Exam 6: Statements of Financial Position and Cash Flows and the Annual Report

Financial statements issued under IFRS require additional disclosures relating to executive compensation for related-party transactions.

If a subsequent event relates to a condition that existed at the balance sheet date, then the financial statements should be adjusted.

If an auditor's independence is impaired during an audit, an adverse opinion will be issued.

When preparing the operating activities section of the statement of cash flows under the indirect method, gains on sale of equipment are subtracted from net income.

Hackett Company's prepaid rent was $9,000 at December 31 Year 1 and $12,000 at December 31, Year 2. Hackett reported rent expense of $41,000 on its Year 2 income statement. What would be reported as cash paid for rent on the statement of cash flows?

In order to be a cash equivalent, an investment must have a maturity date of three months or less when purchased.

The statement of net income is the first financial statement prepared.

The formula for the current ratio is ________.

San Pedro Industries Presented below are selected accounts from the adjusted trial balance ($ Millions) for San Pedro Industries for June 30 of the current year. -Prepare a classified balance sheet using the account format for San Pedro Industries.

Matthews Company Presented below is selected financial information for Matthews Corporation for the most recent fiscal year ended December 31 ($ millions) Current assets: Current liabilities: Cash and cash equivalents \ 2,462 Accounts payable \ 5,040 Short-term investment 1,406 Other current liabilities 2,707 Receivables, net 1,270 Total current liabilities 7,747 Merchandise inventories 5,184 Noncurrent liabilities 2,439 Other current assets 1,357 Shareholders' Equity 5,020 Total current assets 11,679 Total liabilities and shareholders' equity \ 15,206 Noncurrent assets 3,527 Total assets \ 15,206 Revenues \ 40,339 Costs and Expenses Operating Income 1,450 Other income/expense (including interest expense of \ 70) Income before income tax 1,407 Income tax expense Net income Statement of Cash Flows (excerpt) For the most recent fiscal year ended December 31 Interest paid $110 Previous Year's Financial Data Total Assets Shareholders' Equity The interest coverage ratio for Matthews Corporation is ________. (Round your answer to two decimal places, X.XX.)

Compare and contrast the presentation of assets under U.S. GAAP versus IFRS reporting.

Presented below are activities from Ford Enterprises, Inc. Activity Purchase of buildings with cash Issuance of treasury stock Payments to vendors Sale of old equipment Sales to customers for cash Repayment of notes to bank Issuance of bonds payable Purchase of municipal bonds Receipt of interest on municipal bonds Required: Please indicate whether each of these activities is classified as an (O)perating, (I)nvesting, or (F)inancing Activity on the statement of cash flows.

Which of the following is not a disclosure of a related-party transaction?

A subsequent event is a significant event that occurs after the date of the fiscal year-end, but before the financial statements are issued or available to be issued. Explain how these significant events are disclosed.

All of the following are required disclosures of the board members except ________.

Presented below are financial statements for Brownsville Industries: Brownsville Industries Balance Sheet At June 30 Cash \ 26,000 Short-Term Investments 51,000 Accounts Receivable (net) 125,000 Merchandise Inventory 82,400 Property, Plant, and Equipment, net 325,000 Intangible Assets Total Assets Current Liabilities \ 97,500 11\% Bonds payable, long-term 200,000 Common Stock 10,000 Paid in Capital in excess of par 40,000 Retained Earnings Total Liabilities and Equity Brownsville Industries Income Statement For the Year Ended June 30 Sales \ 750,000 Cost of Goods Sold 395,000 Gross Profit \ 355,000 Operating Expenses 155,400 Operating Income \ 199,600 Interest Expense Income before Income Taxes \ 177,600 Income Taxes Net Income \ 124,320 Prior year data Total Assets \ 525,000 Shareholders' Equity Compute the following ratios a. Current ratio b. Debt to Equity Ratio c. Interest Coverage Ratio(Assume interest expense equals interest paid.) d. Return on Assets e. Financial Leverage f. Return on Equity What do these ratios reveal about the financial condition of Brownsville Industries?

Most annual reports begin with the letter to the shareholders.

Which of the following is classified as an investing activity on a statement of cash flows?

Presented below are the December 31 financial statements for Phillips Corporation (in $ Millions). Cash dividends of $60,750 were paid to shareholders during Year 2. Prepare a statement of cash flows using the direct method.

Teague Industries Presented below is selected financial data for Teague Industries for the current year: Current assets: Current liabilities Cash and cash equivalents \ 3,583 Accounts payable \ 5,345 Short-term investments 1,635 Other current liabilities Receivables, net 1,881 Total current liabilities 8,277 Merchandise inventories 6,245 Noncurrent liabilities 5,176 Other current assets 1,965 Shareholders' Equity Total current assets 15,309 Total liabilities and shareholders' equity \ 19,663 Noncurrent assets 4,354 Total assets \ 19,663 Revenues \ 50,826 Costs and Expenses 45,963 Operating Income 4,863 Other income/expense (including interest expense of \ 50 ) (26) Income before income tax 4,837 Income taxexpense (1,449) Net income \ 3,388 Previous Years' Financial Data Total Assets \ 17,220 Shareholders' Equity 3,970 The debt to equity ratio for Teague Industries is ________. (Round your answer to two decimal places, X.XX.)