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Exam 1: Financial Statements and Business Decisions

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Question 21

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Using the income statement model and the statement of financial position model, fill-in the missing amounts for each independent case below. Assume the amounts given are at the end of the first full year of operations of the company.

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Question 22

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The financial statement that shows an entity's economic resources and its liabilities is the statement of retained earnings.

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B) False

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Question 23

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During 20A, Burton Company delivered products to customers for which customers paid or promised to pay $3,820,000. The company collected $3,670,000 in cash from customers during the year. Indicate which of these amounts will appear on the statement of earnings and which on the statement of cash flows.

How do most businesses earn revenues?

In what order are assets are listed on a statement of financial position?

Profit is the excess of total revenues over total expenses incurred to generate revenue during a specific period.

If total liabilities increased by $25,000 and shareholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period?

Liabilities are the entity's legal obligations that result from past business events.

In accounting and reporting for a business entity, the accounting and reporting for the business must be kept separate from other economic affairs of its owners.

Failure to comply with professional rules of conduct can result in serious penalties for professional accountants, but not the rescinding of the professional designation of an offending member.

Allentown Corporation has on its statement of financial position the following amounts: Total assets of $3,500,000 and total liabilities of $500,000. Contributed capital had a balance of $1,000,000. What is the amount of retained earnings that should appear on Allentown's statement of financial position?

Investing activities involve collecting the necessary funds to operate the business.

The statement of financial position and statement of changes in equity are related because

For Baggerly Fashions, the following information is available for the year ended December 31, 20C: The income tax rate is 35%. Required: Prepare an income statement for Baggerly Fashions.

What results from the purchase of goods or services on credit and from borrowing?

The BAT Corporation had revenues of $110,000, expenses of $85,000, and an income tax rate of 20 percent in 20B. What would profit after taxes be?

Economic resources that are owned by a business are called shareholders' equity.

Which of the following is not a principal type of business activity?

At the beginning of 20B, Rodriguez Corporation had assets of $820,000 and liabilities of $340,000. During the year, assets increased by $40,000 and liabilities decreased by $8,000. What was the total amount of shareholders' equity at the end of 20B?

Which of the following would not be considered an internal user of accounting data?