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Exam 1: Business Decisions and Financial Accounting

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Question 51

Multiple Choice

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Which of the following would not represent a financing activity?

A) Paying dividends to shareholders.
B) An investment of financial capital by the owners.
C) Borrowing money from a bank to finance the purchase of new equipment.
D) Collecting cash from customers.

E) B) and D)
F) B) and C)

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Question 52

True/False

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Investors analyze the income statement to identify trends in a company's net income,which can provide clues about the company's future earnings. BT: Knowledge

A) True
B) False

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Question 53

True/False

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Financing activities include borrowing and obtaining money by issuing shares of ownership (called stock certificates). BT: Comprehension

The total net income from the income statement is always included in the Statement of Retained Earnings. BT: Analysis

On the balance sheet,inventories are reported as:

Which of the following statements is true?

When a company goes bankrupt,assets are divided equally between creditors and investors. BT: Knowledge

The Whackem-Smackem Software Company sold $11 million of computer games in its first year of operations.The company received payments of $7.5 million for these computer games.The company's income statement would report:

During 2007,a company's assets rise $56,000 and its liabilities rise $38,000.If no dividend is paid and no further capital is contributed,shareholders' equity would:

In the statement of cash flows,the company's payment of a $1,900 electric bill would be classified as:

A company owes $200,000 on a bank loan.If this loan is documented using a formal written debt contract,it will be reported as a liability called Notes Payable. BT: Comprehension

When is the financial information relevant?

The income statement shows the assets and liabilities of the company at a point in time. BT: Knowledge

Match the lettered terms to the blanks below to complete the relevant formula for each financial statement. A.Cash at beginning of year B.Net cash flow from operating activities C.Balance of retained earnings from previous year D.Net cash flow from investing activities E.Liabilities F.Net cash flow from financing activities G.Balance of retained earnings at end of year H.Net income I.Revenue J.Assets K.Shareholders' equity L.Expenses M.Cash at end of year N.Dividends paid A letter may be used more than once.Use the blank on the left side of the equals sign for the "bottom line" number that is reported at the end of each financial statement.Rearrange the formula if necessary. Balance Sheet_____=_____+_____ Income Statement_____=________-_________ Statement of Retained Earnings______=_________+________-______ Statement of Cash Flows______=________+_________+_______+________

Assets:

Match the category of business activity to the specific business action. A.Operating activity. B.Investing activity. C.Financing activity. _____ 1.The purchase of a new line of assembly equipment. _____ 2.Company payment of a dividend. _____ 3.The purchase of office supplies. _____ 4.The purchase of advertising time by the company. _____ 5.The building of a new factory. _____ 6.Company payment on a bank loan.

If XYZ Company had $12 million in revenue and net income of $3 million then its:

During its first year of operations,Widgets Incorporated reported sales revenue of $386,000 but collected only $303,000 from customers.The amount to be reported as accounts receivable at the end of the year is

In Canada,Generally Accepted Accounting Principles (GAAP) are established:

Under the unit of measure concept,a Canadian company would report these data in Canadian dollars. BT: Comprehension