Exam 2: Financial Statements and the Annual Report

Which of the following terms characterizes the time period between the investment of cash in merchandise and the collection of cash from the sale of that merchandise?

An independent auditor's (CPA's) report is a guarantee that the financial statements are free from fraud or material error

Jackson Transportation purchases many pieces of office furniture with an individual cost below $200 each.Jackson chooses to account for these expenditures as expenses when acquired rather than reporting them as property, plant, and equipment on its balance sheet.The company's accountant and independent CPA agree that no accounting principle has been violated.What accounting justification allows Jackson to expense the furniture?

Use Rizwi Corporation's list of accounts at December 31, 2016 to answer the following question. Rizwi Corporation List of Accounts at December 31, 2016 Cash \ 30,000 Accumulated depreciation \ 12,000 Merchandise inventory 14,000 Notes payable- 120,000 Land 40,000 Due12/31/2024 Buildings 80,000 Accounts payable 14,000 Accounts receivable 25,000 Equipment 33,000 Notes Payable- 14,000 Due07/01/2018 ? What is Rizwi Corp.'s current ratio?

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: Prepare the Assets section of the classified balance sheet.

Match the following characteristics with the statements about each qualitative characteristic's importance. -Those willing to spend the time should be provided with comprehensible accounting information.

​Current assets, other than cash, are expected to be sold or consumed beyond a company's normal operating cycle.

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.Calculate the total amount of current assets for Guinther & Sons.

Matching Identify whether the following investor questions are associated with (a) primary or (b) secondary financial reporting objectives. -If I buy 50 shares of Apple, how much cash will I receive in dividends each year?

From the following list, select the proper section from the statement of cash flows in which it would be classified. -Received cash from selling goods to customers

What is the correct method for calculating working capital?

From the following list, select the proper section from the statement of cash flows in which it would be classified. -Sold equipment no longer used in the business

Which of the following statements is true concerning external users of financial information?

Harrison Company calculated the following amounts concerning its financial information for the years ending December 31, 2017 and 2016: Current ratio 3.1 to 1 2.0 to 1 Profit margin 22\% 18\% ​ REQUIRED: Suppose Harrison Company had a decrease in its cash account from 2016 to 2017.Would the other current asset amounts have increased or decreased? Explain.

____________________ is the quality of accounting information that makes it dependable in representing the events that it purports to represent.

Match the following characteristics with the statements about each qualitative characteristic's importance. -The accounting information must be information that could affect a decision.

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. -Land

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. -Consulting revenues

In the independent auditors' report included with the annual report, management discusses the financial statements and provides the shareholders with explanations for certain amounts reported in the statements.

____________________ is the quality of accounting information that makes it comprehensible to those willing to spend the necessary time.