D196-Module 3 Questions and Correct
Answers.
Why does the balance sheet not reflect the current value or worth of a company? - Answer
Many assets are recorded at cost and same economic assets are not recorded at all.
Which statement best characterizes the elements and purpose of a balance sheet? - Answer
A balance sheet portrays the financial condition of a company at a point in time.
What is owners’ equity? - Answer Residual amount representing the net assets available to
another party after all obligations have been satisfied.
What information should be included on the balance sheet? - Answer Assets and liabilities
Why do the notes to the financial statements contain additional information summary totals? -
Answer Because one summary in the financial statements represents literally thousands of
individual items
Why do the notes to the financial statements contain a summary of significant accounting
policies? - Answer Because accounting involves making assumptions, estimates and
judgements.
Information about accounting policies and practices, including assumptions estimates and
judgments are included in which statements at the financial statements. - Answer The Notes
to the Financial statements
What is the purpose of a classified balance sheet? - Answer A classified balance sheet
represents a period of time instead of a point in time.
Which item would be classified in the owners equity section of the balance sheet? - Answer
Retained earnings
What is Sales- Cost of Goods sold? - Answer Gross profit
What is the calculation for operating income ? - Answer Sales-Cost of good sold- operating
expenses.
What is the purpose of the notes to the financial statements? - Answer The notes present
the assumptions needed to help explain financial statements.
Answers.
Why does the balance sheet not reflect the current value or worth of a company? - Answer
Many assets are recorded at cost and same economic assets are not recorded at all.
Which statement best characterizes the elements and purpose of a balance sheet? - Answer
A balance sheet portrays the financial condition of a company at a point in time.
What is owners’ equity? - Answer Residual amount representing the net assets available to
another party after all obligations have been satisfied.
What information should be included on the balance sheet? - Answer Assets and liabilities
Why do the notes to the financial statements contain additional information summary totals? -
Answer Because one summary in the financial statements represents literally thousands of
individual items
Why do the notes to the financial statements contain a summary of significant accounting
policies? - Answer Because accounting involves making assumptions, estimates and
judgements.
Information about accounting policies and practices, including assumptions estimates and
judgments are included in which statements at the financial statements. - Answer The Notes
to the Financial statements
What is the purpose of a classified balance sheet? - Answer A classified balance sheet
represents a period of time instead of a point in time.
Which item would be classified in the owners equity section of the balance sheet? - Answer
Retained earnings
What is Sales- Cost of Goods sold? - Answer Gross profit
What is the calculation for operating income ? - Answer Sales-Cost of good sold- operating
expenses.
What is the purpose of the notes to the financial statements? - Answer The notes present
the assumptions needed to help explain financial statements.
