Exam 2: Financial Statements and the Annual Report

Powder Corporation began operations on January 2, 2015, with a total investment of $150,000 by its stockholders.Net income for its first year of business was $90,000.During 2016 and 2017, net income increased to $188,000 and to $217,000, respectively.Powder paid $85,000 in dividends to its shareholders in each of the three years. A)In good form, prepare a statement of retained earnings for the year ended December 31, 2016. B)How much is total retained earnings on December 31, 2017? C)Explain the link between the statement of retained earnings and the balance sheet.

The 2016 income statement of Seikoson shows operating revenues of $130,800, selling expenses of $37,100, general and administrative expenses of $34,900, interest expense of $900, and income tax expense of $11,430.Seikoson's stockholders' equity was $280,000 at the beginning of the year and $320,000 at the end of the year.The company has 20,000 shares of stock outstanding at December 31, 2016. ​ -Read the information about Seikoson.What is Seikoson's net income?

Relevant information can be quantitative or qualitative.In deciding whether to go to college part-time or full-time, which of the following is a qualitative factor for a student?

Materiality deals with the insignificance of an error in accounting information.

A construction company that builds skyscrapers is likely to have an operating cycle longer than one year.

For several years, Bosco Corporation has had a current ratio that was consistent with other companies in its industry.For the most recent year, Bosco's current ratio was significantly higher than that for the industry.What is the best possible explanation for this situation?

Independent auditors (CPAs) render an opinion that the financial statements do or do not fairly present a company's financial position, operating results, and cash flows.

Presented below are the condensed balance sheets of Fellsmere Corporation at December 31, 2017 and 2016.Net income for the years ending December 31, 2016 and 2015 is $346,000 and $109,000, respectively. December 31,2017 December Current assets \ 2,228,186 \ 2,544,683 Property, plant, \& equipment (net) 530,589 376,647 Intangibles and other assets 131,206 118,121 Total assets Current liabilities \ 1,429,674 \ 1,003,906 Long-term obligations 3,360 7,240 Warranty and other liabilities 112,971 98,081 Total liabilities \ 1,546,605 \ 1,109,227 Stockholders' equity: Common stock \ 1,566 \ 501,631 Additional paid-in capital 365,986 799,483 Retained earnings 980,509 634,509 Accumulated other comprehensive loss (4,085) \ 1,343,976 Total stockhol ders' equity (5,489) \ 1,930,224 Total liabilities and stockholders' equity \ 2,889,981 \ 3,039,451 ​ -Read the information about Fellsmere Corporation. ​ Required: (A) Explain the change in Fellsmere's working capital from 2016 to 2017.Why do users believe the current ratio provides more information than the dollar amount of working capital? Explain. ​ (B) Fellsmere Corporation's creditors need to know whether its working capital position improved during the year.How would you evaluate this?

From the following list, select the proper section from the statement of cash flows in which it would be classified. -Paid income taxes

.____________________ is the quality of accounting reporting that allows a user to compare two or more accounting periods for a single business.

Matching Identify whether the following investor questions are associated with (a) primary or (b) secondary financial reporting objectives. -How much revenue will Apple generate during the time period in which I own the shares?

Companies prepare classified financial statements because they are required by international accounting principles.

From the following list, select the proper section from the statement of cash flows in which it would be classified. -Paid suppliers cash for inventory purchased

Bevco Company has provided the following information from its accounting records for the current year: Cash \ 55,000 Accounts receivable \ 45,000 Inventory 65,000 Land 75,000 Accounts payable 50,000 Notes payable (due 2020) 150,000 Retained earnings ? Capital stock 20,000 -Read the information for Bevco Company.What are Bevco' current liabilities?

Business entities generally carry on:

Selected data from the accounting records of Cobb Company are listed below: General \& administrative expenses \ 2,200 Operating revenues \ 6,000 Selling expenses 1,800 Incometaxes 600 Other revenues (expenses) 800 Dividends paid 1,200 -Read the information about Cobb Company.What is Cobb's net income?

A balance sheet shows cash, $75,000; marketable securities, $115,000; accounts receivable, $150,000 and $222,500 of inventories.Current liabilities are $225,000.The current ratio is 2.5 to 1.

The following income statement items are taken from the records of Burke Company for the year ended December 31, 2016: Adverti sing expense \ 2,600 Commission expense 3,515 Cost of goods sold 29,200 Depreciation expense - Office Building 4,000 Income tax expense 190 Insurance expense - sales person's auto 3,350 Interest expense 1,400 Interest revenue 2,340 Rent revenue 7,700 Sal aries and wages expense - Office 13,660 Sal es Revenue 50,300 Supplies expense - Office 1,990 ​ -Read the information about Burke Company ​ Required: Prepare a single-step income statement for the year ended December 31, 2016.

For each item listed, select the section of the balance sheet in which the item would be reported. -Notes payable-due within one year

Which one of the following categories on a statement of cash flows is used to report the cash flow effects of buying and selling property, plant, and equipment?