Exam 1: Accounting As a Form of Communication

Someone to whom a company has a debt is known as an investor.

Read the information about Fasoli, Inc. Required: Prepare the Stockholders' Equity section of the classified balance sheet, including the total stockholders' equity amount.

The 2014 income statement of Nasir Inc. shows operating revenues of $135,800, selling expenses of $40,310, general and administrative expenses of $33,990, interest expense of $880, and income tax expense of $13,090. Nasir's stockholders' equity was $250,000 at the beginning of the year and $345,000 at the end of the year. The company has 10,000 shares of stock outstanding at December 31, 2014. Required: Compute Nasir's profit margin. What other information would you need in order to comment on whether this ratio is favorable?

Webb Company Selected data from the accounting records of Webb Company are listed below: -Read the information about Webb Company. By what amount will net income on a single-step income statement differ from net income on a multi-step income statement if Webb Company prepares both formats?

The amount of a transaction may be immaterial by company standards but still be considered significant by financial statement users.

Lakeland Corporation's end­of­year balance sheet consisted of the following amounts: What is Lakeland's retained earnings balance at the end of the current year?

The federal government agency with the ultimate authority to determine the rules in preparing statements for companies whose stock is sold to the public is the __________________________________________________.

For each statement provided, choose the letter of the appropriate term from the list that each statement best describes. Some terms may be used more than once, while others are not used at all. -An artificial segment on the calendar used as a basis for preparing financial statements.

What information is provided in an annual report in addition to the financial statements?

Drew Mellow, owner of Mellow's Melodies, also owns a personal residence that costs $400,000. The market value of his residence is $600,000. During preparation of the financial statements for Mellow's Melodies, the accounting concept most relevant to the presentation of Drew's home is:

What is meant by generally accepted accounting principles?

Sawyer Corporation purchased land in 2009 for $490,000. In 2015, it purchased a nearly identical parcel of land for $660,000. In its 2015 balance sheet, Sawyer valued these two parcels of land at a combined value of $1,320,000. By reporting the land in this manner, Sawyer Corporation has violated which of the following?

The three types of business activities in which all corporations engage are , ______________________, and _____________________.

Read the information about Cargo Corporation. Required: Prepare the current liabilities section of the balance sheet for Cargo Corp. at December 31, 2015. You may omit the heading. If the amount of current liabilities were larger, what effect would this have on the current ratio?

Owners' equity is the residual interest that remains after deducting liabilities from stockholders' equity.

Match the following characteristics with the statements about each qualitative characteristic's importance. -This quality refers to an amount large enough to affect a decision.

For each item listed, select the section of the balance sheet in which the item would be reported. -Accounts payable

Read the information about Fasoli, Inc. Required: Prepare the Liabilities section of the classified balance sheet, including total liabilities balance.

Three organizations important to accounting are listed below. Select the organization that most closely achieves the role described. -Requires that publicly traded companies file annual and quarterly financial statements on a timely basis.

is the magnitude of an omission or misstatement in accounting information that will affect the judgment of someone relying on the information.