Question 1

The purpose of financial reporting is to provide economic information to external decision makers only.

Accepted Answer

A) True 
 B)False

Question 2

Dividends declared and paid reduce a company's retained earnings balance.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following equations represents retained earnings activity?

Accepted Answer

A) Beginning Balance + Net Income + Dividends = Profits for the Year 
B) Beginning Balance + Cash Inflows - Cash Outflows = Ending Balance 
C) Beginning Balance + Dividends - Net Income = Ending Balance 
D) Beginning Balance + Net Income - Dividends = Ending Balance 
A) Beginning Balance + Net Income + Dividends = Profits for the Year 
B) Beginning Balance + Cash Inflows - Cash Outflows = Ending Balance 
C) Beginning Balance + Dividends - Net Income = Ending Balance 
D) Beginning Balance + Net Income - Dividends = Ending Balance

Question 4

Hopper,Inc.
Use the information from Hopper,Inc.to answer the following question.
​
 $$\begin{array} { l r r } 
& \mathbf { 2 0 1 8 } & \mathbf { 2 0 1 7 } \
\text { Operating revenues } & \$ 1,900,000 & \$ 1,600,000 \
\text { Operating expenses } & 1,400,000 & 1,100,000 \
\text { Income taxes } & 200,000 & 200,000
\end{array}$$ ​
-Read the information about Hopper,Inc.Which statement best represents Hopper's performance?

Accepted Answer

A) Hopper's profit margin ratio decreased. 
B) Hopper has become more profitable. 
C) Hopper's increase in operating revenues increased the company's net income. 
D) Hopper's operating expenses as a percentage of operating revenues remained the same. 
A) Hopper's profit margin ratio decreased. 
B) Hopper has become more profitable. 
C) Hopper's increase in operating revenues increased the company's net income. 
D) Hopper's operating expenses as a percentage of operating revenues remained the same.

Question 5

Which set of items below includes current assets?

Accepted Answer

A) Accounts receivable,net income,inventory,and dividends 
B) Cash,accounts receivable,capital stock,and sales 
C) Net income,cash,office supplies,and inventory 
D) Cash,accounts receivable,inventory,and office supplies 
A) Accounts receivable,net income,inventory,and dividends 
B) Cash,accounts receivable,capital stock,and sales 
C) Net income,cash,office supplies,and inventory 
D) Cash,accounts receivable,inventory,and office supplies

Question 6

____________________ is the quality of accounting information that allows a user to analyze two or more companies and look for similarities and differences.

Accepted Answer

The answer of ____________________ is the quality of accounting information...

Question 7

____________________ have claims to an entity's economic resources.

Accepted Answer

Creditors

Question 8

Fasoli,Inc.
The following balance sheet items from Fasoli,Inc.are listed for December 31,2017:
 $\begin{array}{lr}
\text { Accounts payable } & \$ 32,650 \
\text { Interest payable } & 2,200 \
\text { Accounts receivable } & 26,500 \
\text { Land } & 250,000\\text { Accumulated depreciation-buildings } & 40,000 \
\text { Marketable securities } & 15,000 \
\text { Merchandise inventory } & 112,900 \
\text { Accumulated depreciation-equipment } & 12,500 \
\text { Notes payable, due April 15, 2018 } & 6,500 \
\text { Office supplies } & 200\\text { Notes payable, due December } 31,2021 & 251,630 \
\text { Paid-in capital in excess of par value } & 75,000 \
\text { Buil dings } & 150,000 \
\text { Patents } & 45,000 \
\text { Capital stock, } \$ 1 \text { par value } & 200,000\\text { Prepaid rent } & 3,800 \
\text { Cash } & 60,990 \
\text { Retained earnings } & 113,510 \
\text { Equipment } & 84,500 \
\text { Salaries payable } & 7,400 \
\text { Income taxes payable } & 7,500
\end{array}$
-Read the information about Fasoli,Inc.
Required
Prepare the Stockholders' Equity section of the classified balance sheet,including the total stockholders' equity amount.

