Bell Ringer Chapter 8-Lesson 3-4

Adam wants to find out the assets and liabilities of a company. Which financial statement should Adam read to find out this information?

• Income Statement

• Statement of Profit and Loss

• Balance Sheet

• Statement of Cash Flows

Which of the following is an example of external users of accounting information?

• Owners

• Analysts

• Directors

• Managers

What statement(s) do external and internal users of accounting information rely on?

• Balance Sheet

• Income Statement

• Statement of Cash Flows

• All answers are correct.

Monica reads in the newspaper that in the year ended December 31, 2015, Profit For Two Inc made $1 million profit. Monica wants to confirm for herself that this is really the case. What financial statement of Profit For Two Inc should Monica read to confirm the newspaper report?

• The income statement.

• The balance sheet.

• The statement of retained earnings.

• The statement of cash flows.

GAAP sets the standards for the creation of what?

• Income Statement

• Statement of Retained Earnings

• Balance Sheet

• All answers are correct

Which of the following is an example of how publicly-traded companies can apply the principle of conservatism with their financial statements?

• Recognizing a potential gain from a lawsuit immediately.

• Recognizing the cost of goods sold after the company's inventory has been exhausted.

• Recognizing accounts payable immediately on the financial statements.

• All answers are correct

Which company, listed on the New York Stock Exchange would definitely be in breach of the Going Concern Principle?

• Company B, which has made a net loss this financial year.

• Company C, which shows a net cash outflow in its statement of cash flows.

• Company D, which has run out of cash and is now not able to pay its creditors

• Company A, which has decided to issue new shares to foreign nationals.

How many basic accounting principles make up GAAP?

• 18

• 4

• 7

• 10