1. The balance sheet communicates a. proof to the investor that the company is profitable. b. assets, liabilities, and shareholders’ equity with all transactions reflected through the year. c. assets, liabilities, and shareholders’ equity as of a certain date. d. operating, investing, and financing activities. Ans: C KP 3 BT: K Difficulty: Easy TOT: 1 min. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting 2. The income statement communicates a. assets, liabilities, and shareholders’ equity as of a certain date. b. how much cash the owner received during the period. c. information about dividends the company paid to its owners. d. revenues less expenses during a period of time. Ans: D KP 3 BT: K Difficulty: Easy TOT: 1 min. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting 3. Who prepares financial reports for a particular company? a. The Securities and Exchange Commission b. The Board of Directors c. The company’s management d. The company’s auditors Ans: C KP 5 BT: K Difficulty: Easy TOT: 1 min. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting 4. To run a company effectively, which one of the following might be a source from which management might acquire capital? a. Customers b. FASB c. Debt and equity investors d. Auditors Ans: C KP 4 BT: C Difficulty: Easy TOT: 1 min. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting