Office equipment was purchased by transaction have in the financial position of

Question

Office equipment was purchased by transaction have in the financial position of the company a check for $10,000 and a note payable for the balance of $60,000. What effect did this A) Assets ne change Liabilities, no change: 0wners Equity, no change Assets, decreast Lablities, rorease: Owners' Equity. no change 8) C) Asset decrease; Lablities, no change: Owners' Equity decrease D) Assets, ncrease Liabilities, increase Owners Equity no change A balance sheet or statement of financial position, is 0A)·n expansion of the basic accounting equation B) used to report the results of business operations over a period of time. c) composed of four distinct major sections o) prepared shead of the income statement The income statement A) is a summary of revenues and expenses B) is used to report the results of operations over a specific period of time Oa esplans in part how the companys francial posation changed oer s se o D) is all of the above The beginning balance of cash was $O. The ending balance of cash in $45,600 In the statement of cash flows, cash flows from operating activities were a positive $24,000, and the cash flows used by investing activities was a negative $6,000. The cash flows from financing activinies were which of the folowing? A) Negative cash flow of $28,400 B) Positive cash flow of $27,600 Negative cash fow of 545,600 D) Positive cash flow of $18,000 Artioulation refers to the relationship among the financial statements. What item in the income statement ties that statement to the balance sheet? A) Revenues B) Expenses D) all of the above In the short run, what distinguishes liquidity from profitability? A) These are no distinguishable differences B) Profitability increases ownens' equity, liquidity does not cy Creditors are more interested in profitability than liquidity OD) Owners have an interest in profitability bur not in liquidry A strong statement of cash flows would show that the major sources of cash came from which of the following? OA) Investing activities B) Operating activities (DC) Financing actwities OD) Owners

Explanation / Answer

4-

d

assets increase, liabilities increase, owners equity no change

Asset will increase due to purchase of equipment and liability due to notes payable

5-

B

used to report the results of business operations over a period of time.

6-

D

all of the above

7-

B

27600

45600 = 24000-6000+ financing activities cash flow from financing activities = 45600-24000+6000

27600

8-

c

net income

The net income in the income statement will appear as an increase in retained earnings, and the balance of retained earnings will be reported in the balance sheet.

9-

b

Profitability increases owners' equity, liquidity does not

Profitability increases the owners liquidity but liquidity does not increase owners equity

10-

b

Cash flow from operations

the major source of cash, especially on a consistent basis, should come from operations. Sources of cash from investing activities are the result of selling assets and investments. Sources of cash from financing activities are the result of borrowing or additional investments by the owners

4-

d

assets increase, liabilities increase, owners equity no change

Asset will increase due to purchase of equipment and liability due to notes payable

5-

B

used to report the results of business operations over a period of time.

6-

D

all of the above

7-

B

27600

45600 = 24000-6000+ financing activities cash flow from financing activities = 45600-24000+6000

27600

8-

c

net income

The net income in the income statement will appear as an increase in retained earnings, and the balance of retained earnings will be reported in the balance sheet.

9-

b

Profitability increases owners' equity, liquidity does not

Profitability increases the owners liquidity but liquidity does not increase owners equity

10-

b

Cash flow from operations

the major source of cash, especially on a consistent basis, should come from operations. Sources of cash from investing activities are the result of selling assets and investments. Sources of cash from financing activities are the result of borrowing or additional investments by the owners

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