Question

Choose the correct answer.

1.Which of the following statements about the income statement is correct?

1. The income statement covers a specific point in time.
2. The elements of the income statement include income from operations and distributions to owners.

3. The income statement summarizes the results of a company's operations for a period.
4. All of the above.

2. A company's balance sheet shows the value of assets, liabilities, and stockholders' equity:

1. Over a period of time
2. for any given period of time
3. at a specific point in time
4. Any of the above.

3. If total expenses exceed _________, a net loss is reported on an income statement.

1. net expenses
2. profit
3. total revenue
4. net income

4. A Balance Sheet has 4 sections: (1) heading; (2) assets; (3) liabilities, and (4) ___________________.

A- Revenues

B- Expenses

C- Losses

D- None of the above

5. Balance Sheet Equation is:

1. Assets = Liabilities + Shareholder’s Equity
2. Liabilities –Shareholders Equity = Asset
3. Assets + Shareholders Equity = Liabilities
4. Any of the above

Answer 1

1) The correct answer is The income statement summarizes the results of a company's operations for a period.

1. The income statement covers a specific point in time.- Incorrect since balance sheet covers a specific point in time not the income statement.
2. The elements of the income statement include income from operations and distributions to owners.- Incorrrect, it doesnot include distributions to owner.
3. The income statement summarizes the results of a company's operations for a period.- Correct
4. All of the above. - Incorrect,  Since 1 and 2 are incorrect making all of the above as incorrect

2) The correct answer is at a specific point in time

A company's balance sheet shows the value of assets, liabilities, and stockholders' equity:

1. Over a period of time -Incorrect, A company's balance sheet shows the value of assets, liabilities, and stockholders' equity at a specific point in time not over a period of time.
2. for any given period of time - Incorrect, A company's balance sheet shows the value of assets, liabilities, and stockholders' equity at a specific point in time not for any given period of time.
3. at a specific point in time - Correct
4. Any of the above. -Incorrect, since 1 and 2 are incorrect

3) The correct answer is total revenue

If total expenses exceed _________, a net loss is reported on an income statement.

1. net expenses - incorrect
2. profit - Incorrect
3. total revenue -Correct
4. net income - Incorrect

4) The correct answer is  None of the above

A Balance Sheet has 4 sections: (1) heading; (2) assets; (3) liabilities, and (4) Owner's Equity. Hence, the correct answer is none of the above.

5) The correct answer is Assets = Liabilities + Shareholder’s Equity

Balance Sheet Equation is:

1. Assets = Liabilities + Shareholder’s Equity -> Correct
2. Liabilities –Shareholders Equity = Asset -> Incorrect
3. Assets + Shareholders Equity = Liabilities -> Incorrect
4. Any of the above -> Incorrect

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