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Exam 2: Introduction to Financial Statements and Other Financial Reporting Topics

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Question 21

True/False

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A sole proprietorship is a legal entity separate from its owner.

A) True
B) False

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Question 22

True/False

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The financial statements of the parent and the subsidiary are consolidated for all subsidiaries unless control is temporary or does not rest with the majority.

A) True
B) False

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Question 23

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Which of the following is a permanent account?

Listed below is information related to several adjusting entry situations.Assume that the accounting year ends on December 31. 1. $3,000 paad far insurance an October 1 far a ane-year period (October I -September 30). This transaction was recorded as a debit to prepaid insurance ($3,000) and a credit to cash (3.000). 2. Interest an bonds payable in the anount of $500 has not been recorded at December 31. 3. Rent exgense in the andust of $1,200 was paid an November 1. This transaction was recarded a5 a debit to rent exgense ($1,200) and a credit to cash ($1,200). This rent payenent was for the period November 1 to January 31. Required: Record the original entries and the adjusting entries using T-accounts.

Match the financial statement that goes with each term. -Used to present additional information on items included in the financial statements and to present additional financial information.

A disclaimer of opinion is necessary when the exceptions to fair presentation are so material that a qualified opinion is not justified.

Several accounts could be involved in a single transaction,but the debits and credits must still be equal.

Who is responsible for the preparation and integrity of financial statements?

The principal financial statements of a corporation are the balance sheet,income statement,and statement of cash flows.

At the end of the fiscal year,an adjusting entry is made that increases both interest expense and interest payable.This entry is an application for which accounting principle?

If liabilities total $70,000 and stockholders' equity totals $50,000,then total assets must be:

Match the financial statement that goes with each term. -Details the inflows and outflows of cash during a specified period of time.

Tiffin Company had retained earnings of $50,000 at the end of last year.For the current year,income was $20,000 and dividends $15,000.What is the balance in retained earnings at the end of the current year?

Which of the following is a type of audit opinion that a firm would usually prefer?

The statement of retained earnings reconciles the beginning retained earnings balance to the retained earnings balance at the end of the current period.

One is unlikely to regard a qualified opinion or an adverse opinion as casting serious doubts on the reliability of the financial statements.

Which of these statements is not true?

The market will not be efficient if it does not have access to relevant information or if fraudulent information is provided.

A summary annual report generally has more nonfinancial pages than financial pages.

Required: Indicate in days,the Form 10-K deadline for each category of filers.Case 1: Large accelerated filer ($700 million or more market value) Case 2: Accelerated filer ($75 million or more and less than $700 million market value) Case 3: Non-accelerated filer (less than $75 million market value) Crase 1: $\underline{\quad\quad\quad\quad}$ Case 2 : $\underline{\quad\quad\quad\quad}$ Case 3 : $\underline{\quad\quad\quad\quad}$