Accepted Answer

The answer of Fasoli,Inc.
The following balance sheet items from Fasoli,Inc.are...

Question 9

In a ____________________-step income statement,all expenses and losses are added together and then deducted from the sum of all revenues and gains.

Accepted Answer

The answer of In a ____________________-step income statement,all expenses and...

Question 10

Tavella Co.applies the consistency convention.What does this mean?

Accepted Answer

A) Tavella Co.uses the same names for all its expenses as its competitors. 
B) Tavella Co.has selected certain accounting principles that can never be changed. 
C) Tavella Co.applies the same accounting principles each accounting period. 
D) Tavella Co.applies the same accounting principles as its competitors. 
A) Tavella Co.uses the same names for all its expenses as its competitors. 
B) Tavella Co.has selected certain accounting principles that can never be changed. 
C) Tavella Co.applies the same accounting principles each accounting period. 
D) Tavella Co.applies the same accounting principles as its competitors.

Question 11

Use Rizwi Corporation's list of accounts at December 31,2017 to answer the following question: 
Rizwi Corporation
List of Accounts at December 31,2017
$\begin{array}{lrr}
\text { Cash } & \$ 30,000 &\text { Accumulated Depreciation } & \$ 12,000 \
\text { Merchandise } & 21,000 & \text { Notes Payable-Due } 12 / 31 / 2025 & 120,000 \
\text { Inventory } &&& \
\text { Land } & 40,000 &\text { Accounts Payable } & 14,000 \
\text { Buildings } & 80,000& \text { Equipment } & 33,000 \
\text { Accounts Receivable } & 25,000& \text { Notes Payable-Due } 07 / 01 / 2019 & 2,000
\end{array}$ What is Rizwi Corporation's current ratio?

Accepted Answer

A) 0.48 to 1 
B) 2.00 to 1 
C) 2.55 to 1 
D) 2.86 to 1 
A) 0.48 to 1 
B) 2.00 to 1 
C) 2.55 to 1 
D) 2.86 to 1

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

During its fifth year of operations,Bright Creations Company reports a beginning cash balance of $132,000,cash inflows from investing activities of $210,000,cash outflows for financing activities of $79,000,and cash outflows for operating activities of $13,000.What was Bright Creations' cash balance at the end of the fifth year?

Accepted Answer

A) $250,000 
B) $434,000 
C) $276,000 
D) $132,000 
A) $250,000 
B) $434,000 
C) $276,000 
D) $132,000

Question 14

A balance sheet shows cash,$75,000;marketable securities,$115,000;accounts receivable,$150,000;and $222,500 of inventories.Current liabilities are $225,000.The current ratio is 2.5 to 1.

Accepted Answer

A) True 
 B)False

Question 15

The operating cycle for all businesses is one year.

Accepted Answer

A) True 
 B)False

Question 16

Comparative income statements for Jameson Inc.are as follows:
 
 $\begin{array}{|l|r|r|}
\hline &{\mathbf{2 0 1 8}} &{\mathbf{2 0 1 7}} \
\hline \text { Sales } & \$ 2,000,000 & \$ 600,000 \
\hline \text { Cost of sales } & 800,000 & \underline{400,000} \
\hline \text { Gross profit } & \$ 1,200,000 & \$ 200,000 \
\hline \text { Operating expenses } & 520,000 & \underline{120,000} \
\hline \text { Operating income } & \$ 680,000 & \$ 80,000 \
\hline \text { Loss on sale of subsidiary } & (800,000) & 0 \
\hline \text { Net income (loss) } & \$(120,000) & \$ 80,000 \
\hline
\end{array}$ Required
The president and management believe that the company performed better in 2018 than it did in 2017.Write the president's letter to be included in the 2018 annual report.Explain why the company is financially sound and why shareholders should not be alarmed by the $120,000 loss in a year when gross profit increased significantly.

