The change in assets must equal the sum of the changes in liabilities and stockholders' equity. The increase in Assets of $55,000 must equal the sum of the increase in stockholders' equity of $20,000 plus the increase in liabilities of $35,000. AACSB: Analytic AICPA BB: Resource Management AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: Accounting Equation 93. For the current year, the first year of operations, a company sold $100,000 of goods to customers and received $90,000 in cash from customers. The remainder is owed to the company at the end of the year. The company incurred $70,000 in expenses for the year and paid $65,000 of these in cash. The remainder is owed by the company at the end of the year. Based on this information, what is the amount of net income for the year? Revenue is reported on the income statement when it is earned and expenses are reported when they are incurred. Net Income = Revenue $100,000 - Expenses $70,000 = $30,000. AACSB: Analytic AICPA BB: Resource Management AICPA FN: Reporting Blooms: Apply Difficulty: 2 Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: Income Statement 94. Which of the following items appear on more than one financial statement? Ending cash appears on the balance and the cash flow statement. Ending retained earnings appears on the balance sheet and the retained earnings statement.
The change in assets must equal the sum of the changes in liabilities and stockholders' equity. The increase in Assets of $55,000 must equal the sum of the increase in stockholders' equity of $20,000 plus the increase in liabilities of $35,000. AACSB: Analytic AICPA BB: Resource Management AICPA FN: Measurement Blooms: Apply Difficulty: 3 Hard Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: Accounting Equation 93. For the current year, the first year of operations, a company sold $100,000 of goods to customers and received $90,000 in cash from customers. The remainder is owed to the company at the end of the year. The company incurred $70,000 in expenses for the year and paid $65,000 of these in cash. The remainder is owed by the company at the end of the year. Based on this information, what is the amount of net income for the year? Revenue is reported on the income statement when it is earned and expenses are reported when they are incurred. Net Income = Revenue $100,000 - Expenses $70,000 = $30,000. AACSB: Analytic AICPA BB: Resource Management AICPA FN: Reporting Blooms: Apply Difficulty: 2 Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: Income Statement 94. Which of the following items appear on more than one financial statement? Ending cash appears on the balance and the cash flow statement. Ending retained earnings appears on the balance sheet and the retained earnings statement.
Test%20Bank%20for%20Fundamentals%20of%20Financial%20Accounting%204E%20-%20Phillips%20-.docx