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Exam 3: Financial Statements

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Question 31

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The income statement shows earnings before taxes which is equal to

A) gross revenues minus returns and allowances.
B) operating income minus operating expenses.
C) net sales minus cost of goods sold.
D) operating income minus interest.
E) earnings before taxes minus taxes.

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Question 32

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Cash flow from operating activities is the first item on the statement of cash flows.

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Question 33

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Public corporations require independent audits due to requirements established by the

Expenses that are contractual in nature and are normally paid every month are

Alex bought $50,000 worth of computers for his firm,he will pay the vendor for these computers on the fifteenth of next month.These items would be carried on the and listed as .

An increase in inventory is a cash outflow.

How Owner's Equity is shown on the Balance Sheet for a partnership is based on the partnership agreement.

Depreciation expense

Fixed assets are listed on the business balance sheet at the _ and on the individual's statement of financial position at the _ .

Current assets include all of the following except

The primary objective of Sarbanes- Oxley is to protect investors by: I.improving the accuracy of corporate disclosures. II.loosening the reigns on how information is reported. III.improving the reliability of corporate disclosures. IV.holding executive officers liable for the accuracy of corporate financial statements.

An increase in accounts receivable from last year's balance sheet to this year's balance sheet indicates that the business experienced a cash outflow

The final step in generating a statement of cash flows is to

Net income on the income statement is obtained after subtracting taxes for the

Cash received from the sale of stocks or bonds and the actual cash paid to others in the form of dividends to owners and the payment of long- term debt would show up on the cash flow statement under the category of

The business form which is equivalent to the personal cash flow statement is the income statement.

A company's net cash from operating activities is lower than its net income indicating that

The Tom Smith Corporation has the following items: Cash,$5,000;Machinery,$50,000;Building, $150,000;Note payable bank,$10,000;Savings,$10,000;Long term debt,$50,000;Accounts payable, $30,000;Taxes payable,$5,000;Accounts receivable,$30,000;Inventory,$10,000;Depreciation Building,$35,000;Depreciation Machinery,$25,000;Land $50,000.Fixed assets for this Corporation are

The Tom Smith Corporation has the following items: Cash,$5,000;Machinery,$50,000;Building, $150,000;Note payable bank,$10,000;Savings,$10,000;Long term debt,$50,000;Accounts payable, $30,000;Taxes payable,$5,000;Accounts receivable,$30,000;Inventory,$10,000;Depreciation Building,$35,000;Depreciation Machinery,$25,000;Land $50,000.Current liabilities for this Corporation are

Medicare payments for both the employer and employee are not subject to an annual limit.