Exam 2: Introduction to Financial Statements and Other Financial Reporting Topics

Smith Company had retained earnings of $60,000 at the end of the current year.For the current year,income was $30,000 and dividends $10,000.What was the balance in retained earnings at the end of the prior year?

The auditor will issue a qualified opinion when he/she has not performed an audit sufficient in scope to form an opinion.

Which of the following is a temporary account?

A summary annual report is a condensed annual report that omits much of the financial information included in a typical annual report.

Retained earnings always shows a positive balance.

Match each auditor's report with the phrase that correctly describes it. -This opinion states that except for the effects of the matter(s)to which the qualification relates,the financial statements present fairly,in all material respects,the financial position,results of operations,and cash flows of entity in conformity with generally accepted accounting principles.

The point of cash receipt for revenue and cash disbursement for expenses is important under the accrual basis when determining income.

Danner Company reported the following amounts in its 2012 annual report. Net income for 2012 \8 ,450 Dividends declared and paid in 2012 Retained earnings, December 31, 2011 82,000 Retained earnings, December 31, 2012 90,000 Required: Solve for dividends declared and paid in 2010 and prepare a statement of retained earnings for Danner Company for the year ended December 31,2010.(Include the proper heading. )

Accounting for a business combination must be accounted for using the purchase method.

A corporation is considered to be a legal entity separate and distinct from the stockholders.

Dorset Company began the year with total assets of $400,000 and total liabilities of $300,000.Required: Using this information and the accounting equation,answer each of the following independent questions. a.What was Dorset's stockholders' equity at the beginning of the year? b.Assuming Dorset Company's assets increased by $50,000 and its total liabilities increased by $30,000 during the year,what would be the amount of stockholders' equity at the end of the year? c.Assuming Dorset's total assets increased to $500,000 and its stockholders' equity increased to $150,000,what would be the amount of total liabilities at the end of the year?

The responsibility for the preparation and integrity of financial statements rests with the auditors.

The income statement is a summary of revenues and expenses and gains and losses,ending with net income,for a particular period of time.