ANSWERS|LATEST !!!!2026|GRADED A+| (EXAM
Which term is defined as the residual interest in the net assets of a company? -
ANSWER Owners' equity
A corporation has total liabilities of $300 million, total owners' equity of $100 million, and
current assets of $50 million. What is the value of the firm's long term assets? -
ANSWER $350 million
Which situation should result in revenue recognition on the income statement for the year
ending 12/31/14 if the firm is using accrual-basis accounting? - ANSWER In 2014, a
company provides services to a customer for which cash will be collected the next year
(2015).
Which category on the statement of cash flows summarizes cash receipts and payments to
owners and creditors of the company? - ANSWER Cash flows from financing
activities
Information that is enough to make a difference is referred to as - ANSWER Material
Information having to do with the matter at hand - ANSWER Relevant
Information related to recognizing losses as they occur - ANSWER Conservatism
Information that can be verified - ANSWER Reliable
1
, Order the steps in the decision cycle from first (1) to last (5). - ANSWER PAGMI
1. Prepare financial statements
2. Analyze financial statements
3. gather information
4. make decision
5. implement decision
Which form of debt should be reported in the long-term liability category? -
ANSWER Notes payable expected to be paid in 18 months
Which two values affect the measurement of net income? - ANSWER Operating
expenses and ordinary gains and losses
Which two items' subtotals are included in a multi-step income statement? -
ANSWER Gross profit and income from operations
Which item is an investing activity? - ANSWER Cash payments for purchase of plant
assets
What impact does the sale of equipment have on the statement of cash flows? -
ANSWER Increase in cash from investing activities
what is known about the direct and indirect methods of preparing statements of cash flow? -
ANSWER The indirect method is more popular among large U.S. companies
Which two examples represent financial statement errors?
Choose 2 answers - ANSWER The accounting department miscalculates the payroll
tax due at year-end, resulting in an inaccurate liability
2
Which term is defined as the residual interest in the net assets of a company? -
ANSWER Owners' equity
A corporation has total liabilities of $300 million, total owners' equity of $100 million, and
current assets of $50 million. What is the value of the firm's long term assets? -
ANSWER $350 million
Which situation should result in revenue recognition on the income statement for the year
ending 12/31/14 if the firm is using accrual-basis accounting? - ANSWER In 2014, a
company provides services to a customer for which cash will be collected the next year
(2015).
Which category on the statement of cash flows summarizes cash receipts and payments to
owners and creditors of the company? - ANSWER Cash flows from financing
activities
Information that is enough to make a difference is referred to as - ANSWER Material
Information having to do with the matter at hand - ANSWER Relevant
Information related to recognizing losses as they occur - ANSWER Conservatism
Information that can be verified - ANSWER Reliable
1
, Order the steps in the decision cycle from first (1) to last (5). - ANSWER PAGMI
1. Prepare financial statements
2. Analyze financial statements
3. gather information
4. make decision
5. implement decision
Which form of debt should be reported in the long-term liability category? -
ANSWER Notes payable expected to be paid in 18 months
Which two values affect the measurement of net income? - ANSWER Operating
expenses and ordinary gains and losses
Which two items' subtotals are included in a multi-step income statement? -
ANSWER Gross profit and income from operations
Which item is an investing activity? - ANSWER Cash payments for purchase of plant
assets
What impact does the sale of equipment have on the statement of cash flows? -
ANSWER Increase in cash from investing activities
what is known about the direct and indirect methods of preparing statements of cash flow? -
ANSWER The indirect method is more popular among large U.S. companies
Which two examples represent financial statement errors?
Choose 2 answers - ANSWER The accounting department miscalculates the payroll
tax due at year-end, resulting in an inaccurate liability
2
