Exam 1: Accounting As a Form of Communication

On January 1,2017,Francisco Company's balance in retained earnings was $80,000.During 2017,the company earned net income of $43,000 and paid $15,000 in dividends.Calculate the retained earnings balance at December 31,2017.

Which one of the following statements is true concerning assets?

The statement of retained earnings accomplishes which of the following?

A company in the process of liquidation meets the requirements under the going concern assumption.

Sun City Corporation's end-of-year balance sheet consisted of the following amounts: What amount should Sun City report on its balance sheet for total assets? Cash \ 25,000 Accounts receivable \ 70,000 Property, plant, and equipment 70,000 Long-term debt 40,000 Capital stock 100,000 Accounts payable 20,000 Retained earnings ? Inventory 35,000

Lawton Corporation's end-of-year balance sheet consisted of the following amounts: Cash \ 25,000 Accounts receivable \ 58,000 Property, plant, and equipment 69,000 Long-term debt 40,000 Capital stock 100,000 Accounts payable 20,000 Retained earnings ? Inventory 43,000 What amount should Lawton report on its balance sheet for total assets?

Presented below are condensed data from the financial statements of Gallo Factory for 2017 and 2016.The figures are expressed in thousands.Use this information to answer the questions that follow. Required: Based on the information provided,is Gallo Factory considered a business or nonbusiness entity? How do you know by examining the financial statements? Statement A 2017 2016 Total current assets \ 82,309 \ 80,080 Property, plant, and equipment (net of accumulated depreciation) 63,451 62,724 Investments 303 1,061 Other assets 3,438 2,606 Total assets \1 49,501 \1 46,471 Total current liabilities \ 33,928 \ 28,668 Long-term debt 20,491 25,676 Deferred income taxes and contingencies 4,174 5,208 Total liabilities \ 58,593 \ 59,552 Total stockholders' equity \ 90,908 \ 86,919 Total liabilities and stockhol ders' equity \ 149,501 \ 146,471 Statement B 2017 2016 Net sales \ 209,203 \ 174,206 Cost of sales 136,225 114,284 Gross profit \ 72,978 \ 59,922 Selling, general, and administrative expenses 63,895 53,520 Other income (expense) 693 (118) Income (loss) before income taxes \ 9,776 \ 6,284 Income tax expense \ 3,534 \ 3,388 Net income (loss) 6,242 \ 3,896

Avery Corporation began the year with total assets of $800,000 and total liabilities of $620,000.Use the accounting equation to answer the following questions.Assume no additional investment by owners when answering these questions. A) What was the amount of Avery's total assets at the end of the year if liabilities decreased by $\$ 60,000$ and owners' equity increased by $\$ 90,000$ ? B) Was the company profitable? Explain your answer.

Presented below are condensed data from the financial statements of Gallo Factory for 2017 and 2016.The figures are expressed in thousands.Use this information to answer the questions that follow. Statement A 2017 2016 Total current assets \ 82,309 \ 80,080 Property, plant, and equipment (net of accumulated depreciation) 63,451 62,724 Investments 303 1,061 Other assets 3,438 2,606 Total assets \1 49,501 \1 46,471 Total current liabilities \ 33,928 \ 28,668 Long-term debt 20,491 25,676 Deferred income taxes and contingencies 4,174 5,208 Total liabilities \ 58,593 \ 59,552 Total stockholders' equity \ 90,908 \ 86,919 Total liabilities and stockhol ders' equity \ 149,501 \ 146,471 Statement B 2017 2016 Net sales \ 209,203 \ 174,206 Cost of sales 136,225 114,284 Gross profit \ 72,978 \ 59,922 Selling, general, and administrative expenses 63,895 53,520 Other income (expense) 693 (118) Income (loss) before income taxes \ 9,776 \ 6,284 Income tax expense \ 3,534 \ 3,388 Net income (loss) 6,242 \ 3,896 -Required: Was Gallo Factory profitable both years? What are the amounts of the total revenues and total expenses,respectively,for 2017? Which financial statement provides this information to you?

Bullseye,Inc. ,started the year with total assets of $400,000 and total liabilities of $240,000.Net income for the year is $120,000 and dividends declared and paid during the year are $90,000. A)What is the amount of Bullseye's total stockholders' equity at the end of the year? B)Could Bullseye have paid additional dividends during the year? Explain your answer.

Information must be timely to be relevant.

Because market values are subjective,many assets are carried on the balance sheet at their acquisition cost.

Which of the following would be internal users of accounting information?

The going concern assumption infers that a company will continue to operate until a known date.

A balance sheet provides information during a period of time,while the other basic financial statements provide information on activities that occur over a point in time.

Which one of the following business decisions will least likely require financial information?

The Trenton Corporation began 2017 with $390,000 in assets,$140,000 in liabilities,and $170,000 of retained earnings.Net income for the year was $120,000,and dividends of $110,000 were declared and paid. A) Prepare a statement of retained earnings for 2017. B) What is the nature or purpose of the statement of retained earnings? C) What was the amount of capital stock for Trenton Corporation at the beginning of 2017 ? D) Identify what business events might occur in Trenton's business operations that would cause the two stockhol ders' equity items to increase. E) How do you identify whether Trenton was profitable during 2017 by examining the statement of retained earnings?

Which one of the following correctly represents one of the basic financial statement models?

The process of identifying,measuring,and communicating economic information to various users is called ____________________.

Meredith Corporation is in the business of providing dog and cat grooming services to customers within the city of New York.The following information concerning financial activities during 2017 is available at December 31,2017: ​ ​ Grooming revenue \ 130,000 Salary and wage expense \ 44,000 Dividends declared and paid 13,000 Rent expense 24,000 Equipment 40,000 Furniture 60,000 Accounts payable 30,000 Accounts receivable 23,000 Capital stock 22,000 Retaned earnings, Jan. 1,2017 21,000 Utilities expense 10,000 Notes payable 88,000 Cash 33,000 Income tax expense 7,000 A. Calculate net income for 2017 . B. Prepare a statement of retained earnings for the year ended December $31,2017$ . C. What information can you derive from the statement of retained earnings concerning this company? Explain.