, so equity is not affected. Question 71 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $11. Enter the balance in Charlie Co.'s equity at the end of Day 1 into the box below (do not enter $ symbols): Correct! Correct Answer80 Correct. Equity is unaffected in this case because assets (i.e. cash) and liabilities (i.e. accounts payable) reduced by the same amount of the payment. This transaction does not impact the owner's equity in the company, in fact it remains identical to what it was just prior to the payment. Question 81 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. owners contributed cash of $42. What is the balance in Charlie Co.'s equity at the end of Day 1? Correct! Correct Answer122 Correct. Charlie Co. started with $80 in Equity and then the owners made additional contributions. Therefore, the new ending equity balance is $80 + the new contributions from the owners. Question 90.67 / 1 pts Mod 6.4: Match the party on the left with their exclusive responsibility on the right. Correct!Prepare the company's financial statements. Company management You AnsweredAudit the company's financial statements and issue an audit report. Internal Auditor Independent Auditor Correct!Certify to the reliability of the company's financial statements and to the company's internal controls that they helped put in place to help ensure the reliability of such statements. Chief Executive Officer (CEO) and Chief Financial Officer (CFO) Other Incorrect Match Options:Internal Auditor Question 101 / 1 pts Mod 6.4: Publicly traded companies in the United States MUST be audited by: Correct! Certified Public Accountants (CPAs) who are registered with the Public Accounting Oversight Board (PCAOB) Correct. If a state-licensed CPA wants to perform an audit of a publicly-traded company subject to SEC regulations, the CPA must comply with additional rules and register with the Public Company Accounting Oversight Board (PCAOB). Because of these additional registration requirements, many smaller CPA firms do not perform audits of publicly-traded companies. Members of the Institute of Internal Auditors (IIA) Certified Public Accountants (CPAs) Certified Public Accountants (CPAs) who are also members of the American Institute of Certified Public Accountants (AICPA) Correct. If a state-licensed CPA wants to perform an audit of a publicly-traded company subject to SEC regulations, the CPA must comply with additional rules and register with the Public Company Accounting Oversight Board (PCAOB). Because of these additional registration requirements, many smaller CPA firms do not perform audits of publicly-traded companies.

Question 11 / 1 pts Mod 6.1: Which of the following financial statement names are used to describe the statement that would be best to use when analyzing a business' profitability for a specific period of time? Correct! Profit and Loss Account Correct. The Profit and Loss Account is the word used internationally for the Income Statement. It details all of a business' revenues and expenses that led up to its Net Income for a specific period of time. Balance Sheet Statement of Retained Earnings Correct! Income Statement Correct. The Income Statement details all of a business' revenues and expenses that led up to its Net Income for a specific period of time. Statement of Cash Flows Correct! Statement of Operations Correct. The Statement of Operations is another word for the Income Statement. It details all of a business' revenues and expenses that led up to its Net Income for a specific period of time. Statement of Financial Position Correct. The Income Statement, Statement of Operations and the Profit and Loss Account are all names for the statement that focuses on the business' profitability for a specific period. Question 21 / 1 pts Mod 6.1: Which of the following financial statements must US publicly traded companies provide to the SEC each year? Choose all that apply. Correct! Statement of Shareholder Equity Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Correct! Statement of Financial Position Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Statement of Working Capital Correct! Income Statement Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Correct. This is one of the four general-purpose financial statements that all US publicly-traded companies are expected to file with the SEC each year. The complete list is: 1) Balance Sheet (also known as the Statement of Financial Position) 2) Statement of Shareholder Equity (also known in the US as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 3) Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit Loss account) 4) Statement of Cash Flows Question 31 / 1 pts Mod 6.1: If you wanted to clearly see the total that all owners had invested in a given company at the beginning of a year and see how such total investment had changed during the year to arrive at the owners' ending balance, which of the following statements would be most helpful to you? Balance Sheet Correct! Statement of Shareholder Equity Correct. The purpose of the Statement of Shareholder Equity is to provide information about the shareholders' beginning equity balances, changes in those balances during the year, and the ending balances. Statement of Comprehensive Income Statement of Financial Position Correct. The purpose of the Statement of Shareholder Equity is to provide information about the shareholders' beginning equity balances, changes in those balances during the year, and the ending balances. Question 41 / 1 pts Mod 6.2: Here is a list of financial statements. Click on all of the financial statements listed below that provide information about changes in accounts over a period of time and would NOT be dated "As of" a given date, but rather "For the period ended" a given date. Statement of Financial Position Correct! Statement of Cash Flows Correct. The Statement of Cash Flows provides information about the impact on the company's beginning to ending cash balances as caused by its operating, investing and financing cash flows over a period of time, such as "For the year ended 12/31/X1". Correct! Statement of Shareholder Equity Correct. The Statement of Shareholder Equity provides information about the changes in the Shareholders' Equity over a period of time from the beginning balance sheet date to the ending balance sheet date. Because it provides information regarding changes in balances over a period of time, it will be labeled similar to "For the year ended 12/31/X1". Balance Sheet Correct! Income Statement Correct. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Correct. The three core financial statements that articulate into the balance sheet and provide information for the period about how the balance sheet amounts "As of" the beginning of the year changed to the ending balance sheet amounts "As of" the end of the year are the Income Statement, Statement of Shareholder Equity and the Statement of Cash Flows. Please also note that the Statement of Retained Earnings also describes changes in the Equity balances on the balance sheet, but because it is often incorporated into the Statement of Shareholder Equity, I did not list it separately as one of the core articulating statements. Question 51 / 1 pts Mod 6.2: The number on the right indicates the sequential order in which the financial statements on the left should be prepared as of and for the year ended 12/31/X1. For each financial statement on the left, choose its respective order number from the right. Correct!Balance Sheet as of 1/1/X1 1 Correct!Statement of Retained Earnings for the Year Ended 12/31/X1 3 Correct!Income Statement for the Year Ended 12/31/X1 2 Correct!Balance Sheet as of 12/31/X1 4 Correct. You always needs to start with the prior balance sheet (1/1/X1) and then you prepare the income statement, which provides the net income so you can prepare the statement of retained earnings which then allows you to compute the ending retained earnings which will appear on the ending balance sheet. Question 61 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $13. What is the balance in Charlie Co.'s liabilities at the end of Day 1? Correct! Correct Answer7 Correct. Liabilities of $20 will be reduced by the payment on the account payable because accounts payable are liabilities and they reduce when they are paid off. Question 71 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. owners contributed cash of $14. What is the balance in Charlie Co.'s assets at the end of Day 1? Correct! Correct Answer114 Correct. Charlie Co. started with $100 in assets and then received additional cash from the owners. Therefore, the ending asset balance is $100 + the new cash contributions from the owners. Question 81 / 1 pts Mod 6.3: It is possible that a company can report positive net income on the income statement, but have negative cash flows from operating activities on the statement of cash flows. Correct! True Correct. This is a true statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. False Correct. This is a true statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. Question 91 / 1 pts Mod 6.4: Assume that you are an investor that just lost $1 million because you invested in a company whose Net Income was fraudulently overstated by a material amount. Which of the following groups is most likely at fault for the preparation of the fraudulent financial statements that you relied on to your detriment? The external auditor (i.e. the CPA) Correct! The company's management Correct. Management is responsible for preparing the financial statements; therefore, if you want to sue someone for poor preparation, it would have to be company management. The Securities and Exchange Commission (SEC) The company's shareholders The Public Company Accounting Oversight Board (PCAOB) Correct. Management is responsible for preparing the financial statements; therefore, if you want to sue someone for poor preparation, it would have to be company management. Question 101 / 1 pts Mod 6.4: Which of the following documents provides a relatively broad discussion of the company as a whole, kind of an overall description of how the company is doing financially and operationally, how it is doing in its various market segments, what the prospects for its new products and the future are? The Management Certifications The Financial Statements and related footnotes The Auditors' reports. Correct! The Annual Report to Shareholders Correct. The Annual Report to Shareholders "... is usually a state-of-the-company report, including an opening letter from the Chief Executive Officer, financial data, results of continuing operations, market segment information, new product plans, subsidiary activities, and research and development activities on future programs." http://sec.gov/answers/annrep.htm Correct. The Annual Report to Shareholders "... is usually a state-of-the-company report, including an opening letter from the Chief Executive Officer, financial data, results of continuing operations, market segment information, new product plans, subsidiary activities, and research and development activities on future programs." http://sec.gov/answers/annrep.htm

