Exam 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash

What amount of current liabilities would appear on the statement of financial position?

Which one of the following is not a qualitative characteristic of useful accounting information?

In calculating net cash flow from operating activities using the direct method, each item in the statement of earnings is adjusted from the accrual basis to the cash basis.

The cost constraint ensures that the value of information provided is greater than the cost of providing it.

Which of the following is false?

On January 1, 20A, Virginia Company had $22,000 of Retained Earnings. During 20A Virginia earned profit of $40,000 and declared and paid dividends of $20,000. In addition, the company received cash of $15,000 as an additional investment by its owners. What is the ending balance in Retained Earnings at December 31, 20A?

Having a conceptual framework of accounting ensures that standards and practices are clear and consistent.

When land is included in the category of Operational Assets, its acquisition cost should be amortized over time to reflect its use (i.e., wear).

An increase in inventory and plant and equipment during the year while sales remain constant will cause the fixed asset turnover ratio to increase.

Baker Company has a machine which cost $28,000. The machine has an estimated useful life of seven years, no residual value, and was purchased January 1. Baker uses straight-line depreciation. A. The amount of depreciation expense each year would be: $ _. B. The net book (carrying) value of the machine at the end of the third year would be: $ _.

In preparing a cash flow statement, an increase in the Contributed capital account during a period would be an investing activity.

Which of the following would most likely increase net profit margin?

Analysts play a major role in making financial statements and other information available to average investors through their stock recommendations and profit forecasts.

Compute each of the following amounts: A. A company reported current assets of $70,000 and current liabilities of $45,000. What would be the current ratio? B. Current assets are $65,000, noncurrent assets are $180,000, current liabilities are $30,000 and long-term liabilities are $25,000. What is the debt to equity ratio? C. Assume total liabilities are $32,000, total shareholders' equity $65,000, and all assets, other than current assets, total $60,000. What would be the amount of current assets? D. If earnings per share is $2.85 and the number of shares outstanding is 7,500, then profit is:

In addition to the four required financial statements, which of the following is a required disclosure in the annual report?

The income statement is a "profit statement," while the statement of financial position is a "position statement."

Which of the following statements is true?

When the auditors give an unqualified opinion, it means the company's financial statements do not conform to international financial reporting standards.

The following information was taken from the income statement and balance sheet of The ABC Company for the years 2011 and 2012 (in millions): Compute the following ratios for 2012:

Earnings are first made public in press releases. Companies follow these announcements with annual and quarterly reports containing statements, notes, and additional information.