Question 1

For each item listed, select the section of the balance sheet in which the item would be reported.
-Capital stock

Accepted Answer

A) Current Assets 
B) Property. Plant, and Equipment 
C) Current Liabilities 
D) Long-term Liabilities 
E) Stockholders' Equity

Question 2

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 3

Harrison Company calculated the following amounts concerning its financial information for the years ending December 31, 2015 and 2014:
  REQUIRED:
Suppose Harrison Company had a decrease in its cash account from 2014 to 2015. Would the other current asset amounts have increased or decreased? Explain.

Accepted Answer

The answer of Harrison Company calculated the following amounts concerning...

Question 4

Which of the following best describes a company's operating activities?

Accepted Answer

A)  Operating activities focus on the sale of products and services. 
B)  Operating activities are necessary to provide the money to start a business. 
C)  Operating activities are needed to provide the valuable assets required to run a business. 
D)  Operating activities represent the right to receive a benefit in the future.

Question 5

are cash and other assets that are reasonably expected to be realized in cash during the normal operating cycle of the business.

Accepted Answer

The answer of are cash and other assets that are...

Question 6

Bartlett Industries
Bartlett Industries began operations on January 2, 2015, with an investment of $50,000 by each of its two stockholders. Net income for its first year of business was $240,000. Bartlett Industries paid a total of $100,000 in dividends to its stockholders during the year.
-Read the information about Bartlett Industries. The company's dividends for the year:

Accepted Answer

A)  reduce the amount of capital stock reported by the company. 
B)  are part of Bartlett Industries' operating costs. 
C)  are reported on the statement of retained earnings. 
D)  are an expense of Bartlett Industries.

Question 7

Read the information about Cargo Corporation.
Required:
Prepare the long-term asset section of Cargo Corp.'s balance sheet at December 31, 2015. You may omit the heading. Why are these amounts classified as "long-term"?

Accepted Answer

The answer of Read the information about Cargo Corporation.
Required:
Prepare the...

Question 8

Cook, Inc., a manufacturer of tires, has given you its most recent annual report in an effort to obtain a sizable loan. The company is very profitable and appears to have a sound financial position. Based on a report presented on prime-time television last night, you are aware that Cook is a defendant in several lawsuits related to its defective tires that cause vehicles to overturn. The information presented on television is an example of financial information that is:

Accepted Answer

A)  Relevant. 
B)  Consistent. 
C)  Predictable. 
D)  Comparable.

Question 9

The following list contains several items that appear on an income statement.  Select the choice that lists the items in the order they would appear on a multi-step income statement

Accepted Answer

A)  6, 1, 7, 4, 2, 3, 5 
B)  7, 6, 1, 4, 2, 3, 5 
C)  6, 4, 7, 1, 2, 3, 5 
D)  6, 7, 4, 1, 2, 3, 5

Question 10

What is the primary objective of financial reporting?

Accepted Answer

A)  To help investors make credit decisions. 
B)  To help management assess cash flows. 
C)  To protect users from fraudulent financial information. 
D)  To provide useful information for decision making

Question 11

Which of the following statements is true concerning intangible assets?

Accepted Answer

A)  Intangible assets have no economic substance. 
B)  Intangible assets lack physical existence. 
C)  Intangible assets are listed in the stockholders' equity section of the balance sheet. 
D)  Intangible assets appear in the current assets section of the balance sheet.

Question 12

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?

Accepted Answer

A)  The average earnings per share for the quarter. 
B)  Prospective cash receipts. 
C)  Claims to resources. 
D)  Disclosure of accounting policies.

Question 13

The operating cycle for all businesses is one year.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following is an investing activity of a business?

Accepted Answer

A)  Paying for purchases of inventory 
B)  Issuing stock for cash 
C)  Borrowing money from a bank. 
D)  Purchasing a manufacturing plant for cash

Question 15

Match the following characteristics with the statements about each qualitative characteristic's importance.
-This quality refers to an amount large enough to affect a decision.

Accepted Answer

A) Consistency 
B) Materiality 
C) Conservatism 
D) Comparability 
E) Reliability
F)Relevance
G)Understandability

Question 16

A question asked by stockholders is, "How much profit did the company make?" What should the stockholder examine to get the most information that will help evaluate the answer to this question?

Accepted Answer

A)  The balance sheet, because retained earnings represents current profits. 
B)  The statement of cash flows, as cash inflows and outflows represents current profits. 
C)  The income statement, since it shows the revenues and expenses for the period. 
D)  The economic resources of the company.

Question 17

What is the purpose of a statement of cash flows? Give an example of one of each of the three activities.

Accepted Answer

The answer of What is the purpose of a statement...

Question 18

Relevant information can be quantitative or qualitative. In deciding whether to go to college part-time or full-time, which of the following is a qualitative factor for a student?

Accepted Answer

A)  The cost of tuition 
B)  The opportunity to make friends 
C)  The price of football tickets 
D)  "Good Student" discounts on auto insurance rates.

Question 19

The purchase of inventory for cash will cause the current ratio to decrease.

Accepted Answer

A) True 
 B)False

Question 20

Guinther & Sons, Inc.
Guinther & Sons, Inc. a retailer of men's clothing earned a net profit of $77,000 for 2014. The balance sheet for
Guinther & Sons includes the following items:
 
-Read the information for Guinther & Sons. Calculate the total amount of current assets for Guinther & Sons.

Accepted Answer

A)  $100,000 
B)  $147,000 
C)  $150,000 
D)  $249,000

Exam 2: Financial Statements and the Annual Report

For each item listed, select the section of the balance sheet in which the item would be reported. -Capital stock

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.

Which of the following best describes a company's operating activities?

are cash and other assets that are reasonably expected to be realized in cash during the normal operating cycle of the business.

Read the information about Cargo Corporation. Required: Prepare the long-term asset section of Cargo Corp.'s balance sheet at December 31, 2015. You may omit the heading. Why are these amounts classified as "long-term"?

The following list contains several items that appear on an income statement. Select the choice that lists the items in the order they would appear on a multi-step income statement

What is the primary objective of financial reporting?

Which of the following statements is true concerning intangible assets?

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?

The operating cycle for all businesses is one year.

Which one of the following is an investing activity of a business?

Match the following characteristics with the statements about each qualitative characteristic's importance. -This quality refers to an amount large enough to affect a decision.

A question asked by stockholders is, "How much profit did the company make?" What should the stockholder examine to get the most information that will help evaluate the answer to this question?

What is the purpose of a statement of cash flows? Give an example of one of each of the three activities.

Relevant information can be quantitative or qualitative. In deciding whether to go to college part-time or full-time, which of the following is a qualitative factor for a student?

The purchase of inventory for cash will cause the current ratio to decrease.

Guinther & Sons, Inc. Guinther & Sons, Inc. a retailer of men's clothing earned a net profit of $77,000 for 2014. The balance sheet for Guinther & Sons includes the following items: -Read the information for Guinther & Sons. Calculate the total amount of current assets for Guinther & Sons.