Exam 5: Foundations of Financial Reporting and the Classified Balance Sheet

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. -The return on assets for National Textile is

Use this information to answer the following question. -The total dollar amount of assets to be classified as current assets is

The convention of consistency refers to consistent use of accounting principles

To understand accounting information,users must be familiar with the accounting conventions,or rules of thumb,used in preparing financial statements.

Which accounting term does not mean the same as the others?

Use this information to answer the following question. -The total amount of working capital is

For accounting information to be useful,it must be both relevant and conservative.

Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting period.

Use this information to answer the following question. -The total dollar amount of assets to be classified as property,plant,and equipment is

A practical decision to expense a $120 printer rather than record it as property,plant,and equipment and depreciate it probably is made on the basis of the convention of

The normal operating cycle helps define which of the following balance sheet sections?

The relevance of accounting information means that the information has a direct bearing on a decision.

A company with a profit margin of 6 percent earns sixty cents profit for every dollar of net sales.

Which of the following is not expressed in terms of a percentage?

Why is it important for a company to maintain the same accounting methods and practices from period to period?

Using the following amounts taken from the balance sheet and income statement of a business,compute the measures listed below.After each answer,write "L" if it is a measure of liquidity or "P" if it is a measure of profitability.Round to two decimal places. a.Return on assets b.Working capital c.Return on equity d.Current ratio

Return on assets is a combination of the profit margin and the asset turnover.

A debt to equity ratio of 1.0 means that half of the company's assets are financed by creditors.

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. -The total amount of working capital for National Textile is

General-purpose external financial statements are not primarily intended for