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Multiple choice

Need some help with question and the reason behind it.

#1. What is the overall objective of financial reporting information?
a. To be useful in decision-making
b. To provide information that helps shareholders assess management's performance
c. To provide information about a company's financial performance
d. To provide information about a company's assets, liabilities, and owners' equity.

#2. Which one of the following equation property represents the balance sheet?
a. Assets - Liabilities - owner's equity
b. Assets - Liabilities = owner's equity
c. Assets - owner's equity = Liabilities
d. Assets = Liabilities + owner's equity

#3. If a company increases an asset, which of the following is required to maintain balance in the balance sheet equation?
a. Decrease owner's equity
b. Decrease a liability
c. Increase a liability
d. Increase an expense

#4. Which of the following would not be presented on a balance sheet?
a. Cash
b. Depreciation expense
c. Accounts payable
d. Retained earnings

#5. Which of the following would be presented on a balance sheet?
a. Revenue
b. Expense
c. Gains
d. Retained earnings

#6. What result is calculated by subtracting expense and losses from revenue and gains?
a. Net income or lost
b. Gross profit
c. Operating income
d. Retained earnings

#7. Which of the following is the result of an increase in revenue?
a. Increase a net loss
b. Decrease a net loss
c. Decrease net income
d. Decrease retained earnings

#8. How would you categorize the payments in the statement of cash flows when purchasing the debt instruments of other companies?
a. As investing activities
b. As financing activities
c. As operating activities
d. As equity activities

#9. In a statement of cash flows, how would you categorize the cash inflows from proceed from issuing equity instruments?
a. As brokerage activities
b. As operating Activities
c. As financing activities

#10. How are cash inflows from the sales of property, plant, and equipment categorized in the statement of cash flows?
a. As liquidating activities
b. As investing activities
c. As operating activities
d. As financing activities.

Solution Preview

1. a. To be useful in decision-making
The purpose is to provide information which would help in decision making for any interested party

2. d. Assets = Liabilities + owner's equity
All assets are financed either by liabilities or equity and so assets are equal to liabilities + equity. Options b and c are ...

Solution Summary

The solution explains some multiple choice questions relating to financial reporting, equation, classification, statement of cash flows.

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