Question 11 / 1 pts Mod 6.1: Which of the following statements focuses primarily on indicating a company's profitability for a given period of time? Correct! Income Statement Correct. The Income Statement, also known as the Statement of Operations, indicates a business' profitability for a given period of time. Balance Sheet Statement of Taxes Paid Statement of Cash Flows Correct. The Income Statement, also known as the Statement of Operations, indicates a business' profitability for a given period of time. Question 21 / 1 pts Mod 6.1: Choose the financial statement below that is NOT a name of one of the four general-purpose financial statements. Correct! Statement of Asset Purchases Correct. I just made the name of this statement up. This is not one of the four general-purpose financial statements. Statement of Operations Profit & Loss Account Statement of Cash Flows Statement of Financial Position Correct. I just made this up. This is not one of the four general purpose financial statements. For your convenience, the four general purpose financial statements are listed below: 1)Balance Sheet (also known as the Statement of Financial Position) 2)Income Statement (also known as the Statement of Comprehensive Income and Statement of Operations. Internationally, it is known as the Profit amp; Loss account) 3)Statement of Shareholder Equity (also known as Statement of Stockholder Equity, it includes the Statement of Retained Earnings) 4) Statement of Cash Flows Question 31 / 1 pts Mod 6.1: If you wanted to clearly see the total that all owners had invested in a given company at the beginning of a year and see how such total investment had changed during the year to arrive at the owners' ending balance, which of the following statements would be most helpful to you? Statement of Comprehensive Income Correct! Statement of Shareholder Equity Correct. The purpose of the Statement of Shareholder Equity is to provide information about the shareholders' beginning equity balances, changes in those balances during the year, and the ending balances. Balance Sheet Statement of Financial Position Correct. The purpose of the Statement of Shareholder Equity is to provide information about the shareholders' beginning equity balances, changes in those balances during the year, and the ending balances. Question 41 / 1 pts Mod 6.1: From the list below choose the standard names of the three types of cash flow activities that appear on a Statement of Cash Flows: Correct! Operating activities. Correct. The three standard cash flow activities that appear on the Statement of Cash Flows are operating activities, investing activities and financing activities. Capital activities Buying activities Correct! Investing activities Correct. The three standard cash flow activities that appear on the Statement of Cash Flows are operating activities, investing activities and financing activities. Correct! Financing activities Correct. The three standard cash flow activities that appear on the Statement of Cash Flows are operating activities, investing activities and financing activities. Selling activities Correct. The three standard cash flow activities that appear on the Statement of Cash Flows are operating activities, investing activities and financing activities. Question 51 / 1 pts Mod 6.1: Choose all of the statements in the following list that represent one of the common names used to describe the four general-purpose financial statements as required by US GAAP. Make sure you click on ALL that apply because some of these are synonyms. When you are done, you could have more or less than four names selected. Correct! Income Statement Correct. The Income Statement is one of the four general purpose financial statements and is also known as the Statement of Operations. Correct! Statement of Operations Correct. The Statement of Operations is one of the four general purpose financial statements and is also known as the Income Statement. Correct! Statement of Shareholder Equity Correct. The Statement of Shareholder Equity is one of the four general purpose financial statements, it is also known as the Statement of Stockholder Equity. A sub-statement of the Statement of Shareholder Equity is known as the Statement of Retained Earnings. Correct! Statement of Financial Position Correct. The Statement of Financial Position is one of the four general purpose financial statements and is also known as the Balance Sheet. Correct! Balance Sheet Correct. The Balance Sheet is one of the four general purpose financial statements and is also known as the Statement of Financial Position. Statement of Changes in Working Capital Statement of Taxes Paid Correct! Statement of Cash Flows Correct. The Statement of Cash Flows is one of the four general purpose financial statements. Correct. See the individual explanations above.

Question 11 / 1 pts Mod 6.1: Which of the following statements focuses primarily on indicating a company's profitability for a given period of time? Statement of Cash Flows Correct! Income Statement Correct. The Income Statement, also known as the Statement of Operations, indicates a business' profitability for a given period of time. Statement of Taxes Paid Balance Sheet Correct. The Income Statement, also known as the Statement of Operations, indicates a business' profitability for a given period of time. Question 21 / 1 pts Mod 6.1: From the list below choose the standard names of the three types of cash flow activities that appear on a Statement of Cash Flows: Correct! Operating activities. Correct. The three standard cash flow activities that appear on the Statement of Cash Flows are operating activities, investing activities and financing activities. Capital activities Correct! Financing activities Correct. The three standard cash flow activities that appear on the Statement of Cash Flows are operating activities, investing activities and financing activities. Buying activities Correct! Investing activities Correct. The three standard cash flow activities that appear on the Statement of Cash Flows are operating activities, investing activities and financing activities. Selling activities Correct. The three standard cash flow activities that appear on the Statement of Cash Flows are operating activities, investing activities and financing activities. Question 31 / 1 pts Mod 6.1: If you wanted to clearly see the total that all owners had invested in a given company at the beginning of a year and see how such total investment had changed during the year to arrive at the owners' ending balance, which of the following statements would be most helpful to you? Statement of Comprehensive Income Balance Sheet Correct! Statement of Shareholder Equity Correct. The purpose of the Statement of Shareholder Equity is to provide information about the shareholders' beginning equity balances, changes in those balances during the year, and the ending balances. Statement of Financial Position Correct. The purpose of the Statement of Shareholder Equity is to provide information about the shareholders' beginning equity balances, changes in those balances during the year, and the ending balances. Question 40 / 1 pts Mod 6.1: Based on the following account balances as of and for the year ended 12/31/X4, compute Company A's Net Income. Assets $6, Shareholder Equity $2, Revenues $2, Liabilities $4, Expenses $8, Dividends $5. You Answered Correct Answer-6 Incorrect. The standard equation to compute Net Income is Revenues - Expenses. Just take the amount of Revenues provided and deduct the amount of Expenses provided. Please note that Dividends are NOT an expense. They are a direct reduction of a company's equity in its Retained Earnings account. Question 50 / 1 pts Mod 6.1: Which of the following statements indicates what resources a business has and what claims external parties have against the business for those resources as of a point in time. You Answered Income Statement Incorrect. The Income Statement indicates a business' profitability for a given period of time. Statement of Cash Flows Statement of Stockholder Equity Correct Answer Statement of Financial Position Incorrect. The correct answer is the Statement of Financial Position, which is also known as the Balance Sheet. The Balance Sheet indicates what resources a business has and what claims external parties have against the business for those resources as of a point in time. Quiz Score: 3 out of 5 Quiz Submissions Attempt 1: 1 Attempt 2: 2.33 Attempt 3: 3 Attempt 4: 3 Attempt 5: 5 Attempt 6: 3.83 Attempt 7: 3.33 Attempt 8: 2.33 Attempt 9: 1.75 Attempt 10: 5 This quiz has unlimited attempts

