CPB / BookKeeping Financial Statement Preparation 2

Question 1

Which financial statement shows a company's revenues and expenses over a specific period?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Statement of cash flows

Answer

Statement of retained earnings

Question 2

Under accrual accounting, when should revenue be recognized on a financial statement?

Accepted Answer

When goods or services are delivered

Answer

When cash is received

Answer

When the invoice is issued

Answer

When the contract is signed

Question 3

Which section of the statement of cash flows includes payments for equipment purchases?

Accepted Answer

Investing activities

Answer

Operating activities

Answer

Financing activities

Answer

Non-cash activities

Question 4

What is the correct order for listing assets on a balance sheet under US GAAP?

Accepted Answer

Current assets first, then non-current assets

Answer

Non-current assets first, then current assets

Answer

Assets listed alphabetically

Answer

Assets listed by dollar amount, largest first

Question 5

Which of the following is classified as an operating activity on the statement of cash flows using the indirect method?

Accepted Answer

Depreciation expense added back to net income

Answer

Issuance of common stock

Answer

Repayment of long-term debt

Answer

Purchase of a building

Question 6

Where does treasury stock appear on the balance sheet?

Accepted Answer

As a contra-equity account reducing stockholders' equity

Answer

As an asset under investments

Answer

As a liability under long-term debt

Answer

As an expense on the income statement

Question 7

A company has total assets of $500,000 and total liabilities of $320,000. What is the stockholders' equity?

Accepted Answer

$180,000

Answer

$820,000

Answer

$320,000

Answer

$500,000