Question

 1. Which of the following is a limitation of the balance sheet?

 A) Many items that are of financial value are omitted.

 B) Judgments and estimates are used.

 C) Current fair value is not reported.

 D) All of these answer choices are correct.

 2. The correct order to present current assets is

 A) cash, accounts receivable, prepaid items, inventories.

 B) cash, accounts receivable, inventories, prepaid items.

 C) cash, inventories, accounts receivable, prepaid items.

 D) cash, inventories, prepaid items, accounts receivable.

 3. The current assets section of the balance sheet should include

 A) machinery.

 B) patents.

 C) goodwill.

 D) inventory.

 4. Which of the following should be reported for capital stock?

 A) The shares authorized

 B) The shares issued

 C) The shares outstanding

 D) All of these answer choices are correct.

 5. The financial statement which summarizes operating, investing, and financing activities

 of an entity for a period of time is the

 A) retained earnings statement.

 B) income statement.

 C) statement of cash flows.

 D) statement of financial position.

 6. Which of the following is a contra account?

 A) Premium on bonds payable

 B) Unearned revenue

 C) Patents

 D) Accumulated depreciation

Answer 1

Which of the following is a limitation of the balance sheet?

Option (D). All of these answer choices are correct, is correct (judgements and estimates are used eg. For property, plant and equipment, Current value not considering,)

The correct order to present current assets is

Option B. Cash, accounts receivable, inventories, prepaid items. (Order is based on liquidity)

The current asset section of balance sheet should include

Option D) Inventory (other are non-current assets)

Which of the following should be reported for capital stock

Option D) all of these answer choices are correct (Should disclose authorized, issued and outstanding shares in financial statements)

The financial statement which summarizes operating, investing, financing activities of an entity for the period of the time is the

Option C) Statement of cash flows (Explains how changes in balance sheet accounts and income affect cash and cash equivalents)

Which of the following is contra account

Option D) Accumulated depreciation (contra account is an account used in an ledger to reduce the value of a related account, eg, provision for doubtful debts