Intermediate Accounting Quiz2

What is the first step in the accounting cycle?

• Post journal entries to ledger accounts

• Prepare financial statements

• Analyze & journalize transactions

• Prepare unadjusted trial balance

Which financial statement is prepared directly from the Adjusted Trial Balance?

• Balance Sheet

• Income Statement

• Statement of Cash Flows

• Owner’s Equity Statement

What do cash flows from operating activities affect?

• Equity and debt of the business

• Net income

• Cash inflows from financing activities

• Investments in noncurrent assets

What does the statement of cash flows help users evaluate?

• Liquidity, solvency, and financial flexibility

• Market share

• Profit margins

• Revenue generation

Which of the following is NOT a cash flow activity?

• Operating activities

• Investing activities

• Financing activities

• Tax activities

What is treasury stock?

• Shares that pay dividends

• Shares held by shareholders

• Shares repurchased by the company

• Newly issued shares

What is the purpose of closing the accounts?

• To adjust asset values

• To increase revenue

• To calculate net income

• To prepare accounts for the next period

What is the first step in closing the accounts?

• Close individual Expense accounts

• Close Revenues to Income summary account

• Close Income summary account

• Close Dividend account

What is the last step in the accounting cycle?

• Prepare the worksheet

• Prepare post-closing trial balance

• Journalize and post adjusting entries

• Prepare financial statements

What does the statement of cash flows report?

• Net income

• Major cash inflows and outflows

• Only cash outflows

• Only cash inflows