About Financial Statement

Which of the following is not a primary objective of external users who read a company's financial statement?

• Understanding the company's current financial state

• Assessing the company's contribution to social and environmental policies

• Predicting the company's future financial performance

• Evaluating the company's ability to generate cash from sales

A company reported assets of $130,000, liabilities of $20,000, expenses of $220,000 and net income of $40,000. Revenues and owner's equity would be reported as:

Revenues =$.....

Owner's equity = $.....

(a)  

Which of the following is not one of the four basic financial statements?

• Balance sheet

• Income statement

• Audit report

• Statement of cash flows

The income statements reports

• Net earnings or losses for a period of time

• Only revenue for which cash was received at the point of sale

• Revenues, expenses and liabilities

• Financial position of a business at a specific point in time

Which of the following is false regarding the balance sheet?

• The accounts shown on a balance sheet represent the basic accounting equation for a particular business

• The owner's equity balance shown on the balance sheet must agree to the ending owner's equity balance shown on the statement of owner's equity

• The balance sheet summarizes the net changes in specific account balances over a period of time

• The balance sheet reports the amount of assets, liabilities and owner's equity of a business at a point in time

Which of the following is not one of the items required to be shown in the heading of a financial statement?

• The financial statement preparer's name

• The title of the financial statement

• The financial reporting date or period

• The name of the business entity

Which of the following is a liability?

• Prepaid expenses

• Accounts recevable

• Sales revenue

• Wages payable

Which of the following regarding GAAP is true?

• GAAP is an abbreviation for goodie, another accounting problem

• Changes in GAAP do not affect the amount of income reported by a company

• Changes to GAAP must be approved by the Senate Finance Commitee

• GAAP is the abbreviation for generally accepted accounting principles

Which of the following is False?

• Assets are the resources the business owns

• Assets = Liabilities- Owner's Equity

• Ethical decisions are an important component of sound financial reporting

• The primary responsibility for the information in financial statement lies with management

Public accountants provide which of the following services for clients?

• Internal auditing, cost accounting and budgeting

• Internal auditing, taxation and consulting

• Assurance, forensic and consulting

• Assurance, cost accounting and bookkeeping