QUESTION 11

1. A potential investor in CBA Manufacturing is reviewing the firms statement of retained earnings. What information on the statement of retained earnings is of particular interest to a potential investor?

   		purchase additional assets
   		increase employee wages
   		pay dividends to shareholders
   		cover monthly expenses

QUESTION 12

1. Which financial statement for the most recent three years is provided in the annual report?

   		income statement
   		balance sheet
   		statement of cash flows
   		statement of retained earnings

QUESTION 13

1. Which of the following activities are listed on the statement of cash flows? (Select all that apply.)

   		investing
   		vending
   		operating
   		financing
   		servicing of loans

QUESTION 14

1. Which question can be answered by reviewing a companys statement of retained earnings?

   		What was the most recent account balance for the company?
   		Does the company have enough earnings to pay dividends?
   		What are the companys long-term assets and liabilities?
   		Does the companys cash flow support its operating activities?

QUESTION 15

1. You are preparing Redwing Baking Companys annual report. Where would you include an additional explanation for a single line item?

   		Management discussion and analysis
   		Independent auditors report
   		Notes to the financial statements
   		Appendix

QUESTION 16

1. On an income statement, which section indicates the money a firm receives over a period of time for selling its products?

   		assets
   		expenses
   		revenues
   		net income

QUESTION 17

1. Which information might be specifically included in the notes to the financial statements portion of the annual report?

   		net income
   		reporting period
   		balance sheet
   		accounting methos

QUESTION 18

1. A group of investors are considering investing in ATX Enterprises. What is the investor's purpose for reviewing the income statements of ATX Enterprises?

   		understand the components and distribution of stockholders equity
   		identify the firms assets and liabilities at the end of the accounting period
   		determine the firms net income or net losses over a specific period of time
   		evaluate the firms potential solvency for the purpose of obtaining loans

QUESTION 19

1. A business owner is concerned about the ability of his business to pay its debts in the next 30 days due to the companys limited amount of available cash. The business owner is worried about the firms _______________.

   		liquidity
   		solvency

QUESTION 20

1. Which opinion from an independent auditors report indicates that no opinion is made due to missing information?

   		qualified
   		disclaimer
   		adverse
   		unqualified

QUESTION 21

1. Wilson Consulting is seeking a $500,000 loan from National Bank to purchase land for an office building. Which section of Wilson Consultings balance sheet would provide the bank with information about the firms debts and obligations?

   		assets
   		retained earnings
   		liabilities
   		capital stock

QUESTION 22

1. How do dividends from the income statement affect the ending balance on the statement of retained earnings?

   		Net income increases the beginning retained earnings, but dividends decrease it.
   		The dividends are subtracted from the beginning retained earnings balance combined with the net income.
   		The ending balance of the statement of retained earnings does not require reconciling as does the ending balance of the statement of cash flows.

QUESTION 23

1. Which component of a balance sheet indicates the amount of money that stockholders have invested in the company?

   		retained earnings
   		total assets
   		capital stock
   		total liabilities

QUESTION 24

1. Consider the following scenario:

   1. You are the accountant for Carlisle Construction and preparing the monthly statement of retained earnings.
   2. The beginning balance is $160,000.
   3. The firm paid $7,000 in dividends to shareholders.
   4. The firm had a net income of $20,000.

   Given this information, what is the ending balance on the statement?

   		$143,000
   		$147,000
   		$167,000
   		$173,000

QUESTION 25

1. A group of investors are considering investing in ATX Enterprises. The investors can learn more about ATX's revenues and expenses over a specific period by reviewing the firm's _____________________.

   		income statement
   		balance sheet