Question 11 / 1 pts Mod 6.2: How does the Net Income, as reported on the Income Statement, articulate with the Balance Sheet? The amount of Net Income earned during the year appears directly on the Balance Sheet. Correct! The amount of Net Income earned during the year is added to Retained Earnings and is reported on the Statement of Shareholder Equity and then the ending balance of Retained Earnings appears directly on the ending Balance Sheet. Correct. Net Income is added to Retained Earnings (as would appear on the Statement of Shareholder Equity) and then the ending Retained Earnings appears directly on the Balance Sheet. The amount of Net Income earned during the year is added to Capital Contributions as is reported on the Statement of Shareholder Equity and the ending balance of Capital Contributions appears directly on the ending Balance Sheet. The amount of Net Income earned during the year appears on the Statement of Operations and then is added to the Investing Activities on the Statement of Cash Flows. Correct. Net Income is added to Retained Earnings (as would appear on the Statement of Shareholder Equity) and then the ending Retained Earnings appears directly on the Balance Sheet. Question 20 / 1 pts Mod 6.2: The number on the right indicates the sequential order in which the financial statements on the left should be prepared as of and for the year ended 12/31/X1. For each financial statement on the left, choose its respective order number from the right. You AnsweredBalance Sheet as of 1/1/X1 2 1 You AnsweredStatement of Retained Earnings for the Year Ended 12/31/X1 1 3 You AnsweredIncome Statement for the Year Ended 12/31/X1 4 2 You AnsweredBalance Sheet as of 12/31/X1 3 4 Incorrect. You always needs to start with the prior balance sheet (1/1/X1) and then you prepare the income statement, which provides the net income so you can prepare the statement of retained earnings which then allows you to compute the ending retained earnings which will appear on the ending balance sheet. Question 30 / 1 pts Mod 6.2: Choose the statements from the list below that will be labeled "As of" or "As at" a specific point in time and are described as being a "financial photograph" or "financial snapshot" of the company as opposed to being a financial video covering a period of time. You Answered Statement of Retained Earnings Incorrect. The Statement of Retained Earnings is prepared to cover a period of time. Its purpose is to describe the increases and decreases to Retained Earnings, which Retained Earnings is part of the Shareholder Equity that appears on the Balance Sheet. Retained Earnings are increased by adding Net Income for the period and is decreased by deducting the Dividends declared during the period. You Answered Statement of Cash Flows Incorrect. The Statement of Cash Flows is prepared to cover a period of time. Its purpose is to describe the activities (operating, investing and financing) that caused a company's cash balance to change from its beginning cash balance, as noted on the beginning balance sheet, to the ending cash balance, as noted on the ending balance sheet. Statements of Cash Flows are like a motion picture describing the inflows and outflows of cash over a period of time. Correct Answer Statement of Financial Position Correct Answer Balance Sheet You Answered Income Statement Incorrect. The Income Statement is prepared to cover a period of time. Its purpose is to describe the operations and other income producing activities (Revenues - Expenses) that caused a company's equity (particularly Retained Earnings) to change from the beginning equity balance, as noted on the beginning balance sheet, to the ending equity balance, as noted on the ending balance sheet. Income Statements are like a motion picture describing the Revenues and Expenses that helped increase and decrease Retained Earnings over a period of time. Incorrect. The Statement of Shareholder Equity, which includes the Statement of Retained Earnings, the Income Statement, and the Statement of Cash Flows are the three financial statements that articulate into the Balance Sheet and help describe how the balances on the Balance Sheet changed from the beginning of the period to the end of the period. Question 40.67 / 1 pts Mod 6.2: Choose all of the financial statements below that describe changes in accounts over a period of time that would include a title indicating "For the period ended..." Choose all that apply. Correct! Statement of Cash Flows Correct. The Statement of Cash Flows tracks changes in the company's cash balances over a given period of time as caused by operating, investing and financing activities. Correct Answer Statement of Comprehensive Income Correct! Profit and Loss Account Correct. The Profit and Loss Account is just another name for the Income Statement, which is also known as the Statement of Operations and the Statement of Comprehensive Income. The Income Statement tracks changes in the Owner's Equity (particularly Retained Earnings) resulting from Revenues and Expenses over a period of time. Statement of Financial Position Balance Sheet Question 50 / 1 pts Mod 6.2: Assume GHI company's beginning Retained Earnings was $31 and its ending Retained Earnings was $84. In addition, during the year its accounts receivable increased by $9, its owners contributed an additional $8 to increase their ownership stake in the company, it had Expenses of $9 and declared and paid $7 of dividends. Compute the amount of Revenues that GHI must have earned during the year. You Answered Correct Answer69 Correct. Hopefully you just put in the known information in the Retained Earnings formula and Income Statement formulas below and solved for the unknown Revenues as follows: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings And the Net Income to be used above, is computed as follows: Revenues - Expenses = Net Income This is a great example of how revenues, expenses and dividends articulate into and influence the year-end balances on the balance sheet. The other information provided in this problem about Capital Contributions and the change in Accounts Receivable have no direct effect on the computation of Retained Earnings. They are "smoke" and irrelevant to this solution.

Question 11 / 1 pts Mod 6.2: Choose all of the financial statements below that describe changes in accounts over a period of time that would include a title indicating "For the period ended..." Choose all that apply. Balance Sheet Correct! Profit and Loss Account Correct. The Profit and Loss Account is just another name for the Income Statement, which is also known as the Statement of Operations and the Statement of Comprehensive Income. The Income Statement tracks changes in the Owner's Equity (particularly Retained Earnings) resulting from Revenues and Expenses over a period of time. Statement of Financial Position Correct! Statement of Comprehensive Income Correct. The Statement of Comprehensive Income is just another name for the Income Statement, which is also known as the Statement of Operations and the Profit and Loss Account. The Income Statement tracks changes in the Owner's Equity (particularly Retained Earnings) resulting from Revenues and Expenses over a period of time. Correct! Statement of Cash Flows Correct. The Statement of Cash Flows tracks changes in the company's cash balances over a given period of time as caused by operating, investing and financing activities. Correct. The Income Statement, Statement of Cash Flows, and Statement of Shareholder Equity (which includes the Statement of Retained Earnings) all provide information describing changes in account balances over a period of time. Question 21 / 1 pts Mod 6.2: If you wanted to determine how much cash was paid for Vehicles, Equipment, Building and Land during a given period, which of the following statements would be the most helpful in quickly finding that number? Balance sheet Income Statement Correct! Statement of Cash Flows Correct. The cash paid assets such as vehicles, equipment, building and land would be noted as a cash outflow in the company's Statement of Cash Flows. Statement of Shareholder Equity Correct. The cash paid assets such as vehicles, equipment, building and land would be noted as a cash outflow in the company's Statement of Cash Flows. Question 31 / 1 pts Mod 6.2: Choose the statements from the list below that will be labeled "As of" or "As at" a specific point in time and are described as being a "financial photograph" or "financial snapshot" of the company as opposed to being a financial video covering a period of time. Correct! Balance Sheet Correct. Balance sheets are like a financial photograph because they provide a listing of all of a company's assets, liabilities and equity as of a point in time, as if you took a photograph and then, based on the photograph went and wrote down all the assets, liabilities and equity that existed as of that point in time. Statement of Retained Earnings Statement of Cash Flows Income Statement Correct! Statement of Financial Position Correct. Balance sheets are like a financial photograph because they provide a listing of all of a company's assets, liabilities and equity as of a point in time, as if you took a photograph and then, based on the photograph went and wrote down all the assets, liabilities and equity that existed as of that point in time. Correct. Balance sheets, also known as Statements of Financial Position, are like a financial photograph because they provide a listing of all of a company's assets, liabilities and equity as of a point in time, as if you took a photograph and then, based on the photograph went and wrote down all the assets, liabilities and equity that existed as of that point in time. Question 41 / 1 pts Mod 6.2: Which of the following items would cause an INCREASE in a company's Retained Earnings account from one year to the next? Choose all that apply. Capital Contributions Correct! Net Income Correct. When a company earns Net Income, such income belongs to the owners and will be retained in the company (as Retained Earnings) until the owners are able to convince the company to pay the earnings out in the form of a Dividend. If one owner owns 100% of the company, they will not have a very difficult time convincing the company to pay the dividends out thus reducing the owners' Retained Earnings. Net Income is the key that serves to increase Retained Earnings. The formula for the Statement of Retained Earnings is as follows: Beginning Retained Earnings + Net Income - Net Loss - Dividends = Ending Retained Earnings Net Loss Dividends paid Correct. When a company earns Net Income, such income belongs to the owners and will be retained in the company (as Retained Earnings) until the owners are able to convince the company to pay the earnings out in the form of a Dividend. If one owner owns 100% of the company, they will not have a very difficult time convincing the company to pay the dividends out thus reducing the owners' Retained Earnings. Net Income is the key that serves to increase Retained Earnings. The formula for the Statement of Retained Earnings is as follows: Beginning Retained Earnings + Net Income - Net Loss - Dividends = Ending Retained Earnings Question 51 / 1 pts Mod 6.2: How does the Net Income, as reported on the Income Statement, articulate with the Balance Sheet? Correct! The amount of Net Income earned during the year is added to Retained Earnings and is reported on the Statement of Shareholder Equity and then the ending balance of Retained Earnings appears directly on the ending Balance Sheet. Correct. Net Income is added to Retained Earnings (as would appear on the Statement of Shareholder Equity) and then the ending Retained Earnings appears directly on the Balance Sheet. The amount of Net Income earned during the year appears directly on the Balance Sheet. The amount of Net Income earned during the year appears on the Statement of Operations and then is added to the Investing Activities on the Statement of Cash Flows. The amount of Net Income earned during the year is added to Capital Contributions as is reported on the Statement of Shareholder Equity and the ending balance of Capital Contributions appears directly on the ending Balance Sheet. Correct. Net Income is added to Retained Earnings (as would appear on the Statement of Shareholder Equity) and then the ending Retained Earnings appears directly on the Balance Sheet.

