38) Wylie Company has just completed operations for the year ended December 31, 2018. This is the
second year of operations for the company. The following data have been assembled for the business.
Accounts Payable
$12,200
Office Expense
$6,500
Accounts Receivable
14,500
Rent Expense
9,600
Cash
8,200
Retained Earnings, Jan. 1, 2018
8,300
Common Stock
9,000
Salaries Expense
36,000
Dividends
13,500
Service Revenue
84,000
Equipment
15,000
Utilities Expense
6,200
Insurance Expense
4,000
Prepare the balance sheet at December 31, 2018. Use a proper heading.
39) If a transaction does not involve cash, such as the purchase of supplies on account, it will not be
reported on the statement of cash flows.
40) A statement of cash flows always represents a period of time.
41) On the statement of cash flows, investing activities include cash contributions by stockholders.
42) On the statement of cash flows, investing activities include purchases of land and equipment with the
issuance of a note payable.
43) Financial statements are prepared after an entity’s transactions are analyzed and recorded. Which of
the following reports is one of the required financial statements?
A) Statement of cash flows
B) Statement of return on assets
C) Statement of dividends
D) Expense statement
44) Which of the following financial statements reports cash receipts and cash payments during a period
of time?
A) Statement of cash flows
B) Balance sheet
C) Cash receipts budget
D) Statement of retained earnings
45) Which of the following financial statements reports an increase or decrease in net cash during a
specific period of time?
A) Income statement
B) Statement of retained earnings
C) Statement of cash flows
D) Cash budget
46) Which of the following will be categorized as an operating activity on the statement of cash flows?
A) Cash received by selling old equipment
B) Cash paid for purchase of new machinery
C) Cash paid to employees
D) Cash received from issuance of shares of common stock
47) Which of the following will be categorized as a financing activity on the statement of cash flows?
A) Cash received by selling old equipment
B) Cash paid for purchase of new machinery
C) Cash paid for rent
D) Cash received from issuance of shares of common stock
48) Which of the following will be categorized as an investing activity on the statement of cash flows?
A) Purchase of land with a mortgage
B) Cash paid for purchase of new machinery
C) Cash paid for purchase of office supplies
D) Cash received from issuance of shares of common stock
49) Which of the following is shown on the balance sheet as well as the statement of cash flows?
A) Stockholders’ equity (ending balance)
B) Net income
C) Total assets (ending balance)
D) Cash (ending balance)
50) List the three sections of the statement of cash flows and state what is included in each section.
Statement of cash flows sections
What is included in each section
1.
2.
3.
payments for expenses
equipment for cash
cash dividends paid to the stockholders
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1.6 Learning Objective 1-6
1) The income statement shows whether or not a business can generate enough cash to pay its liabilities.
2) The income statement provides information about profitability for a particular period for the company.
3) The balance sheet shows whether or not a business is profitable.
4) The balance sheet allows decision makers to determine their opinion about the financial position of the
company.
5) The statement of retained earnings informs users about how much of the earnings were kept and
reinvested in the company.
6) Economic resources and debts of the company are shown on the balance sheet.
7) The statement of cash flows informs users about how much of the earnings were kept and reinvested in
the company.
8) The statement of retained earnings informs users about how much of the earnings were kept and
reinvested in the company.
9) The balance sheet helps analyze the business performance in terms of profitability.