8. Of the following objectives of financial reporting, which is the most specific? A) Provide information useful in assessing amount, timing, and uncertainty of future cash flows. B) Provide information useful in making investment and credit decisions. C) Provide information about economic resources, claims to resources, and changes in resources and claims. D) Provide information useful to help the enterprise achieve its goals, objectives, and mission. Chapter 2 9. Liquidity may be defined as: 10. Profitability may be defined as: 11. The principle of adequate disclosure means that a company should disclose:
12. Owner's equity in a business may increase by: A) Payments of cash to owners B) Losses from unprofitable operation of the business C) Earnings from profitable operation of the business. D) Borrowing from a commercial bank. 13. Owner's equity in a business may decrease by 14. Effects of transactions on elements of the accounting equationSome of the transactions carried out by Wu Wholesale during the first month of the company's existenceare listed below. You are to determine the effect of each transaction on the total assets, the total liabilities, and the owners' equity. Prepare your answer in columnar form, identifying each transaction byletter and using the symbols (+) for increase, (–) for decrease, and (NC) for no change. An answer is provided for the first transaction to serve as an example.
15. Computation of assets, liabilities, and owners' equity after a series of transactionsOn April 30, 2011, the balance sheet of Japan Collectibles showed total assets of $800,000, total liabilities of $500,000, and owners' equity of $300,000. The following transactions occurred in May of 2011:(1) Capital stock was issued in exchange for $175,000 cash. (2) The business purchased equipment for $380,000, paying $180,000 cash and issuing a note payable for $200,000.(3) The business paid off $80,000 of its accounts payable.(4) The business collected $64,000 of its accounts receivable.Compute the following as of May 31, 2011:
16. Preparation of balance sheetPrepare balance sheet on December 31, 2011, for Gamma Company, from the following list of items which are arranged in random order. You must compute the amount for accounts payable to complete the balance sheet.
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