Chapter 1, Four Basic Financial Statements Video Solutions, Financial Statements Demystified

Problem 1

The balance sheet equation is:
a. Cash - liabilities $=$ owner's equity
b. Assets $=$ liabilities + stockholders' equity
c. Cash $=$ liabilities + stockholders' equity
d. Assets = liabilities - owners' equity

Puneet Prajapati

Numerade Educator

Problem 2

An example of an asset is:
a. Salaries payable
b. Common stock
c. Supplies on hand
d. Rental fees earned

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01:32

Problem 3

The balance sheet shows the assets, liabilities, and owners' equity:
a. For a point in time
b. For a period of time
c. For the future
d. Since the company was established

Jennifer Stoner

Numerade Educator

01:32

Problem 4

The income statement:
a. Computes a company's net worth
b. Presents a company's financial position at a point in time
c. Shows a company's cash inflows and outflows for a period of time
d. Presents a company's revenues and expenses for a period of time

Jennifer Stoner

Numerade Educator

Problem 5

If a business bills its clients $$\$ 100,000$$ for services performed during the year but collects only $$\$ 80,000$$ in cash, revenues reported on the income statement will be:
a. $$\$ 20,000$$
b. $$\$ 80,000$$
c. $$\$ 100,000$$
d. $$\$ 180,000$$

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Problem 6

If a business incurs $$\$ 40,000$$ of expenses associated with operating the business during the year, of which only $$\$ 35,000$$ was paid in cash, expenses on the income statement will be:
a. $$\$ 5,000$$
b. $$\$ 35,000$$
c. $$\$ 40,000$$
d. $$\$ 75,000$$

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Problem 7

Decreases in owner's equity are caused by:
a. Net income
b. An additional investment of cash during the year
c. Net income minus net loss
d. Withdrawals by the owner

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03:46

Problem 8

Which of the following is not one of the categories shown on the statement of cash flows?
a. Cash flows from business activities
b. Cash flows from operating activities
c. Cash flows from investing activities
d. Cash flows from financing activities

Akash M

Numerade Educator

Problem 9

If a business reports revenues of $$\$ 200,000$$ and expenses of $$\$ 180,000$$ and had $$\$ 170,000$$ cash received from customers and $$\$ 145,000$$ cash payments for expenses, its cash flow from operating activities is:
a. $$\$ 10,000$$
b. $$\$ 20,000$$
c. $$\$ 25,000$$
d. $$\$ 55,000$$

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02:01

Problem 10

Accounts receivable represents:
a. The amounts of cash received from customers for services or goods provided
b. The amount owed by customers for goods or services received but not yet paid for
c. The amount of revenue earned from providing goods or services to customers
d. An expense of the business as a result of borrowing

Narayan Hari

Numerade Educator