Exam 5: Communicating and Interpreting Accounting Information

Ridgetop Corporation reported the following amounts on its balance sheet at December 31,2011: Total current assets \ 1,800,000 Total long-term assets 900,000 Total current liabilities 1,300,000 Total long-term liabilities 500,000 Total equity 900,000 Net income 100,000 On January 1,2011,total assets were $2,000,000,total liabilities were $1,200,000 and total equity was $800,000.Calculate Ridgetop's return on assets.

Which of the following statements is false?

Which of the following are primarily responsible for the information provided in a company's financial statements?

Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value?

Which of the following best describes income from operations?

Independent auditors are advisors who analyze financial statements and other economic information to formulate forecasts and stock recommendations.

Which of the following is true about gross profit (gross margin)?

In order for financial information to be consistent,similar accounting methods need to be used from one period to the next.

The return on assets ratio is affected by both the net profit margin ratio and the asset turnover ratio.

Describe the return on assets ratio and the DuPont approach for calculating return on assets.

In order for financial information to be relevant,it should be timely and accurate.

In what order are current assets usually reported on the balance sheet?

Contributed capital consists of which of the following two accounts?

Common stock and additional-paid in capital are both reported on the balance sheet as a component of shareholders' equity.

Financial analysts utilize a company's financial reports to assist them in making earnings projections and earnings per share projections.

Which of the following statements regarding earnings per share is false?

Describe relevance and reliability as they pertain to financial reporting.

The Callie Company has provided the following information: Operating expenses were $231,000; Cost of goods sold was $376,000; Net sales were $940,000; Interest expense was $32,000; Gain on sale of a building was $76,000; Income tax expense was $151,000. What was Callie's income before taxes?

Which of the following results in an increase in the return on assets ratio?

Which of the following would not be a component of income from operations?