Problem 1. What is the overall objective of financial reporting information?
a. To be useful in decision-making
b. To provide information that helps shareholders assess management's performance
c. To provide information about a company's financial performance
d. To provide information about a company's assets, liabilities, and owners' equity.
Problem 2. Which one of the following equation property represents the balance sheet?
a. Assets - Liabilities - owner's equity
b. Assets - Liabilities = owner's equity
c. Assets - owner's equity = Liabilities
d. Assets = Liabilities + owner's equity
Problem 3. If a company increases an asset, which of the following is required to maintain balance in the balance sheet equation?
a. Decrease owner's equity
b. Decrease a liability
c. Increase a liability
d. Increase an expense
Problem 4. Which of the following would not be presented on a balance sheet?
a. Cash
b. Depreciation expense
c. Accounts payable
d. Retained earnings
Problem 5. Which of the following would be presented on a balance sheet?
a. Revenue
b. Expense
c. Gains
d. Retained earnings
Problem 6. What result is calculated by subtracting expense and losses from revenue and gains?
a. Net income or lost
b. Gross profit
c. Operating income
d. Retained earnings
Problem 7. Which of the following is the result of an increase in revenue?
a. Increase a net loss
b. Decrease a net loss
c. Decrease net income
d. Decrease retained earnings
Problem 8. How would you categorize the payments in the statement of cash flows when purchasing the debt instruments of other companies?
a. As investing activities
b. As financing activities
c. As operating activities
d. As equity activities
Problem 9. In a statement of cash flows, how would you categorize the cash inflows from proceed from issuing equity instruments?
a. As brokerage activities
b. As operating Activities
c. As financing activities
Problem 10. How are cash inflows from the sales of property, plant, and equipment categorized in the statement of cash flows?
a. As liquidating activities
b. As investing activities
c. As operating activities
d. As financing activities