Exam 15: Financial Statements and Year-End Accounting for a Merchandising Business

The difference between current assets and current liabilities represents the amount of capital the firm has to work with for current operations.

Match the terms with the definitions. -Compares the relationship between certain amounts in the income statement and balance sheet.

The ability of a business to meet its current obligations may be determined by the

Undepreciated cost is the same as the book value of an asset.

Match the terms with the definitions. -This statement shows a step-by-step calculation of net sales, cost of goods sold, gross profit, operating expenses, income from operations, other revenues and expenses, and net income.

Match the terms with the definitions. -Those expenses directly associated with selling activities.

The statement of owner's equity summarizes all changes in the owner's equity during the period.

Match the terms with the definitions. -Net sales minus cost of goods sold.

Inventory turnover is determined by dividing cost of goods sold for the period by the ending inventory.

Assets that are expected to be used for more than one year in an operation of a business are called property, plant, and equipment.

The following information was taken from the financial statements of Ashley's Linens: Total current assets $ 53,000 Property, plant, and equipment 6,000 Current liabilities 21,000 Long-term liabilities 4,000 Owner's equity 34,000 Beginning inventory 31,000 Ending inventory 33,000 Cost of goods sold 152,000 Net income 42,000 ​ The working capital of Ashley's Linens is

Adjusting entries are made in the

A primary purpose of the work sheet is to serve as an aid in the preparation of the financial statements.

The Income Statement and Balance Sheet columns below are from the work sheet of Bleeker Street Bounty for the year ended December 31, 20--. Required: Using the work sheet, compute (a) total current assets, (b) working capital, (c) current ratio, and (d) accounts receivable turnover. (Accounts receivable balance on January 1, 20-- was $23,200). Round to 2 decimal places. All sales are on account.

Match the terms with the definitions. -Gross profit minus operating expenses on a multiple-step income statement.

The heading on a financial statement includes which of the following information, in the order shown?

A formal statement of the changes in owner's equity during an accounting period is called a statement of financial position.

A mortgage payable is a written agreement specifying that if the borrower does not repay a debt, the lender has the right to take over the property to satisfy the debt.

A trial balance of the general ledger accounts taken after the temporary owner's equity accounts have been closed is usually referred to as a

The following information was taken from the financial statements of Sunshine City: Total current assets $ 53,000 Property, plant, and equipment 6,000 Current liabilities 21,000 Long-term liabilities 4,000 Owner's equity 34,000 Beginning inventory 31,000 Ending inventory 33,000 Cost of goods sold 152,000 Net income 42,000 ​ The inventory turnover (rounded to one decimal place) for Sunshine City is