Deck 2: Basic Financial Statements

Question 1

The financial statements of a business entity:

A) Include the balance sheet, income statement, and income tax return.
B) Provide information about the profitability and financial position of the company.
C) Are the first step in the accounting process.
D) Are prepared for a fee by the Financial Accounting Standards Board.

Answer 1

Provide information about the profitability and financial position of the company.

Question 2

A balance sheet is designed to show the financial position of an entity:

A) At a single point in time.
B) Over a period of time such as a year or quarter.
C) At December 31 of the current year.
D) At January 1 of the coming year.

Answer 2

At a single point in time.

Question 3

Accounts payable and notes payable are:

A) Always less than the amount of cash a business owns.
B) Creditors.
C) Written promises to pay a certain amount, plus interest, at a definite future date.
D) Liabilities.

Answer 3

Liabilities.

Question 4

The balance sheet of Dotty Designs includes the following items:
This list includes:

A) Four assets and three liabilities.
B) Five assets and three liabilities.
C) Five assets and two liabilities.
D) Six assets and two liabilities.

Question 5

An accounting entity may best be described as:

A) An individual.
B) A particular economic unit.
C) A publicly owned corporation.
D) Any corporation, regardless of size.

Question 6

Presented below is the balance sheet for Sabino Family Dentistry on January 1 of the current year.
SABINO FAMILY DENTISTRY
Balance Sheet
January 1, Current Year
During the first few days of January, the following transactions occurred:
Jan 1 $\quad$ The business borrowed $99,000 from the bank, giving a note payable due in 90 days.
3 $\quad$ Additional capital stock was issued in exchange for $44,550 cash.
3 $\quad$ Equipment was purchased for $62,700 on credit.
5 $\quad$ The business collected $26,400 of its accounts receivable and paid $37,950 of its accounts payable.
Indicate your answer to each of the following questions in the space provided.

-On January 6, total assets of the business amount to:

A) $826,650.
B) $994,950.
C) $957,000.
D) $950,400.

Question 7

Presented below is the balance sheet for Sabino Family Dentistry on January 1 of the current year.
SABINO FAMILY DENTISTRY
Balance Sheet
January 1, Current Year
During the first few days of January, the following transactions occurred:
Jan 1 $\quad$ The business borrowed $99,000 from the bank, giving a note payable due in 90 days.
3 $\quad$ Additional capital stock was issued in exchange for $44,550 cash.
3 $\quad$ Equipment was purchased for $62,700 on credit.
5 $\quad$ The business collected $26,400 of its accounts receivable and paid $37,950 of its accounts payable.
Indicate your answer to each of the following questions in the space provided.

-On January 6, owners' equity amounts to:

A) $752,400.
B) $44,550.
C) $796,950.
D) $895,950.

Question 8

Presented below is the balance sheet for Sabino Family Dentistry on January 1 of the current year.
SABINO FAMILY DENTISTRY
Balance Sheet
January 1, Current Year
During the first few days of January, the following transactions occurred:
Jan 1 $\quad$ The business borrowed $99,000 from the bank, giving a note payable due in 90 days.
3 $\quad$ Additional capital stock was issued in exchange for $44,550 cash.
3 $\quad$ Equipment was purchased for $62,700 on credit.
5 $\quad$ The business collected $26,400 of its accounts receivable and paid $37,950 of its accounts payable.
Indicate your answer to each of the following questions in the space provided.

-On January 6, the accounts payable balance is:

A) $136,950.
B) $36,300.
C) $24,750.
D) $99,000.

Question 9

Presented below is the balance sheet for Sabino Family Dentistry on January 1 of the current year.
SABINO FAMILY DENTISTRY
Balance Sheet
January 1, Current Year
During the first few days of January, the following transactions occurred:
Jan 1 $\quad$ The business borrowed $99,000 from the bank, giving a note payable due in 90 days.
3 $\quad$ Additional capital stock was issued in exchange for $44,550 cash.
3 $\quad$ Equipment was purchased for $62,700 on credit.
5 $\quad$ The business collected $26,400 of its accounts receivable and paid $37,950 of its accounts payable.
Indicate your answer to each of the following questions in the space provided.

-On January 6, the accounts receivable balance is:

A) $24,750.
B) $38,775.
C) $77,550.
D) $63,525.

Question 10

Presented below is the balance sheet for Sabino Family Dentistry on January 1 of the current year.
SABINO FAMILY DENTISTRY
Balance Sheet
January 1, Current Year
During the first few days of January, the following transactions occurred:
Jan 1 $\quad$ The business borrowed $99,000 from the bank, giving a note payable due in 90 days.
3 $\quad$ Additional capital stock was issued in exchange for $44,550 cash.
3 $\quad$ Equipment was purchased for $62,700 on credit.
5 $\quad$ The business collected $26,400 of its accounts receivable and paid $37,950 of its accounts payable.
Indicate your answer to each of the following questions in the space provided.

-On January 6, the cash balance is:

A) $127,050.
B) $138,600.
C) $165,000.
D) $202,950.

Question 11

Presented below is the balance sheet for Manhattan Family Dentistry on January 1 of the current year.
MANHATTAN FAMILY DENTISTRY
Balance Sheet
January 1, Current Year
During the first few days of January, the following transactions occurred:
Jan 2 $\quad$ Equipment was purchased for $38,000 on credit.
2 $\quad$ The business collected $16,000 of its accounts receivable and paid $23,000 of its accounts payable.
3 $\quad$ The business borrowed $60,000 from the bank, giving a note payable due in 90 days.
3 $\quad$ Additional capital stock was issued in exchange for $27,000 cash.
Complete the following balance sheet for Manhattan Family Dentistry on January 4 of the current year.
MANHATTAN FAMILY DENTISTRY
Balance Sheet
January 4, Current Year

Question 12

Complete the January 31, Year 1, balance sheet of Countrywide Legal Services using the following information.
(1) Stockholders' equity at January 1, Year 1, included capital stock of $140,000.
(2) The land and building were purchased by the business for a total price of $200,000 on January 25, Year 1, from a company forced out of business. On January 31, an appraiser valued the property at $260,000.
(3) Additional capital stock was issued in exchange for $50,000 cash.
(4) Retained earnings at January 31, Year 1, amounted to $49,400.
COUNTRYWIDE LEGAL SERVICES
Balance Sheet
January 31, Year 1