True/False (1 point each) __F___ A primary objective of accounting is to disclose the fair market value of assets on the balance sheet so investors and creditors know their current value.
__F___ The payment of a liability in cash will decrease stockholders' equity.
__F___ When a company borrows money from a bank, it leads to a cash inflow from an investing activity. Omit
T Only events that can be measured will be reflected in the journal entries
F Every transaction affects both the income statement and the balance sheet
Matching (1 pt. each) Match each account title with its related term by entering the appropriate letter in the space provided: Account Title Term
__D___ 1. Prepaid Rent A. Accrued Revenue __B___ 2. Salaries Payable B. Accrued Expense __C___ 3. Unearned Revenue C. Deferred Revenue __A___ 4. Interest Receivable D. Deferred Expense
Fill in the blank: 1. The basic balance sheet equation is: ASSETS = LIABILITIES + __EQUITY___.
2. The amount of cash paid by a business for office utilities would be reported on the statement of cash flows
as what kind of activity? Operating OMIT THIS QUESTION
3. To determine whether a company will be able to pay for goods when payment is due in 30 days, we should
look at which financial statement? Balance sheet
4. Sales - Cost of Goods Sold = Gross profit
Work-out - Point allocations are indicated on each question.
Use the following list