Exam 2: Financial Statements and the Annual Report

The quality of accounting information that allows a user to analyze two or more companies and look for similarities and differences is known as understandability.

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

The 2016 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, 2016. ​ Required: Compute Nasir's profit margin.What other information would you need in order to comment on whether this ratio is favorable?

.____________________ is the impact of information to change decision-making.

____________________ is the process of writing off the cost of tangible assets and ____________________ is the process of writing off the cost of intangible assets.

Which of the following statements is true concerning intangible assets?

Supplementary disclosures required by GAAP that help explain detail behind the accounting treatment of certain items in the financial statements is most likely found in which of the following sections of a corporate annual report?

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 amount of net increase or decrease in the cash balance for Marvel Shoes for the current year?

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. -Capital stock

Which one of the following statements is true?

Which one of the following items is reported as a current asset on a classified balance sheet?

Which of the following is not an objective of financial reporting?

How are assets which are expected to be realized in cash, sold, or consumed within the normal operating cycle of a business or within one year (if the operating cycle is shorter than one year) reported on a classified balance sheet?

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 income from operations?

Which one of the following is an investing activity of a business?

Matching Identify whether the following investor questions are associated with (a) primary or (b) secondary financial reporting objectives. -Based on the financial information, should I buy shares of Apple?

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

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 multiple-step income statement for the year ended December 31, 2016.

Moore Industries began operations on January 2, 2016, with an investment of $50,000 by each of its two stockholders.Net income for its first year of business was $240,000.Moore Industries paid a total of $100,000 in dividends to its stockholders during the year. ​ -Read the information about Moore Industries.What is the company's retained earnings balance at December 31, 2016?

Vance Corporation's partial income statement is as follows: Sales \ 1,300,000 Cost of sales 300,000 Selling expenses 210,000 General and admin. expenses 150,000 Required: Determine the profit margin.Would you invest in Vance Corporation? Explain your answer.