1
INTERMEDIATE FINANCIAL ACCOUNTING I
FINAL EXAM PRACTICE ONE SOLUTIONS 100%
VERIFIED ANSWERS GRADED A+/NEWEST
UPDATE✓
What information is included in the annual report letter written by managers
of publicly traded companies?
Ans: The annual report of a publicly traded entity must include a letter from
the firm's management that states its responsibilities for the operations of the
entity and the information contained in the financial statements, including:
designing and implementing internal controls relevant to the preparation and
fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
What do auditors attest to in a auditors report?
Ans: The audit report attests to the fairness of the financial statements, not
the annual report. The auditor, though, verifies that the financial information
in the annual report is not inconsistent with the financial statements.
Why are the notes to the financial statements an integral part of the financial
statements?
Pretest - Stuvia US
,2
Ans: The notes (or footnotes) to the financial statements provide descriptive
information regarding a company's accounting policies, supplemental
disclosures of items not reported on the financial statements, and additional
detail for transactions reported on the four main financial statements. For
example, a company will disclose its depreciation policy for long-lived assets
in its financial statement footnotes. A company could also provide additional
disclosures on the historical cost and accumulated depreciation by
significant types of assets. Notes to the financial statements are typically
extensive.
Accounts payable is a
Ans: liability, (current liability)
Trademark is an
Ans: noncurrent asset (intangible asset)
cash is an
Ans: asset (current)
income tax payable is an
Ans: liability (current liability)
tractors are an
Ans: asset (property, plant & equipment)
common stock is
Pretest - Stuvia US
, 3
Ans: stockholders equity
accounts receivable is an
Ans: current asset
retained earnings is
Ans: stockholders equity
The statement of financial position also called the
______________________________, lists an entity's ___________, _______________,
and ___________________________ as of a specific point in time
Ans: balance sheet... assets, liabilities, and equity
the balance sheet consists of __________
Ans: permanent accounts with cumulative balances that company carries
forward period to period over the life of the firm
3 things the balance sheet does....
Ans: 1. Summarizes the economic resources obligations that impact the
entity's ability to generate future cash flows
2. is useful in assessing an entity's rate of return on its investments when
examined in conjunction with the income statement
3. Aids in assessing the risk associated with a entity by providing inputs for
cash flow measures
Pretest - Stuvia US
INTERMEDIATE FINANCIAL ACCOUNTING I
FINAL EXAM PRACTICE ONE SOLUTIONS 100%
VERIFIED ANSWERS GRADED A+/NEWEST
UPDATE✓
What information is included in the annual report letter written by managers
of publicly traded companies?
Ans: The annual report of a publicly traded entity must include a letter from
the firm's management that states its responsibilities for the operations of the
entity and the information contained in the financial statements, including:
designing and implementing internal controls relevant to the preparation and
fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
What do auditors attest to in a auditors report?
Ans: The audit report attests to the fairness of the financial statements, not
the annual report. The auditor, though, verifies that the financial information
in the annual report is not inconsistent with the financial statements.
Why are the notes to the financial statements an integral part of the financial
statements?
Pretest - Stuvia US
,2
Ans: The notes (or footnotes) to the financial statements provide descriptive
information regarding a company's accounting policies, supplemental
disclosures of items not reported on the financial statements, and additional
detail for transactions reported on the four main financial statements. For
example, a company will disclose its depreciation policy for long-lived assets
in its financial statement footnotes. A company could also provide additional
disclosures on the historical cost and accumulated depreciation by
significant types of assets. Notes to the financial statements are typically
extensive.
Accounts payable is a
Ans: liability, (current liability)
Trademark is an
Ans: noncurrent asset (intangible asset)
cash is an
Ans: asset (current)
income tax payable is an
Ans: liability (current liability)
tractors are an
Ans: asset (property, plant & equipment)
common stock is
Pretest - Stuvia US
, 3
Ans: stockholders equity
accounts receivable is an
Ans: current asset
retained earnings is
Ans: stockholders equity
The statement of financial position also called the
______________________________, lists an entity's ___________, _______________,
and ___________________________ as of a specific point in time
Ans: balance sheet... assets, liabilities, and equity
the balance sheet consists of __________
Ans: permanent accounts with cumulative balances that company carries
forward period to period over the life of the firm
3 things the balance sheet does....
Ans: 1. Summarizes the economic resources obligations that impact the
entity's ability to generate future cash flows
2. is useful in assessing an entity's rate of return on its investments when
examined in conjunction with the income statement
3. Aids in assessing the risk associated with a entity by providing inputs for
cash flow measures
Pretest - Stuvia US
