, 9. The only financial statement that reports the retained earnings balance at the end of the period is the
Statement of Retained Earnings.
ANS: F PTS: 1 DIF: Moderate OBJ: 1-4 | 1-6
NAT: AICPA FN-Reporting | AACSB Communication | ACBSP-APC-09-Financial Statement
10. An income statement provides information at one specific point in time, while the other basic financial
statements provide information on activities that occur over a period of time.
ANS: F PTS: 1 DIF: Moderate OBJ: 1-5
NAT: AICPA FN-Reporting | AACSB Communication | ACBSP-APC-09-Financial Statement
11. When an entity's stock issuances exceed its expenses for a period of time, the entity will report net
income.
ANS: F PTS: 1 DIF: Moderate REF: CS1-3
OBJ: 1-5
NAT: AICPA FN-Measurement | AACSB Communication | ACBSP-APC-09-Financial Statement
12. Contributed capital is the residual interest that remains after deducting liabilities from stockholders'
equity.
ANS: F PTS: 1 DIF: Moderate REF: CS1-2
OBJ: 1-4
NAT: AICPA FN-Reporting | AACSB Communication | ACBSP-APC-09-Financial Statement
13. The four steps in preparing the Income Statement are: 1) Prepare heading, 2) List the revenues of the
company, 3) List the expenses of the company, 4) List the dividends of the company.
ANS: F PTS: 1 DIF: Moderate REF: CS1-3
OBJ: 1-5
NAT: AICPA FN-Reporting | AACSB Communication | ACBSP-APC-09-Financial Statement
14. Stockholders equity is composed of contributed capital and retained earnings.
ANS: T PTS: 1 DIF: Moderate OBJ: 1-4
NAT: AICPA FN-Reporting | AACSB Communication | ACBSP-APC-09-Financial Statement
15. The primary objective of internal auditors who are employees of the company is to provide assurance
to the company’s stockholders that the financial statements are fairly presented.
ANS: F PTS: 1 DIF: Easy OBJ: 1-9
NAT: AICPA FN-Reporting | AACSB Communication | ACBSP-APC-01-Purpose
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