FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Financial Statements and the Annual Report

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 101

Essay

Review LaterAdd Note

Review Later

Smith Corporation Listed below is information from the financial records of Smith Corporation at December 31, 2017: $\begin{array}{lrlr}\text { Retained earnings } & \$ 37,000 & \text { Notes payable-Due July 1,2020 } & \$ 12,000 \\\text { Accumulated depreciation } & 13,000 & \text { Interest payable } & 1,000 \\\text { Income taxes payable } & 24,000 & \text { Office supplies } & 2,000 \\\text { Buildings } & 48,000 & \text { Accounts payable } & 46,000 \\\text { Cash } & 11,000 & \text { Inventory } & 33,000 \\\text { Accounts receivable } & 35,000 & \text { Land } & 50,000 \\\text { Capital stock } & 60,000 & \text { Prepaid rent } & 4,000\end{array}$ -Read the information about Smith Corporation. Required: Calculate Smith's current ratio at December 31,2017.What does this ratio tell you about the "composition" of the current assets?

Correct Answer

verified

Current Assets = $85,000
($11,000 Cash +...

View Answer

Show Answer

Question 102

Multiple Choice

Review LaterAdd Note

Review Later

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?

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

Correct Answer

verified

Show Answer

Question 103

Multiple Choice

Review LaterAdd Note

Seikoson The 2017 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, 2017. -Read the information about Cobb Company.By what amount will net income on a single-step income statement differ from net income on a multiple-step income statement if Cobb Company prepares both formats?

On the statement of cash flows,the ______________________________ section involves the purchase and sale of products and services.

Which of the following events will cause a company's current ratio to decrease?

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

Which of the following is a noncurrent asset?

Which of the following represents the correct sequence of the three business activities on the statements of cash flows?

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

Guinther & Sons,Inc. ,a retailer of men's clothing,earned a net profit of $77,000 for 2017.The balance sheet for Guinther & Sons includes the following items: $\begin{array} { l r l r } \text { Cash } & \$ 29,000 & \text { Accounts receivable } & \$ 39,000 \\\text { Inventory } & 79,000 & \text { Prepaid insurance } & 3,000 \\\text { Land } & 90,000 & \text { Accounts payable } & 21,000 \\\text { Taxes payable } & 29,000 & \text { Capital stock } & 50,000 \\\text { Retained earnings } & 97,000 & \text { Long-term notes payable } & 43,000\end{array}$ -Read the information for Guinther & Sons.Calculate the total amount of current assets for Guinther & Sons.

Some analysts properly refer to a company's profit margin as its return on assets.

The following list contains several items that appear on an income statement. $\begin{array} { l l l l } \hline \text { 1. } & \text { Other revenue and expenses } & 5 . & \text { Net income } \\\text { 2. } & \text { Income before taxes } & 6 . & \text { Operating revenues } \\\text { 3. } & \text { Income taxes } & 7 . & \text { Income from operations } \\\text { 4. } & \text { Operating expenses } & & \\\hline\end{array}$ Select the choice that lists the items in the order they would appear on a multiple-step income statement.

Equipment is classified as a ____________________ asset on the balance sheet.

Identify each of the following items as operating (O),investing (I),or financing (F)activities on the statement of cash flows(assuming the indirect method).If an item is not on the statement,please mark it as none of these (N).If the item is an inflow,please indicate by a (+), (e.g.O+,I+ or F+).If the item is an outflow,please indicate by brackets (e.g. ,<O> for operating outflow,<I> for investing outflow,and <F> for financing outflow): ​ ____ (a)Paid an account payable for inventory purchased in the previous accounting period. ____ (b)Received cash from a customer ____ (c)Paid a dividend to stockholders. ____ (d)Paid the interest on a note payable to National Street Bank. ____ (e)Paid the principal amount due on the note payable to National Street Bank. ____ (f)Transferred cash from a checking account into a money market fund. ____ (g)Purchased equipment for cash.

Which of the following would not appear on an income statement?

On the statement of cash flows,the ______________________________ section involves the acquisition and sale of long-term assets.

Dividends paid appear on both the income statement and the statement of retained earnings.

The following information is given for Camino Company: $\begin{array}{lrlr}\text { Cash } & \$ 50,000 & \text { Inventory } & \$ 45,000 \\\text { Land } & 75,000 & \text { Accumulated depreciation } & 40,000 \\\text { Plant and equipment } & 150,000 & \text { Accounts payable } & 60,000\end{array}$ What are the company's current assets?

Current assets,other than cash,are expected to be sold or consumed beyond a company's normal operating cycle.

Harrison Company calculated the following amounts concerning its financial information for the years ending December 31,2017 and 2016: ​ $\begin{array}{lrr}&2018&2017\\\text { Current ratio } & 3 . \overline{1 \text { to } 1} & 2.0 \overline{\text { to }} 1 \\\text { Profit margin } & 22 \% & 18 \%\end{array}$ Required Suppose Harrison Company had a decrease in its cash account from 2017 to 2018.Would the other current asset amounts have increased or decreased? Explain.