Question 1

Use the information from Hopper Inc.to answer the following question(s). $$\begin{array} { l r r } 
& 2017 & 2016 \
\text { Operating revenues } & \$ 1,900,000 & \$ 1,600,000 \
\text { Operating expenses } & 1,400,000 & 1,100,000 \
\text { Income taxes } & 200,000 & 200,000
\end{array}$$ ​
​
-Read the information about Hopper, Inc.Which ratio are you able to calculate given only the information provided by Hopper?

Accepted Answer

A)  Profit margin 
B)  Current ratio 
C)  Working capital 
D)  Gross profit percentage

Question 2

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement.
-Wages payable

Accepted Answer

A) Current Assets (balance sheet) 
B) Property, Plant, & Equipment (balance sheet) 
C) Current Liabilities (balance sheet) 
D) Long-term Liabilities (balance sheet) 
E) Stockholders' Equity (balance sheet)
F)Operating Revenue (income statement)
G)Operating Expenses (income statement)
H)Other Revenue & Expenses (income statement)
I)Income Taxes (income statement)

Question 3

To determine the source of a company's noncurrent assets, on which financial statement will you look?

Accepted Answer

A)  Income statement only 
B)  Balance sheet only 
C)  Both the balance sheet and the income statement 
D)  Both the income statement and the statement of retained earnings

Question 4

An advantage of the current ratio is that it considers the makeup of the current assets.

Accepted Answer

A) True 
 B)False

Question 5

The statement of cash flows, like the income statement, reports only operating activities of a company.

Accepted Answer

A) True 
 B)False

Question 6

Rosu Company has total current assets of $150,000 and total current liabilities of $50,000.What is the amount of working capital for Rosu Company?

Accepted Answer

A)  $200,000 
B)  $100,000 
C)  $125,000 
D)  $ 179,000

Question 7

For each item listed, select the section of the balance sheet in which the item would be reported.
-Computer available for resale

Accepted Answer

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

Question 8

From the following choices, select the answer that describes the effect on working capital as a result of the transaction.
-Borrowed cash using a six-month note

Accepted Answer

A) Working capital will increase 
B) Working capital will decrease 
C) Working capital will not change

Question 9

Matching
Identify whether the following investor questions are associated with (a) primary or (b) secondary financial reporting objectives.
-Based on the financial information, should I sell my shares of Apple next quarter?

Accepted Answer

A) primary financial reporting objective 
B) secondary financial reporting objective

Question 10

If the current ratio is 2.5 to 1, net income is $6,000, and current liabilities are $18,000, how much is working capital?

Accepted Answer

A)  $ 6,000 
B)  $ 14,000 
C)  $ 27,000 
D)  $ 45,000

Question 11

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 12

Listed below is information from the financial records of Smith Corporation at December 31, 2016: $$\begin{array} { l r l r } 
\text { Retained earnings } & \$ 37,000 & \text { Notes payable } - \text { Due July } 1,2019 & \$ 12,000 \
\text { Accumulated depreciati on } & 13,000 & \text { Interest payable } & 1,000 \
\text { Income taxes payable } & 24,000 & \text { Office supplies } & 2,000 \
\text { Buildings } & 48,000 & \text { Accounts payable } & 46,000 \
\text { Cash } & 11,000 & \text { Inventory } & 33,000 \
\text { Accounts receivable } & 35,000 & \text { Land } & 50,000 \
\text { Capital stock } & 60,000 & \text { Prepaid rent } & 4,000
\end{array}$$ ​
​
-Read the information below about Smith Corporation.
​
Required:
Calculate the amount of working capital at December 31, 2016 for Smith Corp.What can you learn from the current ratio that you cannot learn from the amount of working capital?

Accepted Answer

The answer of Listed below is information from the financial...

Question 13

______________________________ is a liquidity measure that is calculated by subtracting current assets from current liabilities.

Accepted Answer

The answer of ______________________________ is a liquidity measure that is...

Question 14

Assume that you want to determine the profit margin for a company.Which one of the following financial statements is the best source of this information?

