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Introduction to Financial Statements 147.
1-27
Which financial statement would best indicate whether the company relies on debt or stockholders’ equity to finance its assets? a. Statement of cash flows b. Retained earnings statement c. Income statement d. Balance sheet
Ans: D, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Measurement, AICPA PC: None, IMA: Business Economics
148.
The primary purpose of the statement of cash flows is to report a. a company's investing transactions. b. a company's financing transactions. c. information about cash receipts and cash payments of a company. d. the net increase or decrease in cash.
Ans: C, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
149.
Claims of owners are called a. dividends. b. stockholders’ equity. c. liabilities. d. income payable.
Ans: B, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
150.
Which of the following is not a common way that managers use the balance sheet? a. To analyze the balances of assets, liabilities, and stockholders’ equity throughout the accounting period b. To determine if the cash balance is sufficient for future needs c. To analyze the balance between debt and common stock financing d. To analyze the balance of accounts receivable on the last day of the accounting period
Ans: A, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Business Economics
151.
Why are financial statement users interested in the statement of cash flows? a. It is the easiest financial statement to evaluate. b. It provides information about an important company resource. c. It is the first statement that is presented to users. d. It helps users decide whether assets such as office equipment should be replaced.
Ans: B, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
152.
Why should the income statement be prepared first? a. The statement of cash flows should be prepared first because it determines the sources of cash. That information is then used in preparing the income statement. b. Net income from the income statement flows into the retained earnings statement. The ending retained earnings balance then flows into the balance sheet. c. The income statement does not have to be prepared first. Financial statements can be prepared in any order. d. None of these answer choices are correct.
Ans: B, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: None, IMA: Reporting
FOR INSTRUCTOR USE ONLY
Full file at https://testbankuniv.eu/Accounting-Tools-for-Business-Decision-Making-5th-Edition-Kimmel-Test-Bank