Section 1 (Cash Flow Statement)

Circle or underline the right answer for each question. (10 Marks)

1. Proceeds from the sale of equipment used in the business.

Operating; Investing; Financing; Supplemental

2. Declaration and payment of dividends on company's stock.

Operating; Investing; Finance; Supplemental

3. An increase in the balance in a retailer's Merchandise Inventory.

Operating; Investing; Finance; Supplemental

4. An increase in the balance in Accounts Payable.

Operating; Investing; Finance; Supplemental

5. The proceeds from issuing additional Common Stock.

Operating; Investing; Finance; Supplemental

Exercise:

Draft a Cash Flow Statement with the following information. (15 Marks)

Georges Auto Care Period ending December 31, 2021

Customer Payments $2,000,000; Material Purchase $640,000; Wages $840,000; Other payments $352,000; Equipment Purchase $40,000; Loan Payment $60,000

Section 2 (Balance Sheet)

Circle or underline the right answer for each question. (10 Marks)

1. Another name for the balance sheet is

Statement of Operations; Statement of Financial Position

2. The balance sheet heading will specify a

Period of Time; Point in Time

3. Which of the following is a category, classification, or element of the balance sheet?

Expense; Gains; Liabilities; Losses

4. Which of the following is an asset account?

Accounts Payable; Prepaid insurance; Unearned Revenue

5. What is the normal balance for an asset account?

Debit; Credit

Exercise:

Draft a Balance Sheet with the listed information below: (make sure you have the proper headings for each area) (20 Marks)

Georges Dry Cleaners; December 31, 2021

Assets: Cash $32,800; Accounts Receivable $300; Prepaid rent $1,000; Inventory $44,800; Leaseholder Improvements $100,000; Accumulated Depreciation $2,000

Liabilities: Account Payable $49,000; Accrued Expenses $450; Unearned Revenue $ 1,000; Long term Liabilities $104,500

Owners Equity: Retained earnings $11,450; Common Stock $10,000