Question 10.67 / 1 pts Mod 6.2: Here is a list of financial statements. Click on all of the financial statements listed below that provide information about changes in accounts over a period of time and would NOT be dated "As of" a given date, but rather "For the period ended" a given date. Correct! Statement of Shareholder Equity Correct. The Statement of Shareholder Equity provides information about the changes in the Shareholders' Equity over a period of time from the beginning balance sheet date to the ending balance sheet date. Because it provides information regarding changes in balances over a period of time, it will be labeled similar to "For the year ended 12/31/X1". Balance Sheet You Answered Statement of Financial Position Incorrect. The Statement of Financial Position is just another name for the balance sheet. It provides a financial snapshot of all of a company's assets, liabilities and equity "As of" a point in time, such as "As of 12/31/X1". Correct! Statement of Cash Flows Correct. The Statement of Cash Flows provides information about the impact on the company's beginning to ending cash balances as caused by its operating, investing and financing cash flows over a period of time, such as "For the year ended 12/31/X1". Correct! Income Statement Correct. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Question 20.4 / 1 pts Mod 6.2: Choose all of the statements below that help users understand what caused a company's assets, liabilities and equity to change over a period of time. Correct Answer Statement of Cash Flows Correct! Statement of Shareholder Equity Correct. The Statement of Shareholder Equity provides information about the changes in the Shareholders' Equity over a period of time from the beginning balance sheet date to the ending balance sheet date. Because it provides information regarding changes in balances over a period of time, it will be labeled similar to "For the year ended 12/31/X1". Correct Answer Income Statement Correct! Statement of Operations Correct. The Statement of Operations is just another name for the Income Statement. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. You Answered Balance Sheet Incorrect. The balance sheet provides a financial snapshot of all of a company's assets, liabilities and equity "As of" a point in time, such as "As of 12/31/X1". This is the statement whose changes are trying to be explained via the articulation of all the other statements. Correct! Profit and Loss Account Correct. The Profit and Loss Account is just an international name for the Income Statement. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Question 30 / 1 pts Mod 6.2: What does it mean for the general purpose financial statements to "articulate"? The financial statements are written in English. You Answered The financial statements have been audited by an auditor. Incorrect. Before an auditor even begins to audit the financial statements, the balance sheet should balance indicating that the other financial statements have properly articulated into it. The financial statements articulate because changes in one financial statement, such as the Income Statement influences other financial statements such as the Statement of Retained Earnings and the Balance Sheet. The financial statements result in ever increasing amounts. Correct Answer The financial statements interrelate to each other. Incorrect. The financial statements articulate because changes in one financial statement, such as the Income Statement influences other financial statements such as the Statement of Retained Earnings and the Balance Sheet. Question 40 / 1 pts Mod 6.2: Assume DEF company's beginning Retained Earnings was $45 and during the year its cash increased by $3, it had Revenues of $4, its owners contributed an additional $6 to increase their ownership stake in the company, it had Expenses of $8 and declared and paid $3 of dividends. Compute DEF's Retained Earnings at the end of the year. You Answered Correct Answer38 Incorrect. Retained Earnings is computed as follows: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings And the Net Income to be used above, is computed as follows: Revenues - Expenses = Net Income This is a great example of how revenues, expenses and dividends articulate into and influence the year-end balances on the balance sheet. The other information provided in this problem about Capital Contributions and the change in Cash have no direct effect on the computation of Retained Earnings. They are "smoke" and irrelevant to this solution. Question 50 / 1 pts Mod 6.2: If you wanted to determine how much cash was paid for Vehicles, Equipment, Building and Land during a given period, which of the following statements would be the most helpful in quickly finding that number? Correct Answer Statement of Cash Flows Balance sheet You Answered Statement of Shareholder Equity Incorrect. The Statement of Shareholder Equity does not track payments for assets. It only tracks increases and decreases in the Shareholders' claims against the company for those assets. Income Statement Incorrect. The cash paid assets such as vehicles, equipment, building and land would be noted as a cash outflow in the company's Statement of Cash Flows. See additional explanations above.

Question 11 / 1 pts Mod 6.2: If you wanted to determine how much cash was paid for Vehicles, Equipment, Building and Land during a given period, which of the following statements would be the most helpful in quickly finding that number? Correct! Statement of Cash Flows Correct. The cash paid assets such as vehicles, equipment, building and land would be noted as a cash outflow in the company's Statement of Cash Flows. Statement of Shareholder Equity Balance sheet Income Statement Correct. The cash paid assets such as vehicles, equipment, building and land would be noted as a cash outflow in the company's Statement of Cash Flows. Question 20 / 1 pts Mod 6.2: What does it mean for the general purpose financial statements to "articulate"? The financial statements are written in English. You Answered The financial statements result in ever increasing amounts. Incorrect. Financial statements articulate whether or not the amounts involved are increasing or decreasing. The financial statements articulate because changes in one financial statement, such as the Income Statement influences other financial statements such as the Statement of Retained Earnings and the Balance Sheet. The financial statements have been audited by an auditor. Correct Answer The financial statements interrelate to each other. Incorrect. The financial statements articulate because changes in one financial statement, such as the Income Statement influences other financial statements such as the Statement of Retained Earnings and the Balance Sheet. Question 31 / 1 pts Mod 6.2: Which of the following items would cause an INCREASE in a company's Retained Earnings account from one year to the next? Choose all that apply. Correct! Net Income Correct. When a company earns Net Income, such income belongs to the owners and will be retained in the company (as Retained Earnings) until the owners are able to convince the company to pay the earnings out in the form of a Dividend. If one owner owns 100% of the company, they will not have a very difficult time convincing the company to pay the dividends out thus reducing the owners' Retained Earnings. Net Income is the key that serves to increase Retained Earnings. The formula for the Statement of Retained Earnings is as follows: Beginning Retained Earnings + Net Income - Net Loss - Dividends = Ending Retained Earnings Net Loss Dividends paid Capital Contributions Correct. When a company earns Net Income, such income belongs to the owners and will be retained in the company (as Retained Earnings) until the owners are able to convince the company to pay the earnings out in the form of a Dividend. If one owner owns 100% of the company, they will not have a very difficult time convincing the company to pay the dividends out thus reducing the owners' Retained Earnings. Net Income is the key that serves to increase Retained Earnings. The formula for the Statement of Retained Earnings is as follows: Beginning Retained Earnings + Net Income - Net Loss - Dividends = Ending Retained Earnings Question 41 / 1 pts Mod 6.2: Choose all of the statements below that help users understand what caused a company's assets, liabilities and equity to change over a period of time. Correct! Profit and Loss Account Correct. The Profit and Loss Account is just an international name for the Income Statement. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Correct! Statement of Operations Correct. The Statement of Operations is just another name for the Income Statement. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Balance Sheet Correct! Income Statement Correct. The Income Statement provides information about the Revenues and Expenses earned and incurred over a period of time, such as a year. For example, For the year ended 12/31/X1. It helps explain how Retained Earnings, which is part of Shareholder Equity changed from the beginning of the period to the end of the period as reported on the beginning and ending balance sheets. Correct! Statement of Shareholder Equity Correct. The Statement of Shareholder Equity provides information about the changes in the Shareholders' Equity over a period of time from the beginning balance sheet date to the ending balance sheet date. Because it provides information regarding changes in balances over a period of time, it will be labeled similar to "For the year ended 12/31/X1". Correct! Statement of Cash Flows Correct. The Statement of Cash Flows provides information about the impact on the company's beginning to ending cash balances as caused by its operating, investing and financing cash flows over a period of time, such as "For the year ended 12/31/X1". Correct. The three core financial statements that articulate into the balance sheet and provide information for the period about how the balance sheet amounts "As of" the beginning of the year changed to the ending balance sheet amounts "As of" the end of the year are the Income Statement, Statement of Shareholder Equity and the Statement of Cash Flows. Please also note that the Statement of Retained Earnings also describes changes in the Equity balances on the balance sheet, but because it is often incorporated into the Statement of Shareholder Equity, I did not list it separately as one of the core articulating statements. Question 50 / 1 pts Mod 6.2: Assume DEF company's beginning Retained Earnings was $39 and during the year its cash increased by $9, it had Revenues of $5, its owners contributed an additional $9 to increase their ownership stake in the company, it had Expenses of $5 and declared and paid $6 of dividends. Compute DEF's Retained Earnings at the end of the year. You Answered Correct Answer33 Incorrect. Retained Earnings is computed as follows: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings And the Net Income to be used above, is computed as follows: Revenues - Expenses = Net Income This is a great example of how revenues, expenses and dividends articulate into and influence the year-end balances on the balance sheet. The other information provided in this problem about Capital Contributions and the change in Cash have no direct effect on the computation of Retained Earnings. They are "smoke" and irrelevant to this solution.

