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1.Which of the following statements is prepared as of a point in time?Income statementStatement of Retained EarningsBalance sheetStatement of cash flowsThe types of business activities measured by the statement of cash flows are:selling goods, selling services, and obtaining financing.operating activities, investing activities, and financing activities.hiring, producing, and advertising.generating revenues, paying expenses, and paying dividends.Net income is the amount:the company earned after subtracting expenses and dividends from revenue.by which assets exceed expenses.by which assets exceed liabilities.by which revenues exceed expenses.Net income is calculated as revenues minus expenses. Dividends are not expenses of doing business and are not involved in determining the amount of net income on the income statement. Assets and liabilities are reported on the balance sheet.The owner is not responsible for the entity's taxes and debts if the entity is organized as a(n):rev: 09_11_2015_QC_CS-24360corporationsole proprietorshipunlimited liability corporationlimited liability corporation
Unlike sole proprietorships and partnerships, a corporation is a separate entity from both legal and accounting perspectives. This means that a corporation, not its owners, is legally responsible for its own taxes and debts.Pizza Aroma delivered $500 of pizzas to the local high school, but hasn't received payment yet. Pizza Aroma will report:nothing, because payment hasn't been received yet.Cash of $500, because the school will pay for the pizzas eventually.Accounts payable of $500.Accounts receivable of $500.Pizza Aroma is the seller and thus will report $500 of Accounts Receivable, which is a right to collect for sales/services provided on account.Information that always makes a difference in a decision is:cash based.audited.provided by GAAP.relevant.Information is relevant if it makes a difference in decision making and it is a faithful representation if it fully depicts the economic substance of business activities.Who has primary responsibility for making sure that a company's financial statements follow GAAP?ManagementIndependent auditors (CPAs)The Securities and Exchange Commission (SEC)The Public Company Accounting Oversight Board (PCAOB)A company's managers have primary responsibility for following GAAP. To provide additional assurance, some private companies and all public companies hire independent auditors to scrutinize their financial records.The obligations and debts of a business are referred to as:equities.
assets.dividends.liabilities.Liabilities are measurable amounts that the company owes to creditors. From a legal perspective, creditors have priority over stockholders. Thus, if a company goes out of business, liabilities must be paid before any amounts are paid to stockholders.