Introduction to Accounting and Business Ch 1 Part 4

Chapter 01-Introduction to Accounting and Business 210. Explain the interrelationship between the balance sheet and the statement of cash flows. ANSWER: The cash reported on the balance sheet is also reported as the end-of-period cash on the statement of cash flows. 211. From the following list of items taken from Lamar's accounting records, identify those that would appear on the income statement. (a) Rent expense (b) Land (c) Common stock (d) Fees carned (c) Dividends (f) Wages expense (g) Investment ANSWER: (a), (d), (f) 212. Identify which of the following accounts would appear on a balance sheet. (a) Cash (b) Fees earned (c) Common stock (d) Wages payable (c) Rent expense (f) Supplies (g) Land ANSWER: (a), (c), (d), (f), (g) 213. Indicate whether each of the following activities would be reported on the statement of cash flows as an operating activity, an investing activity, a financing activity, or does not appear on the cash flow statement. (a) Cash paid for building (b) Cash paid to suppliers (c) Cash paid for dividends (d) Cash received from customers (c) Cash received from the sale of common stock (f) Cash received from the sale of a building (g) Borrowed cash from a bank ANSWER: (a) Investing (b) Operating (c) Financing (d) Operating (c) Financing (1) Investing (g) Financing 214. For each of the following, determine the amount of net income or net loss for the year. (a) Revenues for the year totaled $71,300 and expenses totaled $35,500. The shareholders purchased $15,000 of common stock during the year. (b) Revenues for the year totaled $220,500 and expenses totaled $175,000. The shareholders were paid $40,000 dividends during the year. (c) Revenues for the year totaled $149,000 and expenses totaled $172,000. The shareholders purchased $12,000 of Chapter 01-Introduction to Accounting and Business common stock and were paid $16,000 in dividends during the year. (d) Revenues for the year totaled $198,150 and expenses totaled $174,200. The shareholders were paid $35,000 dividends during the year. ANSWER: (a) $35,800 net income ($71,300-$35,500) (b) $45,500 net income ($220,500-$175,000) (c) $23,000 net loss ($149,000-$172,000) (d) $23,950 net income ($198,150-$174,200) 215. The total assets and total liabilities of Paul's Pools and Palaces at the beginning and at the end of the current fiscal. year are as follows: Jan, 1 Dec. 31 Total assets $280,000 $475,000 Total liabilities 205,000 130,000 (a) Determine the amount of net income earned during the year. No additional common stock was issued and no dividends were paid. (b) Determine the amount of net income during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders were paid $53,000 in cash dividends during the year (no additional purchase of common stock). (c) Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders paid for $35,000 of common stock in June of the current fiscal year (no dividends). (d) Determine the amount of net income earned during the year. The assets and liabilities at the beginning and at the end of the year are unchanged from the amounts presented above. However, the shareholders paid for $12,000 of common stock in August of the current fiscal year and were paid twelve monthly cash dividends of $1,500 each during the year. ANSWER:(Stockho a lders' $345,000 ) equity at end of year ($475,0 00- $130,00 (0) 75,000 Stockho Iders' equity at beginni ng of year ($280,0 00-$205,00 0) Net income $270,000 Chapter 01-Introduction to Accounting and Business C. comparability d. verifiability ANSWER: 231. Financial reports that are available for user's to use in decision making show a. timeliness b. understandability C. comparability d. verifiability ANSWER: a C 232. Relevant and faithful representation of accounting data is enhanced when financial reports are clear and concise. Such reports demonstrate a. timeliness b. understandability C. comparability d. verifiability ANSWER: 233. Financial reports are said to be verifiable when a. they are available in time to influence users' decisions. b. they are formatted clearly and concisely. c. they demonstrate the similarities and differences among reported items. d. users can agree on the meaning of reported items. ANSWER: 234. A fiscal year for a business a. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month b. is determined by the federal government c. always begins on January 1 and ends on December 31 of the same year d. should end at the height of the business's annual operating cycle ANSWER: 235. The natural business year is a a. fiscal year that ends when business activities are at their lowest point b. calendar year that ends when business activities are at their lowest point c. fiscal year that ends when business activities are at their highest point d. calendar year that ends when business activities are at their highest point ANSWER: 236. Resources owned by a business are known as debts b d a a b. liabilities Chapter 01-Introduction to Accounting and Business C. d. assets equity ANSWER: 237. The rights of owners in a corporation are referred to as a. proprietor's equity b. stockholder's equity c. dividends d. equity in assets ANSWER: b C 238. The assets and stockholder's equity of a company are $159,000 and $95,000, respectively. Liabilities should equal a. $64,000 b. $46,000 c. $254,000 d. $95,000 a ANSWER: 239. The liabilities and stockholder's equity of a company are $132,000 and $244,000, respectively. Assets should equal a. $188,000 b. $132,000 C. $376,000 d. $112,000 ANSWER: 240. Stockholders' equity at the beginning of the year for ATLAS Inc. was $390,000, while its liabilities totaled $230,000. During the year its assets increased by $75,000; its liabilities decreased by $50,000. Which of these is stockholders' equity at the end of the year for ATLAS Inc.? C a. $107,000 b. $98,000 c. $415,000 d. $515,000 ANSWER: d 241. At the beginning of the year, Winton Company's assets were $180,000 and its stockholders' equity was $82,000. During the year, assets increased by $25,000 and liabilities increased by $9,000. What was the stockholders' equity at the end of the year? $107,000 b. $98,000 c. $114,000 d. $116,000 b ANSWER: 242. The assets and liabilities of Bennett Designs at December 31, the end of the current year, and its revenue and