Reference no: EM132782420

Question 1: The first financial statement that is prepared from the trial balance is the

Option 1: statement of cash flows.
Option 2: statement of changes in equity.
Option 3: income statement.
Option 4: balance sheet.

Question 2: The amount of cash received or paid during a period is not an adequate measure of the economic consequences of an organization's activities because

Option 1: many activities may not involve the use of cash.
Option 2: cash inflows may represent the result of activities completed in a previous period.
Option 3: cash outflows may precede or follow the activities with which they are associated.
Option 4: All of the above reasons are correct.

Question 3: At the end of an accounting period, the equation Assets = Liabilities + Owner's Equity does not necessarily balance. Which of the following actions balances the equation?

Option 1: Subtract revenues and add expenses to owners' equity.
Option 2: Subtract revenues from owners' equity and add expenses to assets.
Option 3: Add the difference between revenues and expenses to owner's equity.
Option 4: Add revenues and subtract expenses from assets.