Exam 5: Communicating and Interpreting Accounting Information

Determine the effect of the following transactions on the identified financial statement components and ratios. Code your answers as follows: A: If the transaction results in an increase in the financial statement component or ratio. B: If the transaction results in a decrease in the financial statement component or ratio. C. If the transaction does not affect the financial statement component or ratio. Transaction 1: A company issued common stock at a price in excess of par value. Revenues_____ Assets_____ Stockholders' equity_____ Return on assets ratio_____ Transaction 2: A company recorded depreciation expense at year-end. Net income_____ Assets_____ Stockholders' equity_____ Asset turnover ratio_____

Anthony Inc. reported the following amounts on their 2014 and 2013 income statements: Net Sales \ 20,438 \ 20,367 Cost of sales 7,943 8,198 Requirements: A. Compute the gross profit percentage for years 2014 and 2013. B. Provide at least two potential causes for the change in Anthony's gross profit percentage.

Intangible assets are reported on the balance sheet as a current asset.

The Securities & Exchange Commission requires publically traded companies to have their financial statements audited by their internal auditors.

Which of the following tasks is not performed by the Securities & Exchange Commission (SEC)?

The fraud triangle conditions necessary for financial statement fraud to occur are the existence of a system of internal control, the ability to invade the system, and rationalization to commit the fraud.

For the year ending December 31, 2014, the accounts of Jackson Corporation showed the following balances: Common stock, January 1, 2014 \ 500,000 Retained earnings, beginning balance, January 1,2014 \ 100,000 Total revenues earned during 2014 \ 150,000 Total expenses incurred during 2014 \ 90,000 Total dividends declared during 2014 \ 10,000 Issuance of stock during 2014 \ 50,000 Requirements: Determine the components of stockholders' equity as of December 31, 2014.

Where are shares of the reporting company's common stock issued in exchange for cash reported on a statement of cash flows?

Comparative financial statements are those of a company in one industry presented with another company in the same industry.

Which of the following is not reported as an operating expense on the income statement?

Information on all contractual agreements is included in notes as a financial statement disclosure.

Kryton Corp. has provided the following information: Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000. What was Kryton's gross profit percentage?

The balance sheet for Glenwood Corporation at December 31, 2014 showed the following subtotals: Current assets \ 140,000 Current liabilities 80,000 Property plant and equipment 420,000 Total stockholders' equity 420,000 Retained earnings 120,000 Total liabilities 210,000 Other long-term assets 70,000 Based on the above data, calculate the following amounts: A. Total assets \ B. Long-term liabilities \ C. Common stock and Additional paid-in capital \ D. Total liabilities and stockholders' equity \

Which of the following would not typically be disclosed in the notes to the financial statements?

FocusMore, Inc., had the following alphabetical list of accounts taken from its adjusted trial balance at December 31, 2014: Accounts Payable \ 15,000 Accounts Receivable 18,000 Accumulated Depreciation-Building 26,200 Advertising Expense 12,800 Building 100,000 Common Stock 60,000 Cash 15,000 Cost of Goods Sold 56,500 Depreciation Expense 2,000 Insurance Expense 3,800 Insurance Payable 1,900 Inventory 25,000 Land 30,000 Prepaid Insurance 4,600 Interest Revenue 2,500 Retained Earnings (Jan. 1, 2014) 58,000 Salaries Expense 48,000 Salaries Payable 4,600 Sales 150,000 Supplies Inventory 1,200 Supplies Expense 2,000 Unearned Rent Revenue 700 Required: Prepare a multiple step income statement for 2014. (Include gross profit, but ignore income taxes.)

The form 10-K is the annual report that publically traded companies must file with the Securities & Exchange Commission (SEC).

Which of the following are primarily responsible for the information provided in a company's financial statements?

Which of the following statements regarding earnings per share is false?

Which of the following statements is correct?

Which of the following statements is false when a company sells inventory costing $700 for $1,200?