Accepted Answer

A)  Statement of retained earnings 
B)  Statement of cash flows 
C)  Statement of stockholders' equity 
D)  Income statement

Question 15

There is a standard threshold for materiality set by the Financial Accounting Standards Board for all companies.

Accepted Answer

A) True 
 B)False

Question 16

The ability of a company to pay its debt when due refers to ____________________.

Accepted Answer

The answer of The ability of a company to pay...

Question 17

Listed below is information from the financial records of Smith Corporation at December 31, 2016: $$\begin{array} { l r l r } 
\text { Retained earnings } & \$ 37,000 & \text { Notes payable } - \text { Due July } 1,2019 & \$ 12,000 \
\text { Accumulated depreciati on } & 13,000 & \text { Interest payable } & 1,000 \
\text { Income taxes payable } & 24,000 & \text { Office supplies } & 2,000 \
\text { Buildings } & 48,000 & \text { Accounts payable } & 46,000 \
\text { Cash } & 11,000 & \text { Inventory } & 33,000 \
\text { Accounts receivable } & 35,000 & \text { Land } & 50,000 \
\text { Capital stock } & 60,000 & \text { Prepaid rent } & 4,000
\end{array}$$ ​
​
-Read the information about Smith Corporation.
Required:
Prepare the current liabilities section of the balance sheet for Smith Corp.at December 31, 2016.You may omit the heading.If the amount of current liabilities were larger, what effect would this have on the current ratio?

Accepted Answer

The answer of Listed below is information from the financial...

Question 18

Excursion Corp.increased its dollar amount of working capital over the past several years.To further evaluate the company's short-run liquidity, which one of the following measures should be used?

Accepted Answer

A)  The current ratio 
B)  An analysis of the company's long-term debt 
C)  An analysis of the return on stockholders' equity 
D)  An analysis of retained earnings

Question 19

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

Accepted Answer

A)  To provide a place for management to justify questionable items in the statements 
B)  To provide comparative ratios for the company's financial data 
C)  To provide the CPA's opinion of the fairness of the financial statements 
D)  To satisfy the need for full disclosure of all the facts relevant to a company's results and financial position

Question 20

The 2016 income statement of Seikoson shows operating revenues of $130,800, selling expenses of $37,100, general and administrative expenses of $34,900, interest expense of $900, and income tax expense of $11,430.Seikoson's stockholders' equity was $280,000 at the beginning of the year and $320,000 at the end of the year.The company has 20,000 shares of stock outstanding at December 31, 2016.
​
-Read the information about Seikoson.What is Seikoson's profit margin (to the closest tenth of a percent)?

Accepted Answer

A)  2.8 
B)  35.5 
C)  61.2 
D)  14.5

Exam 2: Financial Statements and the Annual Report

Match the selected items from a classified balance sheet and multiple-step income statement to the section in which they would appear on the classified balance sheet or the income statement. -Wages payable

To determine the source of a company's noncurrent assets, on which financial statement will you look?

An advantage of the current ratio is that it considers the makeup of the current assets.

The statement of cash flows, like the income statement, reports only operating activities of a company.

Rosu Company has total current assets of $150,000 and total current liabilities of $50,000.What is the amount of working capital for Rosu Company?

For each item listed, select the section of the balance sheet in which the item would be reported. -Computer available for resale

From the following choices, select the answer that describes the effect on working capital as a result of the transaction. -Borrowed cash using a six-month note

Matching Identify whether the following investor questions are associated with (a) primary or (b) secondary financial reporting objectives. -Based on the financial information, should I sell my shares of Apple next quarter?

If the current ratio is 2.5 to 1, net income is $6,000, and current liabilities are $18,000, how much is working capital?

What is the primary objective of financial reporting?

______________________________ is a liquidity measure that is calculated by subtracting current assets from current liabilities.

Assume that you want to determine the profit margin for a company.Which one of the following financial statements is the best source of this information?

There is a standard threshold for materiality set by the Financial Accounting Standards Board for all companies.

The ability of a company to pay its debt when due refers to ____________________.

Excursion Corp.increased its dollar amount of working capital over the past several years.To further evaluate the company's short-run liquidity, which one of the following measures should be used?

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