Question 11 / 1 pts Mod 6.3: It is impossible that a company can report positive net income on the income statement, but have negative cash flows from operating activities on the statement of cash flows. True Correct! False Correct. This is a FALSE statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. Correct. This is a FALSE statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. Question 21 / 1 pts Mod 6.3: At the end of the prior month Sage Co's balance sheet had the following balances: Assets $200, Liabilities $160, Equity $40 On Day 1, Sage Co. sold $70 of inventory to customers for $100 on account (i.e. on credit) What is the balance in Sage Co.'s liabilities at the end of Day 1? Correct! Correct Answers160 (with margin: 0) Correct. This sales transaction has no effect on liabilities. Assets will be affected by receivables increasing by the sales price, and decrease for the cost of the inventory sold, and equity will increase by the sales revenue earned and decreasing by the cost of goods sold incurred (which netted equals the gross margin on the sale), but liabilities are unaffected. Question 31 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $13. What is the balance in Charlie Co.'s liabilities at the end of Day 1? Correct! Correct Answer7 Correct. Liabilities of $20 will be reduced by the payment on the account payable because accounts payable are liabilities and they reduce when they are paid off. Question 41 / 1 pts Mod 6.3: Compute Company F's gross margin (as a $ amount, NOT a %) for the month assuming it had the following transactions: Day 5 Sold inventory costing $57 to a customer for $34 in cash. Day 12 Sold inventory costing $33 to a customer on account for $25. Day 20 Made a $84 sale on account of inventory that cost only $26. Correct! Correct Answer27 Correct. Gross margin is computed as Net Sales Revenue Less Cost of Goods Sold. Net Sales Revenue = Total Sales Revenues less: any merchandise returns ($0 in this example) less: sales discounts offered for paying cash early ($0 in this example) = Net Sales Revenue Cost of Goods Sold = the cost of all the inventory sold to customers, as well as damaged and obsolete inventory, even though it wasn't sold, but rather possibly thrown away. Just add up all three Sales Revenue amounts and deduct all three Cost of Goods Sold amounts and you have your Gross Margin. If your Gross Margin is positive, you are selling your inventory for more than your cost. This number needs to be sufficiently large in order to pay your other expenses, such as salaries and wages, rent, utilities, marketing, etc. Question 51 / 1 pts Mod 6.3: Bunson Co. began Day 1 with $1,000 of assets ($300 of which was inventory). It also had $300 of liabilities and $700 of equity. On Day 1 it ordered $200 of inventory to be delivered in 5 days. Compute Bunson Co.'s ending balances for assets, liabilities and equity. Assets $1,200; Liabilities $300, Equity $900. Correct! Assets $1,000; Liabilities $300, Equity $700. Assets $1,200; Liabilities $500, Equity $700. Assets $800; Liabilities $300, Equity $500. Correct. All the balance sheet balances remain unchanged. Assets are $1,000, Liabilities are $300, and Equity is $700. A purchase order to receive inventory some time in the future has no direct impact on the balance sheet because 1) you have not obtained control of the inventory yet, so assets are unaffected and 2) you are not obligated to pay for the inventory yet, so liabilities are unaffected, and 3) you have not sold the inventory to customers yet, so equity is not affected.

Question 11 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $17. What is the balance in Charlie Co.'s liabilities at the end of Day 1? Correct! Correct Answer3 Correct. Liabilities of $20 will be reduced by the payment on the account payable because accounts payable are liabilities and they reduce when they are paid off. Question 21 / 1 pts Mod 6.3: When a company pays off an account payable for inventory that it purchased in the past, what impact will the payment have on its balance sheet equation? Assets will be unaffected, Liabilities will decrease, Equity will be unaffected. Correct! Assets will decrease, Liabilities will decrease, Equity will be unaffected. Correct. Assets will decrease because cash (which is an asset) will be given away to the supplier. Liabilities will decrease because when you pay off the supplier your liabilities (i.e. accounts payable) to the supplier must necessarily decrease. Equity will be unaffected because the owners' equity is not impacted in any way. The decrease in assets is exactly equal to the decrease in liabilities so the balance sheet already balances without affecting equity. Assets will increase, Liabilities will decrease, Equity will increase. Assets will decrease, Liabilities will be unaffected, Equity will decrease. Correct. Assets will decrease because cash (which is an asset) will be given away to the supplier. Liabilities will decrease because when you pay off the supplier your liabilities (i.e. accounts payable) to the supplier must necessarily decrease. Equity will be unaffected because the owners' equity is not impacted in any way. The decrease in assets is exactly equal to the decrease in liabilities so the balance sheet already balances without affecting equity. Question 31 / 1 pts Mod 6.3: At the end of the prior month Sage Co's balance sheet had the following balances: Assets $200, Liabilities $160, Equity $40 On Day 1, Sage Co. sold $26 of inventory to customers for $92 on account (i.e. on credit) What is the balance in Sage Co.'s equity at the end of Day 1? Correct! Correct Answer106 Correct. Equity will increase by the gross margin earned on this sale as follows: Beginning Equity $40 + Net Income (i.e. in this case the only net income we have was generated by this sale with Sales Revenues Less the Cost of the Goods Sold) = Ending Equity Question 40 / 1 pts Mod 6.3: Assume last week that Company A ordered $1,000 of inventory on account (i.e. on credit) from Company B. This week, Company A sent a truck over and personally picked up the ordered inventory and promised to pay for the inventory within 30 days. What impact will Company A's picking up of the inventory have on Company A's income statement, statement of owners' equity, balance sheet and statement of cash flows? income statement (reduce income), statement of owners' equity (reduce equity), balance sheet (increase assets, liabilities increase, equity decrease) and statement of cash flows (no effect) You Answered income statement (decrease income), statement of owners' equity (decrease equity), balance sheet (assets increase, liabilities increase, equity decrease) and statement of cash flows (decrease cash on hand) Incorrect. Because Company A obtained possession of the ordered inventory which it has agreed to pay for, its assets will increase (particularly inventory will go up), liabilities will increase (particularly accounts payable will go up), and equity will not be affected because no revenue or expense has yet resulted. The other financial statements remain unaffected. Correct Answer income statement (no effect), statement of owners' equity (no effect), balance sheet (assets increase, liabilities increase, equity no effect) and statement of cash flows (no effect) income statement (reduce income), statement of owners' equity (no effect), balance sheet (assets increase, liabilities increase, equity no effect) and statement of cash flows (no effect) Incorrect. Because Company A obtained possession of the ordered inventory which it has agreed to pay for, its assets will increase (particularly inventory will go up), liabilities will increase (particularly accounts payable will go up), and equity will not be affected because no revenue or expense has yet resulted. The other financial statements remain unaffected. Question 51 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. owners contributed cash of $25. What is the balance in Charlie Co.'s equity at the end of Day 1? Correct! Correct Answer105 Correct. Charlie Co. started with $80 in Equity and then the owners made additional contributions. Therefore, the new ending equity balance is $80 + the new contributions from the owners.

