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