Exam 4: The Balance Sheet and the Statement of Shareholders Equity

A comparison of a company's performance with that of its own past results is known as

The cash surrender value of a life insurance policy would be considered a long-term investment.

GAAP requires that all derivative financial instruments be reported at their

Selected information from a company's balance sheet follows: Working capital is

Below is a list of common ratios necessary for financial statement analysis. a. Debt-to-Assets b. Return on Common Equity c. Fixed Asset Turnover d. Total Asset Turnover e. Debt-to-Equity Ratio f. Inventory Turnover g. Current Ratio h. Quick Ratio Required: Match the ratio with the appropriate formula. 1.Net Income ÷ Average Total Common Equity 2.Quick Assets ÷ Current Liabilities 3.Current Assets ÷ Current Liabilities 4.Cost of Goods Sold ÷ Average Inventory 5.Total Liabilities ÷ Total Common Equity 6.Total Revenues ÷ Average Net Fixed Assets 7.Total Revenues ÷ Average Total Assets 8.Total Liabilities ÷ Total Assets

Which of the following is not a characteristic of a liability?

On January 1, 2015, Marlow Corporation had the following shareholders' equity account balances: During 2015, the following events occurred in the order listed and were properly recorded: Required: Prepare a statement of changes in shareholders' equity for 2015.

Which statement is not true?

The balance sheet reports the financial position of a company at a specific date in time whereas the other three financial statements report changes in the financial position of the company.

On January 1, 2014 Hammer Company listed the following shareholders' equity section of its balance sheet: During 2014, the following transactions and events occurred and were recorded: 1)Hammer issued 50,000 shares of common stock at $3 per share. 2) Hammer earned net income of $175,900. 3)Hammer paid a cash dividend of $.10 per share of common stock 4) Hammer had an unrealized loss associated with some available-for-sale securities in the amount of $1,450. Required: Prepare Hammer's statement of shareholders' equity for 2014.

Current liabilities are defined as obligations that will be paid

Listed below are the five alternatives identified by the FASB for measuring balance sheet elements. Following the list is a series of balance sheet elements. a. historical cost b. current replacement cost c. fair value d. net realizable value e. present value 1.Receivables net of allowance for doubtful accounts 2.Prepaid expenses 3.Investment securities available for sale 4.Patents 5.Raw materials inventory adjusted downward to lower of cost or market 6.Capital lease obligations 7.Financial instruments 8.Property, plant, and equipment 9.Bonds payable 10.Trading securities Required: Match each measurement alternative to its balance sheet element by placing the appropriate letter in the space provided.

A client of your accounting firm is impressed with the precision and detail in the financial statements that you have just prepared for his company. However, he wants to know if there are any limitations to the information contained in them. Required: Describe four limitations of the balance sheet.

Under IFRS "capital and reserves" includes capital stock, additional paid-in capital, and retained earnings.

Which of the following would not be classified as contributed capital?

In order for an asset to be capitalized it must meet one of these three criteria: control, acquisition, and future benefit.

The following information has been provided for Zero One Corp.: Required: a.Prepare the current asset section of Zero One's balance sheet. b.Calculate Zero One's working capital.

The SEC requires comparative income statements and statements of cash flows for

Which of the following formulas represents working capital?

Which of the following is typically recorded at its present value?