ACCT 1004S Week 6 Exam Solutions

1. Question: Which information might be specifically included in the notes to the financial statements portion of the annual report? 2. Question: Consider the following scenario: Which of the following would the company delcar on an income statement? 3. Question: You are the accountant for Pacific Paper and preparing the firm’s statement of cash flows. Which of the following would you categorize as cash flows from investing activities? 4. Question: Which number is transferred from the income statement to the statement of retained earnings? 5. Question: You have completed the statement of retained earnings. Which number is transferred to the balance sheet? 6. Question: On an income statement, which section indicates the money a firm receives over a period of time for selling its products? 7. Question: A group of investors are considering investing in ATX Enterprises. The investors can learn more about ATX's revenues and expenses over a specific period by reviewing the firm's . 8. Question: Which opinion from an independent auditor’s report indicates that no opinion is made due to missing information? 9. Question: Wilson Consulting is seeking a $500,000 loan from National Bank to purchase land for an office building. Which section of Wilson Consulting ’s balance sheet would provide the bank with information about the firm’s Software are reviewing t he firm's statement of cash flows. The investors are specifically focusing on whether A&E is able to generate debts and obligations? 10. Question: True or false. The statement of retained earnings is used by firms to report changes in cash inflows and outflows from one accounting period to the next. 11. Question: A group of potential investors in A&E net cash by selling its software products. Which section on the statement of cash flows would provide this information? 12. Question: A business owner is concerned about the ability of his business to pay its debts in the next 30 days due to the company’s limited amount of available cash. The business owner is worried about the firm’s . 13. Question: On a balance statement, which component is categorized as stockholders’ equity? 14. Question: Which of the following activities are listed on the statement of cash flows? (Select all that apply.) 15. Question: Where on the balance sheet is the ending retained earnings balance transferred? 16. Question: A group of potential investors in A&E Software are reviewing the firm’s statement of cash flows. The investors are specifically focusing on the firm’s cash flows from operating activities. What can the investors determine by reviewing this section of the cash flow statement? 17. Question: Which component of a balance sheet indicates the amount of money that stockholders have invested in the company? 18. Question: You are preparing Redwing Baking Company’s annual report. Where would you include an additional explanation for a single line item? 19. Question: On a statement of cash flows, the cash flow from investing activities section includes all cash transactions related to what? 20. Question: Which question can be answered by reviewing a company’s statement of retained earnings? 21. Question: Which financial statement for the most recent three years is provided in the annual report? 22. Question: A group of potential investors in A&E Software want to know how the firm generates andusesavailablecash.Whichofthefollowingreportswouldbethebestsourcefor this information? 23. Question: Which number is transferred from the balance sheet to the statement of cash flows? 24. Question: Which of the following are the sections that appear on the balance sheet? (Select all that apply.) 25. Question: Of the likely audiences for the annual report, which party is most interested in the company’s ability to pay for goods and services it purchases? 26. Question: Which of the four financial statements is the second to be prepared? 27. Question: A group of investors are considering investing in ATX Enterprises. What is the investor's purpose for reviewing the income statements of ATX Enterprises? 28. Question: Which of the following decreases the balance of retained earnings? 29. Question: A potential investor in CBA Manufacturing is reviewing the firm’s statement of retained earnings. What information on the statement of retained earnings is of particular interest to a potential investor? 30. Question: During the fourth quarter of the year, Carl's Carpet Cleaning received $4,000 from customers in exchange for providing carpet cleaning services. Where would this money appear on the income statement? 31. Question: How do dividends from the income statement affect the ending balance on the statement of retained earnings? 32. Question: Which number from the balance sheet is used to reconcile the ending balance on the statement of cash flows? 33. Question: Wilson Enterprises sells one of its facilities. Which section on the statement of cash flows would the incoming funds be categorized? 34. Question: A group of investors are considering investing in ATX Enterprises. What can the investors learn by reviewing the third quarter income statement for ATX? 35. Question: What is the purpose of the cash amount on the balance sheet relative to the ending balance on the cash flow statement? 36. Question: Consider the following scenario: Given this information, what is the ending balance on the statement? 37. Question: The document shown below is used by investors to determine whether a firm has enough earnings to pay shareholder dividends and support future growth. What is this document known as: 38. Question: Wilson Consulting is seeking a $500,000 loan from National Bank to purchase land for an office building. The bank’s loan officer asks numerous questions based on the balance sheet to determine the risk of providing the loan. Which question about information on the balance sheet best addresses the liquidity of Wilson Consulting? 39. Question: Which statement about stockholders’ equity is correct? 40. Question: Which party requires that all companies prepare an annual report?