Question 11 / 1 pts Mod 6.3: Compute the ending asset, liability and equity balances for a company that began the month with the following balances: Assets $700, Liabilities $140, Equity $560 And then issued $400 of stock to investors in exchange for cash. Type the dollar amount of your desired answers into the blank boxes below (Example: 700): Total Assets: Total Liabilities: Total Equity: Answer 1:Correct!1100Correct AnswerCorrect. Beginning assets were $700 and then additional assets of $400 were received when the investors paid the company cash in exchange for stock (i.e. ownership shares, the term stock is used here in the American form indicating ownership shares) thus resulting in ending equity of $1,100.Correct Answer$1,100 Correct Answer1,100 Correct Answer$1100 Answer 2:Correct!140Correct AnswerCorrect. The issuance of ownership shares to investors in exchange for cash has no effect on liabilities, therefore, liabilities remain at $140.Correct Answer$140 Answer 3:Correct!960Correct AnswerIncorrect. Beginning equity was $560 and $400 of additional equity shares were issued resulting in ending equity of $960.Correct Answer$960 Correct. Beginning assets were $700 + $400 of cash = $1,100. Beginning liabilities were $140 and the issuance of stock to investors had no impact on liabilities because the company did not borrow any money from the investors, but rather provided them ownership shares instead. Beginning equity was $560 and $400 of additional equity shares were issued resulting in ending equity of $960. Question 21 / 1 pts Mod 6.3: At the end of the prior month Sage Co's balance sheet had the following balances: Assets $200, Liabilities $160, Equity $40 On Day 1, Sage Co. sold $53 of inventory to customers for $83 on account (i.e. on credit) What is the balance in Sage Co.'s assets at the end of Day 1? Correct! Correct Answer230 Correct. Sage Co's ending assets would be computed as follows: Beginning Assets: $200 + Increase in accounts receivable for sales price charged to the customer for the inventory - Decrease in inventory for the cost of the goods (i.e. inventory) sold to the customer = Ending Assets Question 31 / 1 pts Mod 6.3: When a company pays off an account payable for inventory that it purchased in the past, what impact will the payment have on its balance sheet equation? Correct! Assets will decrease, Liabilities will decrease, Equity will be unaffected. Correct. Assets will decrease because cash (which is an asset) will be given away to the supplier. Liabilities will decrease because when you pay off the supplier your liabilities (i.e. accounts payable) to the supplier must necessarily decrease. Equity will be unaffected because the owners' equity is not impacted in any way. The decrease in assets is exactly equal to the decrease in liabilities so the balance sheet already balances without affecting equity. Assets will decrease, Liabilities will be unaffected, Equity will decrease. Assets will be unaffected, Liabilities will decrease, Equity will be unaffected. Assets will increase, Liabilities will decrease, Equity will increase. Correct. Assets will decrease because cash (which is an asset) will be given away to the supplier. Liabilities will decrease because when you pay off the supplier your liabilities (i.e. accounts payable) to the supplier must necessarily decrease. Equity will be unaffected because the owners' equity is not impacted in any way. The decrease in assets is exactly equal to the decrease in liabilities so the balance sheet already balances without affecting equity. Question 41 / 1 pts Mod 6.3: When a company orders product from a supplier to be delivered at a later date, what impact will such order have on the company's income statement, statement of owners' equity, balance sheet and statement of cash flows? Income statement (none), statement of owners' equity (none), balance sheet (increase assets, increase liabilities, no change to equity) and statement of cash flows (none). Income statement (reduce income), statement of owners' equity (none), balance sheet (increase assets, increase liabilities, no change to equity) and statement of cash flows (none). Income statement (increase expenses), statement of owners' equity (reduce owners' equity), balance sheet (reduce assets, reduce liabilities, reduce equity) and statement of cash flows (reduce cash). Correct! Income statement (none), statement of owners' equity (none), balance sheet (none) and statement of cash flows (none). Correct. Product that simply has been ordered has no effect on the company's financial statements because no asset has been received and no obligations have been incurred. Correct. Product that simply has been ordered has no effect on the company's financial statements because no asset has been received and no obligations have been incurred. Question 50 / 1 pts Mod 6.3: It is impossible that a company can report positive net income on the income statement, but have negative cash flows from operating activities on the statement of cash flows. You Answered True Incorrect. This is a FALSE statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. Correct Answer False Correct. This is a FALSE statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative.

Question 11 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $7. Enter the balance in Charlie Co.'s equity at the end of Day 1 into the box below (do not enter $ symbols): Correct! Correct Answer80 Correct. Equity is unaffected in this case because assets (i.e. cash) and liabilities (i.e. accounts payable) reduced by the same amount of the payment. This transaction does not impact the owner's equity in the company, in fact it remains identical to what it was just prior to the payment. Question 21 / 1 pts Mod 6.3: Compute the ending asset, liability and equity balances for a company that began the month with the following balances: Assets $700, Liabilities $140, Equity $560 And then issued $400 of stock to investors in exchange for cash. Type the dollar amount of your desired answers into the blank boxes below (Example: 700): Total Assets: Total Liabilities: Total Equity: Answer 1:Correct!1100Correct AnswerCorrect. Beginning assets were $700 and then additional assets of $400 were received when the investors paid the company cash in exchange for stock (i.e. ownership shares, the term stock is used here in the American form indicating ownership shares) thus resulting in ending equity of $1,100.Correct Answer$1,100 Correct Answer1,100 Correct Answer$1100 Answer 2:Correct!140Correct AnswerCorrect. The issuance of ownership shares to investors in exchange for cash has no effect on liabilities, therefore, liabilities remain at $140.Correct Answer$140 Answer 3:Correct!960Correct AnswerIncorrect. Beginning equity was $560 and $400 of additional equity shares were issued resulting in ending equity of $960.Correct Answer$960 Correct. Beginning assets were $700 + $400 of cash = $1,100. Beginning liabilities were $140 and the issuance of stock to investors had no impact on liabilities because the company did not borrow any money from the investors, but rather provided them ownership shares instead. Beginning equity was $560 and $400 of additional equity shares were issued resulting in ending equity of $960. Question 31 / 1 pts Mod 6.3: When a company orders product from a supplier to be delivered at a later date, what impact will such order have on the company's income statement, statement of owners' equity, balance sheet and statement of cash flows? Income statement (none), statement of owners' equity (none), balance sheet (increase assets, increase liabilities, no change to equity) and statement of cash flows (none). Income statement (increase expenses), statement of owners' equity (reduce owners' equity), balance sheet (reduce assets, reduce liabilities, reduce equity) and statement of cash flows (reduce cash). Income statement (reduce income), statement of owners' equity (none), balance sheet (increase assets, increase liabilities, no change to equity) and statement of cash flows (none). Correct! Income statement (none), statement of owners' equity (none), balance sheet (none) and statement of cash flows (none). Correct. Product that simply has been ordered has no effect on the company's financial statements because no asset has been received and no obligations have been incurred. Correct. Product that simply has been ordered has no effect on the company's financial statements because no asset has been received and no obligations have been incurred. Question 40 / 1 pts Mod 6.3: It is possible that a company can report positive net income on the income statement, but have negative cash flows from operating activities on the statement of cash flows. Correct Answer True You Answered False Incorrect. This is a true statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. Correct. This is a true statement. Because under accrual accounting, revenues are recorded when they are earned, even if the cash may not be received until much later, and because expenses are recorded when incurred not necessarily when cash is paid, the accrual-basis income statement could show positive income even though the actual cash flows from operating activities are negative. Question 50 / 1 pts Mod 6.3: Assume last week that Company A ordered $1,000 of inventory on account (i.e. on credit) from Company B. This week, Company A sent a truck over and personally picked up the ordered inventory and promised to pay for the inventory within 30 days. What impact will Company A's picking up of the inventory have on Company A's income statement, statement of owners' equity, balance sheet and statement of cash flows? income statement (reduce income), statement of owners' equity (reduce equity), balance sheet (increase assets, liabilities increase, equity decrease) and statement of cash flows (no effect) You Answered income statement (decrease income), statement of owners' equity (decrease equity), balance sheet (assets increase, liabilities increase, equity decrease) and statement of cash flows (decrease cash on hand) Incorrect. Because Company A obtained possession of the ordered inventory which it has agreed to pay for, its assets will increase (particularly inventory will go up), liabilities will increase (particularly accounts payable will go up), and equity will not be affected because no revenue or expense has yet resulted. The other financial statements remain unaffected. income statement (reduce income), statement of owners' equity (no effect), balance sheet (assets increase, liabilities increase, equity no effect) and statement of cash flows (no effect) Correct Answer income statement (no effect), statement of owners' equity (no effect), balance sheet (assets increase, liabilities increase, equity no effect) and statement of cash flows (no effect) Incorrect. Because Company A obtained possession of the ordered inventory which it has agreed to pay for, its assets will increase (particularly inventory will go up), liabilities will increase (particularly accounts payable will go up), and equity will not be affected because no revenue or expense has yet resulted. The other financial statements remain unaffected.

