ACCT 212 Week 4 Midterm (Version 2) 2022 ACCT 212 Week 4 Midterm (Version 2) 1. Question : (TCO 1) The Accounting Equation is used to develop the organization's financial reports. (1) Describe what assets value would be if Liabilities are $12,000 and Owners' Equity is $50,000 by showing the Accounting Equation (10 points), and (2) provide an example of two asset accounts that could contain the value. (10 points) Student Answer: Equity= Assets- Liabilities Liabilities = Assets - Equity 50,000- 12,000= 38,000 Two types of asset accounts that can contain value are notes receivable, and merchandise inventory. Instructor Explanation: Textbook pages 11-12. Assets = $12,000 + $50,000 = $62,000. Cash and inventory are examples. Points Received: 16 of 20 Comments: Question 2 Question : . (TCO 1) The financial statements present a company to the public in financial terms. (1) Which financial statement should be prepared first and why (10 points), and (2) explain what information this financial statement provides. (10 points) Student Answer: The income statement or statement of operation is the first to be prepared. This reports the revenues and expenses for the specified period. The income statement reports two main things. The first is revenues and gains and the second is expenses and losses. We also find the net income after subtracting the expenses from revenue. Net income is the most important item in financial statements. Instructor Explanation: Textbook pages 15-21. Income Statement. Compares revenue to expenses. Points Received: 20 of 20 Comments: Question 3 Question :

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