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2.) Financing 3.) Investing - correct answer Select the business activity that matches with the description: 1.) Transactions related to revenues and expenses. 2.) Transactions with lenders and owners. 3.) Transactions involving the purchase and sale of productive assets. Business Activities: -Financing -Investing -Operating 1.) Statement of Stockholders' Equity 2.) Income Statement 3.) Statement of Cash Flows 4.) Balance Sheet - correct answer Select the financial statement that matches with the description: 1.) Change in owners' claims to resources. 2.) Profitability of the company. 3.) Change in cash as a result of operating, investing, and financing activities. 4.) Resources equal creditors' and owners' claims to those resources. Financial Statements: -Balance Sheet -Income Statement -Statement of Cash Flows -Statement of Stockholders' Equity 1.) Statement of Stockholders' Equity 2.) Statement of Cash Flows 3.) Income Statement 4.) Balance Sheet - correct answer Select the financial statement to which the item belongs: 1.) The change in retained earnings due to net income and dividends. 2.) Amount of cash received from borrowing money from a local bank. 3.) Revenue from sales to customers during the year. 4.) Total amounts owed to workers at the end of the year. Financial Statements: -Balance Sheet -Income Statement -Statement of Cash Flows -Statement of Stockholders' Equity 1.) Securities and Exchange Commission 2.) Financial Accounting Standards Board 3.) Auditors 4.) International Accounting Standards Board - correct answer Each of these parties plays a role in the quality of financial reporting. Select the group that matches with its function: 1.) Group that has been given power by Congress to enforce the proper application of financial reporting rules for companies whose securities are publicly traded. 2.) Independent, private-sector group that is primarily responsible for setting financial reporting standards in the United States. 3.) Independent intermediaries that help to ensure that management appropriately applies financial reporting rules in preparing the company's financial statements. 4.) Body that is attempting to develop a single set of high-quality, understandable global accounting standards. Financial Reporting Groups: -International Accounting Standards Board -Financial Accounting Standards Board -Auditors -Securities and Exchange Commission 1.) Predictive Value 2.) Confirmatory Value 3.) Materiality - correct answer Select the components of relevance that matches with its definition: 1.) Information is useful in helping to forecast future outcomes. 2.) Information provides feedback on past activities. 3.) The nature or amount of an item has the ability to affect decisions. Components of Relevance: -Materiality -Predictive Value -Confirmatory Value 1.) Completeness 2.) Neutrality 3.) Freedom From Error - correct answer Select the components of faithful representation that matches with its definition: 1.) All information necessary to describe an item is reported. 2.) Information that does not bias the decision maker. 3.) Reported amounts reflect the best available information. Components of Faithful Representation: -Freedom From Error -Completeness -Neutrality Equipment = $11,000 Notes Payable = $12,000 - correct answer Calculate the missing amounts assuming the business has total assets of $28,700: Accounts ‖ Balances Land ‖ $7,800 Equipment ‖ ? Salaries Payable ‖ $3,300 Notes Payable ‖ ? Supplies ‖ $1,500 Cash ‖ $6,200 Stockholders' Equity ‖ $12,300 Accounts Payable ‖ $1,100 Prepaid Rent ‖ $2,200 a ) Assets = Liabilities + Stockholders' Equity + $47,000 + $47,000 b ) Assets = Liabilities + Stockholders' Equity + $39,000 ($39,000) c ) Assets = Liabilities + Stockholders' Equity + $32,000 + $32,000 d ) Assets = Liabilities + Stockholders' Equity ($4,700) ($4,700) - correct answer The following transactions occur for a company during the month of June: a ) Provide services to customers on account for $47,000. b ) Receive cash of $39,000 from customers in (a) above. c ) Purchase bike equipment by signing a note with the bank for $32,000. d ) Pay utilities of $4,700 for the current month. Analyze each transaction and indicate the amount of increases and decreases in the accounting equation: a ) Assets = Liabilities + Stockholders' Equity b ) Assets = Liabilities + Stockholders' Equity c ) Assets = Liabilities + Stockholders' Equity