Question 1

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Capital stock

Accepted Answer

Capital stock is a component of stockholders' equity on the balance sheet, representing the funds raised by issuing shares.

Question 2

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Interest expense

Accepted Answer

Interest expense would be included under operating expenses on the income statement, which is category H.

Question 3

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Buildings

Accepted Answer

Buildings belong to the category of property, plant, and equipment on the classified balance sheet.

Question 4

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Income taxes payable

Accepted Answer

Income taxes payable are obligations that a company needs to pay within a year, so they are classified as current liabilities on the balance sheet.

Question 5

From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Borrowed cash using a long-term note

Accepted Answer

Borrowing cash using a long-term note will increase the amount of cash available to the company, which will increase its current assets and, therefore, increase working capital.

Question 6

From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Borrowed cash using a six-month note

Accepted Answer

Borrowing cash using a six-month note increases both current assets (cash) and current liabilities (note payable) by the same amount, leaving working capital (current assets minus current liabilities) unchanged.

Question 7

From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Purchased land for cash

Accepted Answer

Working capital is calculated as current assets minus current liabilities. When land is purchased for cash, the current asset (cash) decreases and there is no change in current liabilities. As a result, working capital decreases.

Question 8

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Accounts receivable

Accepted Answer

Accounts receivable is a current asset, which means it is expected to be converted into cash within a year. It would be reported under the current assets section of the classified balance sheet. It would not be reported on the income statement as it represents a balance sheet account, not an income statement account. However, the company's revenue from operations (which generates accounts receivable) would be reported as operating revenue on the income statement.

Question 9

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Cost of goods sold

Accepted Answer

Cost of goods sold is classified under Operating Expenses on the income statement as it is an expense directly related to the production or purchase of the goods sold by a company.

Question 10

From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Collected an account receivable

Accepted Answer

Collecting an account receivable converts one current asset (accounts receivable) into another (cash), without changing the total amount of current assets or current liabilities, thus working capital remains unchanged.

Question 11

For each item listed, select the section of the balance sheet in which the item would be reported.
-Bonds payable

Accepted Answer

Bonds payable represent long-term debt and would be reported under the Long-term Liabilities section of the balance sheet.

Question 12

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Land

Accepted Answer

Land is classified under Property, Plant, & Equipment on the balance sheet as it is a long-term asset used in operations and not expected to be converted into cash within a year.

Question 13

For each item listed, select the section of the balance sheet in which the item would be reported.
-Computer used within the business

Accepted Answer

A computer used within the business would be classified as a fixed asset and reported in the Property, Plant, and Equipment section of the balance sheet.

Question 14

From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Purchased inventory on account

Accepted Answer

Purchasing inventory on account increases inventory (an asset) and increases accounts payable (a liability) by the same amount, leaving working capital (current assets minus current liabilities) unchanged.

Question 15

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Wages payable

Accepted Answer

Wages payable is a current liability, which would be listed under the current liabilities section of the classified balance sheet. Since it is not a revenue or expense item, it would not appear on the income statement.

Question 16

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Service revenues

Accepted Answer

Service revenues would appear under the Operating Revenue section of the income statement.

Question 17

For each item listed, select the section of the balance sheet in which the item would be reported.
-Computer available for resale

Accepted Answer

Computers available for resale by a company are considered inventory, which is classified under Current Assets on the balance sheet because they are expected to be sold within the company's normal operating cycle or within a year.

Question 18

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Bonds payable

Accepted Answer

Bonds payable are a long-term liability and would be listed under Long-term Liabilities on the classified balance sheet.

Question 19

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Consulting revenues

Accepted Answer

Consulting revenues would appear in the Operating Revenue section on the income statement.

Question 20

From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Paid cash for supplies

Accepted Answer

Paying cash for supplies decreases cash but increases supplies, both of which are current assets, so the overall working capital remains unchanged.

Quiz 2: Financial Statements and the Annual Report

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Capital stock

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Interest expense

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Buildings

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Income taxes payable

From the following choices, select the answer that describes the effect on working capital as a result of the transaction. -Borrowed cash using a long-term note

From the following choices, select the answer that describes the effect on working capital as a result of the transaction. -Borrowed cash using a six-month note

From the following choices, select the answer that describes the effect on working capital as a result of the transaction. -Purchased land for cash

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Accounts receivable

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Cost of goods sold

From the following choices, select the answer that describes the effect on working capital as a result of the transaction. -Collected an account receivable

For each item listed, select the section of the balance sheet in which the item would be reported. -Bonds payable

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Land

For each item listed, select the section of the balance sheet in which the item would be reported. -Computer used within the business

From the following choices, select the answer that describes the effect on working capital as a result of the transaction. -Purchased inventory on account

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Wages payable

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Service revenues

For each item listed, select the section of the balance sheet in which the item would be reported. -Computer available for resale

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Bonds payable

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Consulting revenues

From the following choices, select the answer that describes the effect on working capital as a result of the transaction. -Paid cash for supplies