For each of the following items, identify the appropriate financial statement element: (1) Probable future sacrifices of economic benefits. (2) Probable future economic benefits owned by the company. (3) Inflows of assets from ongoing, major activities. (4) Decrease in equity from peripheral or incidental transactions. Assets Expenses Gains Liabilities

For each of the following items, identify the appropriate financial statement element: (1) Probable future sacrifices of economic benefits. (2) Probable future economic benefits owned by the company. (3) Inflows of assets from ongoing, major activities. (4) Decrease in equity from peripheral or incidental transactions. Assets Expenses Gains Liabilities

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 4MC: Which of the following terms is used when assuming a business will continue to operate in the...

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Which of the following terms is used when assuming a business will continue to operate in the foreseeable future? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumption
Which of the following statements is true? a. The fixed asset turnover ratio assists managers in determining the estimated future capital expenditures that are needed. b. The average age of the fixed assets is computed by dividing accumulated depreciation by depreciation expense. c. If net sales increases, the fixed asset turnover ratio will decrease. d. A relatively low fixed asset turnover ratio signals that a company is efficiently using its assets.
For each of the following items, identify the appropriate financial statement element or elements: (1) probable future sacrifices of economic benefits; (2) probable future economic benefits owned by the company; (3) inflows of assets from ongoing, major activities; (4) decrease in equity from peripheral or incidental transactions.
A) Comment on any significant changes in each company in the composition of current assets and current liabilities. Explain. b) Which assets in each company have the most significant investment? Why? c) Are the companies financed primarily with debt or equity? Why?
Which of the following is NOT correct regarding the rate of return on assets? a. The rate of return on assets measures management’s ability to productively employ all its resources. b. The rate of return on assets measures the return on all assets used regardless of how the assets are financed. c. The rate of return on assets is a measure of profitability. d. The rate of return on assets measures the return on the investment made by the owners of the entity. is B the correct answer?
Assets are resources related to past transactions that are expected to provide a future economic benefit to the company. True False
The relationship between current assets and current liabilities is a. useful in determining profitability. b. useful in evaluating a company’s liquidity. c. useful in evaluating a company’s solvency. d. useful in determining the amount of a company’s non-current debt.
The primary purpose of showing special types of eventsseparately in the income statement is to:a. Increase earnings per share.b. Assist users of the income statement in evaluating theprofitability of normal, ongoing operations. c. Minimize the income taxes paid on the results of ongo-ing operations. d. Prevent unusual losses from recurring.
Which of the following is an assumption made in the preparation of the financial statements? Select one: a. The current market value is assumed to be less relevant than the original cost paid. b. Financial statements are prepared for a specific entity that is distinct from the entity's owners. c. The preparation of financial statements for a specific time period assumes that the balance sheet covers a designated period of time. d. Financial statements are prepared assuming that inflation
Which item is not correct with respect to the treatment of sustainable and transitory items and a company's income statement? Financial reporting assists statement users in forecasting future cash flows by providing an income statement format that segregates components of net income. Income statements prepared in accordance with GAAP differentiate between income components that are believed to be sustainable and those that are transitory. The income statement isolates a key figure called “income from sustainable operations.” Transitory items are disclosed separately on the income statement so that statement users can place less weight on these earnings components when forecasting future profitability.
Which statement is incorrect? * Under the transactions approach, net income is computed as the excess of income over expenses Under the capital maintenance approach, net income is computed as the excess of ending capital over beginning capital, excluding the effect of investments and withdrawals by owners. Unusual and infrequent items of expenses should be presented in in the income statement as a component of income from continuing operation. The single statement of comprehensive income shows a detailed presentation of all income and expenses, regardless of whether these income and expenses are recognized or not in the profit or loss. None of the above
Which statement is incorrect? a. Under the transactions approach, net income is computed as the excess of income over expenses b. Under the capital maintenance approach, net income is computed as the excess of ending capital over beginning capital, excluding the effect of investments and withdrawals by owners. c. Unusual and infrequent items of expenses should be presented in in the income statement as a component of income from continuing operation. d. The single statement of comprehensive income shows a detailed presentation of all income and expenses, regardless of whether these income and expenses are recognized or not in the profit or loss. e. None of the above Statement 1: In the statement of changes in equity, the effect of the correction of a prior period error is presented separately for each component of equity. Statement 2: Preference share dividend appear under the retained earnings section of the statement of changes in equity. a. True, True b. False,…