Accepted Answer

<b>Letter from the President to Stockhol

Question 17

Which of the following would appear on a multiple-step income statement but not on a single-step income statement?

Accepted Answer

A) Net income 
B) Total expenses 
C) Total revenues 
D) Income before income taxes 
A) Net income 
B) Total expenses 
C) Total revenues 
D) Income before income taxes

Question 18

One primary purpose of a classified balance sheet is to help users evaluate the liquidity of a company.

Accepted Answer

A) True 
 B)False

Question 19

Three common categories of long-term assets are: (1)property,plant,and equipment, (2)investments,and (3)intangibles.

Accepted Answer

A) True 
 B)False

Question 20

Materiality deals with the insignificance of an error in accounting information.

Accepted Answer

A) True 
 B)False

The purpose of financial reporting is to provide economic information to external decision makers only.

Dividends declared and paid reduce a company's retained earnings balance.

Which one of the following equations represents retained earnings activity?

Hopper,Inc. Use the information from Hopper,Inc.to answer the following question. Operating revenues \ 1,900,000 \ 1,600,000 Operating expenses 1,400,000 1,100,000 Income taxes 200,000 200,000 -Read the information about Hopper,Inc.Which statement best represents Hopper's performance?

Which set of items below includes current assets?

____________________ is the quality of accounting information that allows a user to analyze two or more companies and look for similarities and differences.

____________________ have claims to an entity's economic resources.

In a ____________________-step income statement,all expenses and losses are added together and then deducted from the sum of all revenues and gains.

Tavella Co.applies the consistency convention.What does this mean?

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

A balance sheet shows cash,$75,000;marketable securities,$115,000;accounts receivable,$150,000;and $222,500 of inventories.Current liabilities are $225,000.The current ratio is 2.5 to 1.

The operating cycle for all businesses is one year.

Which of the following would appear on a multiple-step income statement but not on a single-step income statement?

One primary purpose of a classified balance sheet is to help users evaluate the liquidity of a company.

Three common categories of long-term assets are: (1)property,plant,and equipment, (2)investments,and (3)intangibles.

Materiality deals with the insignificance of an error in accounting information.

Accounting As a Form of Communication

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 2: Financial Statements and the Annual Report

The purpose of financial reporting is to provide economic information to external decision makers only.

Dividends declared and paid reduce a company's retained earnings balance.

Which one of the following equations represents retained earnings activity?

Hopper,Inc. Use the information from Hopper,Inc.to answer the following question. ​ Operating revenues \ 1,900,000 \ 1,600,000 Operating expenses 1,400,000 1,100,000 Income taxes 200,000 200,000 ​ -Read the information about Hopper,Inc.Which statement best represents Hopper's performance?

Which set of items below includes current assets?

____________________ is the quality of accounting information that allows a user to analyze two or more companies and look for similarities and differences.

____________________ have claims to an entity's economic resources.

In a ____________________-step income statement,all expenses and losses are added together and then deducted from the sum of all revenues and gains.

Tavella Co.applies the consistency convention.What does this mean?

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

A balance sheet shows cash,$75,000;marketable securities,$115,000;accounts receivable,$150,000;and $222,500 of inventories.Current liabilities are $225,000.The current ratio is 2.5 to 1.

The operating cycle for all businesses is one year.

Which of the following would appear on a multiple-step income statement but not on a single-step income statement?

One primary purpose of a classified balance sheet is to help users evaluate the liquidity of a company.

Three common categories of long-term assets are: (1)property,plant,and equipment, (2)investments,and (3)intangibles.

Materiality deals with the insignificance of an error in accounting information.

Accounting As a Form of Communication

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Hopper,Inc. Use the information from Hopper,Inc.to answer the following question. Operating revenues \ 1,900,000 \ 1,600,000 Operating expenses 1,400,000 1,100,000 Income taxes 200,000 200,000 -Read the information about Hopper,Inc.Which statement best represents Hopper's performance?