Exam 2: Financial Statements and the Annual Report

On the statement of cash flows,the ______________________________ section involves the purchase and sale of products and services.

Assume that you want to determine the profit margin for a company.Which one of the following financial statements is the best source of this information?

Dividends paid appear on both the income statement and the statement of retained earnings.

Which of the following represents the correct sequence of the three business activities on the statements of cash flows?

Some analysts properly refer to a company's profit margin as its return on assets.

Smith Corporation Listed below is information from the financial records of Smith Corporation at December 31, 2017: Retained earnings \ 37,000 Notes payable-Due July 1,2020 \ 12,000 Accumulated depreciation 13,000 Interest payable 1,000 Income taxes payable 24,000 Office supplies 2,000 Buildings 48,000 Accounts payable 46,000 Cash 11,000 Inventory 33,000 Accounts receivable 35,000 Land 50,000 Capital stock 60,000 Prepaid rent 4,000 -Read the information about Smith Corporation. Required: Calculate Smith's current ratio at December 31,2017.What does this ratio tell you about the "composition" of the current assets?

To determine the source of a company's noncurrent assets,on which financial statement will you look?

Harrison Company calculated the following amounts concerning its financial information for the years ending December 31,2017 and 2016: ​ 2018 2017 Current ratio 3. 2.01 Profit margin 22\% 18\% Required Suppose Harrison Company had a decrease in its cash account from 2017 to 2018.Would the other current asset amounts have increased or decreased? Explain.

Which of the following would not appear on an income statement?

Guinther & Sons,Inc. ,a retailer of men's clothing,earned a net profit of $77,000 for 2017.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 21,000 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.

The following list contains several items that appear on an income statement. 1. Other revenue and expenses 5. Net income 2. Income before taxes 6. Operating revenues 3. Income taxes 7. Income from operations 4. Operating expenses Select the choice that lists the items in the order they would appear on a multiple-step income statement.

The following information is given for Camino Company: Cash \ 50,000 Inventory \ 45,000 Land 75,000 Accumulated depreciation 40,000 Plant and equipment 150,000 Accounts payable 60,000 What are the company's current assets?

Which of the following is a noncurrent asset?

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

Identify each of the following items as operating (O),investing (I),or financing (F)activities on the statement of cash flows(assuming the indirect method).If an item is not on the statement,please mark it as none of these (N).If the item is an inflow,please indicate by a (+), (e.g.O+,I+ or F+).If the item is an outflow,please indicate by brackets (e.g. ,<O> for operating outflow,<I> for investing outflow,and <F> for financing outflow): ​ ____ (a)Paid an account payable for inventory purchased in the previous accounting period. ____ (b)Received cash from a customer ____ (c)Paid a dividend to stockholders. ____ (d)Paid the interest on a note payable to National Street Bank. ____ (e)Paid the principal amount due on the note payable to National Street Bank. ____ (f)Transferred cash from a checking account into a money market fund. ____ (g)Purchased equipment for cash.

Which of the following events will cause a company's current ratio to decrease?

The purchase of inventory for cash will cause the current ratio to decrease.

On the statement of cash flows,the ______________________________ section involves the acquisition and sale of long-term assets.

Seikoson The 2017 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, 2017. -Read the information about Cobb Company.By what amount will net income on a single-step income statement differ from net income on a multiple-step income statement if Cobb Company prepares both formats?

Equipment is classified as a ____________________ asset on the balance sheet.