Question 10 / 1 pts Mod 6.3: Bunson Co. began Day 1 with $1,000 of assets ($300 of which was inventory). It also had $300 of liabilities and $700 of equity. On Day 1 it ordered $200 of inventory to be delivered in 5 days. Compute Bunson Co.'s ending balances for assets, liabilities and equity. Assets $800; Liabilities $300, Equity $500. Assets $1,200; Liabilities $500, Equity $700. You Answered Assets $1,200; Liabilities $300, Equity $900. Correct Answer Assets $1,000; Liabilities $300, Equity $700. Incorrect. All the balance sheet balances remain unchanged. Assets are $1,000, Liabilities are $300, and Equity is $700. A purchase order to receive inventory some time in the future has no direct impact on the balance sheet because 1) you have not obtained control of the inventory yet, so assets are unaffected and 2) you are not obligated to pay for the inventory yet, so liabilities are unaffected, and 3) you have not sold the inventory to customers yet, so equity is not affected. Question 21 / 1 pts Mod 6.3: Spencer Co. started the current month with Assets of $90, Liabilities of $70, Equity of $20. Because he needed more assets he borrowed $16 from the bank at 8% simple interest to be repaid in full in 5 years. How much in assets does Spencer Co. have immediately after obtaining the loan from the bank? Correct! Correct Answer106 Correct. Spencer Co. started with $90 in assets and then obtained a loan from the bank, thus increasing assets (in the form of cash). Therefore, the ending cash balance is $90 + the new cash obtained from the bank loan. Question 30 / 1 pts Mod 6.3: At the end of the prior month Charlie Co's balance sheet had the following balances: Assets $100, Liabilities $20, Equity $80 On Day 1, Charlie Co. paid off an account payable to its vendor in the amount of $19. What is the balance in Charlie Co.'s liabilities at the end of Day 1? You Answered Correct Answer1 Incorrect. Liabilities of $20 will be reduced by the payment on the account payable because accounts payable are liabilities and they reduce when they are paid off. Question 41 / 1 pts Mod 6.3: At the beginning of Day 1, Company D had receivables of $200, then during Day 1, one of its customers showed up and paid off receivables in the amount of $70. Assuming Company D started the day with Assets of $500, Liabilities of $200 and Equity of $300, what will be Company D's TOTAL assets at the end of Day 1? Correct! Correct Answers500 (with margin: 0) Correct. NET Assets remain unchanged because the decrease in the receivable (which is an asset) resulting from the payment is perfectly offset by the increase in cash (which is also an asset) resulting from the payment. Question 50 / 1 pts Mod 6.3: At the end of the prior month Sage Co's balance sheet had the following balances: Assets $200, Liabilities $160, Equity $40 On Day 1, Sage Co. sold $49 of inventory to customers for $90 on account (i.e. on credit) What is the balance in Sage Co.'s equity at the end of Day 1? You Answered Correct Answer81 Incorrect. Equity will increase by the gross margin earned on this sale as follows: Beginning Equity $40 + Net Income (i.e. in this case the only net income we have was generated by this sale with Sales Revenues Less the Cost of the Goods Sold) = Ending Equity

Question 10 / 1 pts Mod 6.4: Within 75-90 days after the end of a company's fiscal year, to which of the following entities must the management of a publicly-traded company submit its completed Form 10-K to? the IRS Correct Answer the SEC the CFO You Answered the CPA Incorrect. The CPA must audit key components of the Form 10-K which would not be complete until the auditor has finished his audits. Incorrect. See explanations above. Question 21 / 1 pts Mod 6.4: Use the drop-down lists next to each report or certification below to indicate who is required to prepare the noted item. Annual report to shareholders [ Select ] ["Company management", "External auditor"] Form 10-K Company management Financial Statements and related footnotes [ Select ] ["External auditor", "Company management"] Management certifications [ Select ] ["Company management (particularly the CEO and CFO)", "External auditor"] Answer 1:Correct!Company management Correct. Answer 2:Correct!Company management Correct. Answer 3:Correct!Company management Correct. Answer 4:Correct!Company management (particularly the CEO and CFO) Correct. Correct. See explanations above. Question 31 / 1 pts Mod 6.4: In the United States, when someone with an auditing background receives a license to perform external audits, s/he becomes a: CEO CFO COO Correct! CPA Correct. Certified Public Accountants (CPAs) have the legal right and license to perform external audits. Correct. Certified Public Accountants (CPAs) have the legal right and license to perform external audits. Question 41 / 1 pts Mod 6.4: Which of the following is a reliable, free source for obtaining a company's audited financial statements? Correct! Electronic Data Gathering, Analysis and Retrieval (EDGAR) Correct. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Complete Electronic Form Filings Service (CEFFS) Form Retrieval Evidence Exhibits (FREE) Annual Report Filing Service (ARFS) Incorrect. This is a garbage answer that I just made up from scratch. The correct answer is EDGAR. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Question 51 / 1 pts Mod 6.4: If you were a potential investor in a publicly-traded company and you could only request the company to provide you one of the following documents to assist you in making your investment decision, which one would provide you the most extensive and reliable information? Annual Report to Shareholders Auditors' report on the financial statements Management certifications Correct! Form 10-K Correct. The Form 10-K includes all of the other items listed in this question as well as many other things. It is the most extensive and reliable information available on the list. Financial statements and related footnotes Correct. The Form 10-K includes all of the other items listed in this question as well as many other things. It is the most extensive and reliable information available on the list.

