Question

1 Identify the correct components of the income statement.

1. revenues, losses, expenses, and gains
2. assets, liabilities, and owner’s equity
3. revenues, expenses, investments by owners, distributions to owners
4. assets, liabilities, and dividends

2. The balance sheet lists which of the following?

1. assets, liabilities, and owners’ equity
2. revenues, expenses, gains, and losses
3. assets, liabilities, and investments by owners
4. revenues, expenses, gains, and distributions to owners

3.  The accounting equation is expressed as ________.

1. Assets + Liabilities = Owner’s Equity
2. Assets – Noncurrent Assets = Liabilities
3. Assets = Liabilities + Investments by Owners
4. Assets = Liabilities + Owner’s Equity

4. Which of the following is not an element of the financial statements?

1. future potential sales price of inventory
2. assets
3. liabilities
4. equity

5. Which of the following is the correct order of preparing the financial statements?

1. income statement, statement of cash flows, balance sheet, statement of owner’s equity
2. income statement, statement of owner’s equity, balance sheet, statement of cash flows
3. income statement, balance sheet, statement of owner’s equity, statement of cash flows
4. income statement, balance sheet, statement of cash flows, statement of owner’s equity

Answer 1

1

Revenues, losses, expenses, and gains are correct components of the income statement

Option A is correct

2

The balance sheet lists assets, liabilities, and owners’ equity

Option A is correct

3

The accounting equation is expressed as Assets = Liabilities + Owner’s Equity

Option D is correct

4

Future potential sales price of inventory is not an element of the financial statements.

Option A is correct

5

The correct order of preparing the financial statements is income statement, statement of owner’s equity, balance sheet, statement of cash flows

Option B is correct