chapter 2

Question 1

income becomes … on balance sheet

Answer 1

retained earnings

Question 2

net fixed assets equation

Answer 2

book value of fixed assets - accum dep

Question 3

sources of cash

Answer 3

Cash inflow – occurs when we “sell” something

Question 4

decrease in non cash asset account =

Answer 4

source of cash

Question 5

increase in liability or equity account

Answer 5

source of cash

Question 6

uses of cash

Answer 6

Cash outflow – occurs when we “buy” something

Question 7

increase in non cash account

Answer 7

uses of cash

Question 8

decrease in liability or equity account

Answer 8

uses of cash

Question 9

fixed asset acquistion equation for cash flows =

Answer 9

ending NFA - Beg NFA + dep

Question 10

What are standardized financial statements?

Answer 10

Financial statements which are items in relative terms rather than absolute
terms

Question 11

why do we use standardized financial statements

Answer 11

easier to compare financial info over time as company grows

useful for comparing companies of diff sizes in same industry

Question 12

what does the cash flow statement show

Answer 12

If there is enough cash to sustain company operations from inflows and outflows