Question 11 / 1 pts Mod 6.4: Corporate management is often expected to meet the expectations of its employees, its stakeholders, board of directors and its shareholders. Which of these noted groups is the largest of the four and includes all of the other three groups? Correct! stakeholders Correct. Stakeholders encompass anyone and everyone impacted by the decisions of the company. This is the largest, most all-encompassing group of those listed. employees board of directors shareholders Correct. Stakeholders encompass anyone and everyone impacted by the decisions of the company. This is the largest, most all-encompassing group of those listed. Question 21 / 1 pts Mod 6.4: Which of the following is a reliable, free source for obtaining a company's audited financial statements? Form Retrieval Evidence Exhibits (FREE) Correct! Electronic Data Gathering, Analysis and Retrieval (EDGAR) Correct. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Complete Electronic Form Filings Service (CEFFS) Annual Report Filing Service (ARFS) Incorrect. This is a garbage answer that I just made up from scratch. The correct answer is EDGAR. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Question 31 / 1 pts Mod 6.4: If you were a potential investor in a publicly-traded company and you could only request the company to provide you one of the following documents to assist you in making your investment decision, which one would provide you the most extensive and reliable information? Correct! Form 10-K Correct. The Form 10-K includes all of the other items listed in this question as well as many other things. It is the most extensive and reliable information available on the list. Management certifications Financial statements and related footnotes Annual Report to Shareholders Auditors' report on the financial statements Correct. The Form 10-K includes all of the other items listed in this question as well as many other things. It is the most extensive and reliable information available on the list. Question 41 / 1 pts Mod 6.4: The most important stewardship of company management is to: Prepare financial statements Comply with government regulations Correct! Increase shareholder value Correct. The primary responsibility of company management is to manage the company in a manner that increases shareholder value. The discussion of increasing stakeholder value is broader than this question is asking and that is why I left "stakeholder value" out of the list of possible answers. Sell products File tax returns Correct. The primary responsibility of company management is to manage the company in a manner that increases shareholder value. The discussion of increasing stakeholder value is broader than this question is asking and that is why I left "stakeholder value" out of the list of possible answers. Question 51 / 1 pts Mod 6.4: In the United States, when someone with an auditing background receives a license to perform external audits, s/he becomes a: COO CEO Correct! CPA Correct. Certified Public Accountants (CPAs) have the legal right and license to perform external audits. CFO Correct. Certified Public Accountants (CPAs) have the legal right and license to perform external audits.

Question 11 / 1 pts Mod 6.4: Within 75-90 days after the end of a company's fiscal year, to which of the following entities must the management of a publicly-traded company submit its completed Form 10-K to? Correct! the SEC Correct. All Form 10-K's must be submitted to the Securities and Exchange Commission (SEC) within 75 to 90 days (depending on the company's size) after the company's fiscal year end. the CFO the IRS the CPA Correct. All Form 10-K's must be submitted to the Securities and Exchange Commission (SEC) within 75 to 90 days (depending on the company's size) after the company's fiscal year end. Question 20 / 1 pts Mod 6.4: In a large, publicly-traded corporation, who is directly responsible for selecting, and approving the hiring of, the core management team (i.e. the CEO, CFO, COO, etc.)? Correct Answer The board of directors of the company The shareholders of the company You Answered The human resources manager Incorrect. The human resources manager will process the paperwork to hire the management team, but the human resources manager should have no authority to select and approve the hiring of the core management team. The auditor (CPA) Incorrect. See explanations above. Question 30 / 1 pts Mod 6.4: Which of the following is a reliable, free source for obtaining a company's audited financial statements? Correct Answer Electronic Data Gathering, Analysis and Retrieval (EDGAR) You Answered Annual Report Filing Service (ARFS) Incorrect. This is a garbage answer that I just made up from scratch. The correct answer is EDGAR. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Complete Electronic Form Filings Service (CEFFS) Form Retrieval Evidence Exhibits (FREE) Incorrect. This is a garbage answer that I just made up from scratch. The correct answer is EDGAR. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Question 40 / 1 pts Mod 6.4: The role of an external auditor (i.e. a CPA) hired to perform the audit of a publicly-traded company in compliance with SEC (Securities Exchange Commission) and PCAOB (Public Company Accounting Oversight Board) regulations is to (choose all that apply, there may be more than one): Correct Answer Perform an audit on the company's internal controls over financial reporting. You Answered Perform an audit of the company's compliance with all laws and regulations. Incorrect. In the US, there are many, many laws and regulations that have no direct financial statement impact on the company's financial statements and therefore are irrelevant to a financial statement audit. For example, let's assume a company runs a delivery business and all of its drivers consistently drive 1 mile per hour faster than what is allowed by law. Although the Company is breaking the law every day, such does not directly impact the company's financial statements and therefore the auditor would not audit such compliance or lack thereof. Correct! Perform a financial audit of the company's financial statements and related footnotes. Correct. Auditors are required to not only audit the financial statements but also the related footnotes. You Answered Perform an audit of the company's predicted future stock value. Incorrect. Auditors do not audit the predicted future stock values of the company. Incorrect. See explanations above. Question 50 / 1 pts Mod 6.4: The management of publicly-traded companies (particularly the CEO and CFO) are required to submit personal certifications that, according to their knowledge: (there may be more than one, choose all that apply) Correct Answer The financial statements are not materially misstated. You Answered The auditor who performed the audit is independent of the company. Incorrect. Although it is a requirement that the external auditors of a company be independent in fact and in appearance of the company, the management of the company is not required to certify to such fact. Correct Answer The internal controls over financial reporting are reliable. You Answered The shareholders' stock value will increase in the future. Incorrect. No CEO or CFO would ever be required to make such certification because too many variables in the future can influence the value of a company's stock. In fact, if you ever hear a CEO make such a guarantee, I would be very, very cautious in considering an investment in such a company. Inorrect. See explanations above.

Question 11 / 1 pts Mod 6.4: What are the three areas of emphasis of internal auditors when striving to improve a company's "internal control". capture, process, report. Correct! operations, reporting, and compliance. Correct. These are the three areas of "Internal Control" as defined by "Internal Control - Integrated Framework" (2013) as produced by COSO (the Committee of Sponsoring Organizations). financing, manufacturing, and marketing. employee relations, customer relations and supplier relations. Correct. These are the three areas of "Internal Control" as defined by "Internal Control - Integrated Framework" (2013) as produced by COSO (the Committee of Sponsoring Organizations). Question 21 / 1 pts Mod 6.4: Which of the following is a reliable, free source for obtaining a company's audited financial statements? Correct! Electronic Data Gathering, Analysis and Retrieval (EDGAR) Correct. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Annual Report Filing Service (ARFS) Form Retrieval Evidence Exhibits (FREE) Complete Electronic Form Filings Service (CEFFS) Incorrect. This is a garbage answer that I just made up from scratch. The correct answer is EDGAR. When management submits its Form 10-K to the SEC, the SEC then posts the Form 10-K to its Electronic Data Gathering, Analysis and Retrieval (EDGAR) system which makes them freely searchable and available to the public. Question 31 / 1 pts Mod 6.4: In the United States, when someone with an auditing background receives a license to perform external audits, s/he becomes a: Correct! CPA Correct. Certified Public Accountants (CPAs) have the legal right and license to perform external audits. CFO COO CEO Correct. Certified Public Accountants (CPAs) have the legal right and license to perform external audits. Question 40 / 1 pts Mod 6.4: Publicly traded companies in the United States MUST be audited by: Members of the Institute of Internal Auditors (IIA) Correct Answer Certified Public Accountants (CPAs) who are registered with the Public Accounting Oversight Board (PCAOB) You Answered Certified Public Accountants (CPAs) who are also members of the American Institute of Certified Public Accountants (AICPA) Incorrect. Although auditors of publicly traded companies must be CPAs, they are not required to be members of the AICPA. If a state-licensed CPA wants to perform an audit of a publicly-traded company subject to SEC regulations, the CPA must comply with additional rules and register with the Public Company Accounting Oversight Board (PCAOB). Because of these additional registration requirements, many smaller CPA firms do not perform audits of publicly-traded companies. Certified Public Accountants (CPAs) Incorrect. If a state-licensed CPA wants to perform an audit of a publicly-traded company subject to SEC regulations, the CPA must comply with additional rules and register with the Public Company Accounting Oversight Board (PCAOB). Because of these additional registration requirements, many smaller CPA firms do not perform audits of publicly-traded companies. See additional explanations above. Question 51 / 1 pts Mod 6.4: If you were a potential investor in a publicly-traded company and you could only request the company to provide you one of the following documents to assist you in making your investment decision, which one would provide you the most extensive and reliable information? Financial statements and related footnotes Annual Report to Shareholders Management certifications Correct! Form 10-K Correct. The Form 10-K includes all of the other items listed in this question as well as many other things. It is the most extensive and reliable information available on the list. Auditors' report on the financial statements Correct. The Form 10-K includes all of the other items listed in this question as well as many other things. It is the most extensive and reliable information available on the list.

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