Exam 2: Financial Statements and the Annual Report

Which one of the following subtotals or totals would appear in a multiple-step,but not a single-step,income statement?

Liquidity relates to a company's ability to do which of the following?

Accountants are the main reason financial statements are prepared.

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

Which statement is true concerning gains and losses?

.____________________ is the quality of accounting reporting that allows a user to compare two or more accounting periods for a single business.

Complete the December 31,2017 (first year of operation)balance sheet for Lincoln Company using the following information: (a)Retained earnings at December 31,2017 was $51,000. (b)Total stockholders' equity at January 1,2017 was $139,000. (c)On December 30,2017,additional capital stock was sold for cash,$55,000. (d)The land and building were purchased on December 30,2017 for $150,000. ​ Lincoln Company Balance Sheet December 31, 2017 Assets Liabilities \& Stockholders' Equity Cash \ 80,000 Liabilities: Accounts receivable ? Notes payable ? Land 112,000 Accounts payable 45,000 Building ? Total liabilities ? Equipment 30,000 Stockholders' equity: Capital stock ? Retained earnings ? Total assets \& Total liabilities and \3 90,000 stockholders' equity

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,Inc.The average current ratio for stores such as Guinther & Sons is 2.4 to 1.What does this comparison tell you about its liquidity?

What financial statement items are investors and creditors most interested in and why?

Which of the following is generally supplementary information required by GAAP concerning the accounting treatments used by a company?

Which of the following would not be considered to be an intangible asset?

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 below about Smith Corporation. Required: Calculate the amount of working capital at December 31,2017 for Smith Corporation.What can you learn from the current ratio that you cannot learn from the amount of working capital?

You are comparing three companies that use different depreciation methods.Which of the following would help you the most in making a comparison of the companies?

Burke Company The following income statement items are taken from the records of Burke Company for the year ended December 31,2017: ​ Advertising expense \ 2,600 Commission expense 3,515 Cost of goods sold 29,200 Depreciation expense-o ffice buil ding 4,000 Income tax expense 190 Insurance expense-sales person's auto 3,350 Interest expense 1,400 Interest revenue 2,340 Rent revenue 7,700 Sal aries and wages expense-office 13,660 Sales revenue 50,300 Supplies expense-office 1,990 ​ -Read the information about Burke Company ​ Required Prepare a single-step income statement for the year ended December 31,2017.

Fasoli,Inc. The following balance sheet items from Fasoli,Inc.are listed for December 31,2017: Accounts payable \ 32,650 Interest payable 2,200 Accounts receivable 26,500 Land 250,000 Accumulated depreciation-buildings 40,000 Marketable securities 15,000 Merchandise inventory 112,900 Accumulated depreciation-equipment 12,500 Notes payable, due April 15, 2018 6,500 Office supplies 200 Notes payable, due December 31,2021 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 Salaries payable 7,400 Income taxes payable 7,500 -Read the information about Fasoli,Inc. Required Compute Fasoli's current ratio.On the basis of your answer,does Fasoli appear to be liquid? What other information do you need to fully answer that question?

Forman,Inc.earned $600,000 profit during 2017.On which financial statement(s)will you find the dollar amount of the profit earned by the company?

Which of the following represents one of the purposes of the notes to financial statements?

____________________ and ____________________ have claims to an entity's economic resources.

Coglin,Inc.incurred a net loss of $20,000 for 2017.The balance sheet at December 31,2017,for Coglin,Inc.includes the following items: ​ Cash \ 23,000 Accounts receivable 13,000 Inventory 45,000 Prepaid insurance 1,000 Land 14,000 Building 80,000 Accounts payable 55,000 Sal aries payable 2,000 Capital stock 100,000 Retained earnings 25,000 A) Determine Coglin's current ratio and working capital. B) Beyond the information provided in your answers to " $\mathrm{A}$ ," what does the composition of Coglin's current assets tell you about its liquidity? C) What other information would one need to fully access Coglin's liquidity?

Moore Industries Moore Industries began operations on January 2, 2017, with an investment of $50,000 by each of its two stockholders. Net income for its first year of business was $240,000. Moore Industries paid a total of $100,000 in dividends to its stockholders during the year. -Read the information about Moore Industries.If the company's revenues were $500,000 for the year ended December 31,2017,how much were total expenses?