Chapter 01 – Financial Statements and Business Decisions
44. Madrid Company has provided the following data (ignore income taxes):
2010 revenues were $77,500.
2010 net income was $33,900.
Dividends declared and paid during 2010 totaled $5,700.
Total assets on December 31, 2010 were $217,000.
Total stockholders’ equity on December 31, 2010 was $123,000.
Retained earnings on December 31, 2010 were $83,000.
Which of the following is not correct?
Chapter 01 – Financial Statements and Business Decisions
45. Madrid Company has provided the following data (ignore income taxes):
2010 revenues were $77,500.
2010 net income was $33,900.
Dividends declared and paid during 2010 totaled $5,700.
Total assets on December 31, 2010 were $217,000.
Total stockholders’ equity on December 31, 2010 was $123,000.
Retained earnings on December 31, 2010 were $83,000.
Which of the following is correct?
46. Which of the following is the amount of revenue reported on the income statement of a
retail company?
Chapter 01 – Financial Statements and Business Decisions
47. On January 1, 2010 Miller Corporation had retained earnings of $8,000,000. During 2010,
Miller reported net income of $1,500,000, declared dividends of $500,000, and issued stock
for $1,000,000. What were Miller’s retained earnings on December 31, 2010?
48. What are the categories of cash flows that appear on a statement of cash flows?
Chapter 01 – Financial Statements and Business Decisions
49. When would a company report a net loss on the income statement?
50. Which of the following describes the amount of insurance expense reported on the income
statement?
Chapter 01 – Financial Statements and Business Decisions
51. Which of the following would immediately cause a change in a corporation’s retained
earnings?
52. Which of the following describes the operations section of a cash flow statement?
Chapter 01 – Financial Statements and Business Decisions
53. Within which of the following would you find the inventory method(s) being used by a
business entity?
54. At the beginning of 2010, a corporation had assets of $270,000 and liabilities of $160,000.
During 2010, assets increased $25,000 and liabilities increased $5,000. What was
stockholders’ equity on December 31, 2010?
Chapter 01 – Financial Statements and Business Decisions
55. During 2011, Canton Company’s assets increased $95,500 and their liabilities decreased
$17,300. Canton Company’s stockholders’ equity on December 31, 2011 was $211,500. How
much was stockholders’ equity on January 1, 2011?
56. How are creditor and investor claims reported on a balance sheet?
Chapter 01 – Financial Statements and Business Decisions
57. In what order would the items on the balance sheet appear?
58. Which of the following would increase retained earnings?
Chapter 01 – Financial Statements and Business Decisions
59. A company’s retained earnings increased $375,000 last year and its assets increased
$973,000. The company declared a $79,000 cash dividend during the year. What was last
year’s net income?
60. Which of the following items is reported as an expense on the income statement?
Chapter 01 – Financial Statements and Business Decisions
61. Which of the following has primary responsibility to develop Generally Accepted
Accounting Principles?
62. Which of the following has the legal authority to determine financial reporting in the
United States?
Chapter 01 – Financial Statements and Business Decisions
63. Which of the following is not reported as a liability on a balance sheet?
64. Which of the following transactions increases both cash and net income?
Chapter 01 – Financial Statements and Business Decisions
65. Which of the following properly describes the impact on the financial statements when a
company reports wage expense of $7,500, of which $2,500 remains unpaid?
66. Which of the following properly describes the impact on the financial statements when a
company purchases and pays $8,000 for supplies inventory, of which $2,000 remains unused
at the end of the period?
Chapter 01 – Financial Statements and Business Decisions
67. Which of the following properly describes the impact on the financial statements when a
company incurs operating expenses of $9,000, of which $3,000 remains unpaid?
68. Which of the following properly describes the impact on the financial statements when a
company borrows $20,000 from a local bank?
Chapter 01 – Financial Statements and Business Decisions
69. Which of the following would not be reported in the operating activities section of a cash
flow statement?
70. Which of the following would be reported in the financing section of a cash flow
statement?
Chapter 01 – Financial Statements and Business Decisions
71. Which of the following would be reported in the investing section of a cash flow
statement?
72. Which of the following statements is correct?
Chapter 01 – Financial Statements and Business Decisions
73. Husky Company has provided the following information for its most recent year of
operation:
Cash collected from customers totaled $89,300.
Cash borrowed from banks totaled $31,700.
Cash paid to employees totaled $32,100.
Cash paid for interest totaled $2,900.
Cash received from selling Husky stock to stockholders totaled $41,000.
Cash payments to banks for repayment of money borrowed totaled $7,500.
Cash paid for operating expenses totaled $9,600.
Land costing $25,000 was sold for $25,000 cash.
Cash paid for dividends to stockholders totaled $3,300.
How much was Husky’s cash flow from operating activities?
Chapter 01 – Financial Statements and Business Decisions
74. Husky Company has provided the following information for its most recent year of
operation:
Cash collected from customers totaled $89,300.
Cash borrowed from banks totaled $31,700.
Cash paid to employees totaled $32,100.
Cash paid for interest totaled $2,900.
Cash received from selling Husky stock to stockholders totaled $41,000.
Cash payments to banks for repayment of money borrowed totaled $7,500.
Cash paid for operating expenses totaled $9,600.
Land costing $25,000 was sold for $25,000 cash.
Cash paid for dividends to stockholders totaled $3,300.
How much was Husky’s cash flow from financing activities?
Chapter 01 – Financial Statements and Business Decisions
75. Sparty Corporation has provided the following information for its most recent year of
operation:
Revenues earned were $97,000, of which $9,000 were uncollected at the end of the year.
Operating expenses incurred were $39,000, of which $7,000 were unpaid at the end of the
year.
Dividends declared were $11,000, of which $3,000 were unpaid at the end of the year.
Income tax expense is 30% of pretax income.
How much net income was reported on Sparty’s income statement?
76. Which of the following statements is correct?
Chapter 01 – Financial Statements and Business Decisions
77. During 2010, Rock Company’s cash balance increased from $79,000 to $91,300. Rock’s
net cash flow from operating activities was $37,300 and its net cash flow from financing
activities was $11,100. How much was Rock’s net cash flow from investing activities?
78. Which of the following statements is false?
Chapter 01 – Financial Statements and Business Decisions
79. Which of the following is not a consequence to a company resulting from the issue of
their financial statements?
80. Which of the following statements pertaining to the audit function is incorrect?