Exam 5: Communicating and Interpreting Accounting Information

Which of the following would not be used to calculate income from operations?

Which of the following statements is true?

The summary of significant accounting policies is a required financial statement disclosure.

Huron has provided the following year-end balances: Cash, $25,000 Patents, $7,900 Accounts receivable, $9,300 Property, plant, and equipment, $98,700 Prepaid insurance, $3,600 Accumulated depreciation, $10,000 Inventory, $37,000 Trademarks, $12,600 Goodwill, $11,000 How much are Huron's current assets?

Which of the following is not true about the audit committee of the board of directors?

The following income statement was reported for Bauer Inc. for the first year of operations ending December 31, 2014 reported (in thousands of dollars): Sales revenue \ 24,500 Expenses: Cost of Sales \ 14,700 Salaries and Wages 3,300 Rent 700 Utilities 500 Miscellaneous Total Expenses Income before taxes 5,100 Income tax expense Net income \ .3.315 Requirements: A. Calculate gross profit percentage. B. Calculate net profit margin. C. Calculate earnings per share if there are 200,000 shares of common stock outstanding.

Marino Company has provided the following information: Net sales, $480,000 Net income, $24,000 Average total assets, $200,000 What is Marino's return on assets ratio?

Panmar Inc. is preparing a statement of stockholders' equity for 2014. On January 1, 2014, Panmar started the year with a $200,000 credit balance in its retained earnings account. During 2014, the company earned net income of $140,000. Panmar declared dividends of $80,000 and paid $50,000 of those dividends. Also, the company received cash of $100,000 for additional shares of common stock issued and then paid $30,000 to repurchase shares of common stock. What is the balance in retained earnings on December 31, 2014?

The Nellie Company has provided the following information: Operating expenses were $115,000; Gross profit was $629,000; Cost of goods sold was $470,000; Interest expense was $17,000; Extraordinary loss was $29,000; Income tax expense was $199,000. What was Nellie's income before taxes?

The primary responsibility for the information in a corporation's financial statements lies with the chief executive officer (CEO) and the chief financial officer (CFO).

Which of the following would not be included on an income statement?

Which of the following statements correctly describe the effect of accruing interest revenue at year-end?

The following data were taken from the adjusted trial balance of Kent Corporation. Kent Corporation Adjusted Trial Balance Data December 31, 2014 Accounts Payable \ 12,000 Accounts Receivable 13,000 Accumulated Depreciation-Building 6,000 Accumulated Depreciation-Furniture \& Fixtures 9,000 Building 60,000 Common Stock 40,000 Cash 24,000 Copyrights 22,000 Dividends Declared 12,000 Furniture \& Fixtures 15,000 Land 25,000 Note Payable (10\% , due in 5 years ) 40,000 Office Supplies 1,000 Prepaid Insurance 3,000 Retained Earnings (January 1, 2014) 23,000 Salaries Payable 2,000 Service Revenue 85,000 Salaries Expense 28,000 Utilities Expense 2,000 Depreciation Expense 5,000 Insurance Expense 2,000 Office Supplies Expense 1,000 Interest Expense 4,000 Required: Prepare a classified balance sheet in good form at December 31, 2014. (Ignore income taxes).

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 acquired land by signing a long-term note payable. Property, plant, and equipment_____ Asset turnover ratio_____ Net profit margin ratio_____ Return on assets ratio_____ Transaction 2: Cash was used to pay a current liability. Net income_____ Asset turnover ratio_____ Net profit margin ratio_____ Return on assets ratio_____

Which of the following statements is false?

On January 1, 2014 Gucci Brothers Inc. had a $500,000 credit balance in retained earnings and $600,000 balance in common stock. During 2014, the company earned net income of $100,000, declared a dividend of $15,000, and issued additional stock for $25,000. What is total stockholders' equity on December 31, 2014?

Information disclosed in a balance sheet about shares of common stock includes the number of shares that are:

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 accrued interest expense at year-end. Net income_____ Assets_____ Stockholders' equity_____ Asset turnover ratio_____ Transaction 2: A company declared and paid dividends to stockholders. Net income_____ Assets_____ Stockholders' equity_____ Return on assets ratio_____

Financial analysts utilize a company's financial reports to assist them in making earnings forecasts and earnings per share projections.

The Statement of Comprehensive Income includes items in which order?