Esercitazione esame Environmental accounting con soluzioni

Financial statements and business decisions

True / false questions

• 1. A business entity's accounting system creates financial accounting reports which are provided to external decision makers. True False
• 2. Business managers utilize managerial accounting reports to plan and manage the daily operations. True False
• 3. The balance sheet includes assets, liabilities, and stockholders' equity as of a point in time. True False
• 4. Revenue is recognized within the income statement during the period in which cash is collected. True False
• 5. Total assets are $37,500, total liabilities are $20,000 and common stock is $10,000; therefore, retained earnings are $7,500. True False
• 6. The income statement is a measure of an entity's economic performance for a period of time. True False
• 7. The accounting equation states that Assets = Liabilities + Stockholders' Equity. True False
• 8. A decision maker who wants to understand a company's financial statements must carefully read the notes to the financial statements because these disclosures provide useful supplemental information. True False
• 9. The financial statement that shows an entity's economic resources and claims against those resources is the balance sheet. True False
• 10. Stockholders' equity on the balance sheet includes common stock and retained earnings. True False
• 11. The amount of cash paid by a business for dividends would be reported as an operating activity cash flow on the statement of cash flows. True False
• 12. A company's retained earnings balance increased $50,000 last year; therefore, net income last year must have been $50,000. True False
• 13. The statement of stockholders' equity explains the change in the retained earnings balance caused by stockholder investments and dividend declarations. True False
• 14. The primary objective of financial reporting is to provide useful information to external decision makers. True False
• 15. The stockholders' equity section of a balance sheet includes capital contributed by owners and also retained earnings. True False
• 16. The current assets section of a balance sheet includes both inventory and prepaid expenses. True False
• 17. Assets are reported on the balance sheet in the order of liquidity. True False
• 18. Many valuable assets such as trademarks and copyrights are not reported on a company's balance sheet. True False
• 19. Stockholders' equity reflects the financing provided by owners. True False
• 20. Common stock and additional-paid in capital represent the financing sources from shareholders. True False
• 21. Unearned revenue is repo