Exam 2: Financial Statements and the Annual Report

What are the two subtotals that distinguish the multi-step income statement from the single-step income statement?

Which statement is true concerning an income statement?

The primary responsibility for the preparation and integrity of the financial statements in an annual report belongs to the company's independent accountants (CPAs).

Which set of items below are current assets?

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Accounts receivable

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

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Bonds payable

Marvel Shoes reported the following items on its statement of cash flows for the current year: Net cash inflows from operating activities \ 70,000 Net cash outflows from investing activities (20,000) Net cash outflows from financing activities (40,000) Cash balance at the beginning of the year 30,000 -Read the information about Marvel Shoes.What was the cash balance for Marvel Shoes at the end of the current year?

As used in accounting, the "Notes to the Financial Statement" should be:

One primary purpose of a classified balance sheet is to help users evaluate the liquidity of a company.

Complete the December 31, 2016 (first year of operation) Balance sheet for Lincoln Company using the following information: (a) Retained earnings at December 31, 2016 was $51,000. (b) Total stockholders' equity at January 1, 2016 was $139,000. (c) On December 30, 2016, additional capital stock was sold for cash, $55,000 (d) The land and building were purchased on December 30, 2016 for $150,000. ​ Lincoln Company Balance Sheet December 31,2016 Assets Liabilities \& Stockholders' Equity Cash \ 80,000 Liabilities: Accounts receivable ? Notes payable ? Land 112,000 Accounts payable 45,000 Buildings ? Total liabilities ? Equipment 30,000 Stockhol ders' equity: Capital Stock ? Retained earnings ? Total liabilities and Total assets \- -- stockholders' equity \3 90,000

In preparing the financial statements for December 31, 2016, an accountant improperly classified the payment of prepaid rent as rent expense.Which of the following amounts would not be affected by this improper classification?

Tavella Company applies the consistency convention.What does this mean?

Which of the following is a current asset?

Which of the following represents the correct sequence of the three business activities on the Statements of Cash Flows?

On the statement of cash flows, the ______________________________ section involves the issuance and repayment of long term liabilities and stock transactions.

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Buildings

The SEC created the objectives of financial reporting.

Guinther & Sons, Inc.a retailer of men's clothing, earned a net profit of $77,000 for 2016.The balance sheet for Guinther & Sons includes the following items: Cash \ 29,000 Accounts receivable \ 39,000 Inventory 79,000 Prepaid insurance 3,000 Land 90,000 Accounts payable 14,000 Taxes payable 29,000 Capital stock 50,000 Retained earnings 97,000 Long-term notes payable 43,000 ​ -Read the information for Guinther & Sons, Inc.The average current ratio for stores such as Guinther & Sons is 2.4 to 1.What does this comparison tell you about its liquidity?

The following balance sheet items from Fasoli, Inc.are listed for December 31, 2016: Accounts payable \ 32,650 Interest payable 2,200 Accounts receivable 26,500 Land 250,000 Accumulated depreciation-buil dings 40,000 Marketable securities 15,000 Merchandise inventory 112,900 Accumulated depreciation-equipment 12,500 Notes payable, due April 15,2017 6,500 Office supplies 200 Notes payable, due December 31,2020 251,630 Paid-in capital in excess of par value 75,000 Buil dings 150,000 Patents 45,000 Capital stock, \ 1 par value 200,000 Prepaid rent 3,800 Cash 60,990 Retained earnings 113,510 Equipment 84,500 Sal aries payable 7,400 Income taxes payable 7,500 -Read the information about Fasoli, Inc. Required: Compute Fasoli's current ratio.On the basis of your answer, does Fasoli appear to be liquid? What other information do you need to fully answer that question?