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 91

Short Answer

Review LaterAdd Note

Review Later

____________________ is the process of writing off the cost of tangible assets and ____________________ is the process of writing off the cost of intangible assets.

Correct Answer

verified

Depreciati...

View Answer

Show Answer

Question 92

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following terms characterizes the time period between the investment of cash in merchandise and the collection of cash from the sale of that merchandise?

A) Operating cycle
B) Natural business year
C) Accounting period
D) Fiscal period

Correct Answer

verified

Show Answer

Question 93

True/False

Review LaterAdd Note

In the independent auditors' report included with the annual report,management discusses the financial statements and provides the shareholders with explanations for certain amounts reported in the statements.

Fellsmere Corporation Presented below are the condensed balance sheets of Fellsmere Corporation at December 31,2018 and 2017.Net income for the years ending December 31,2018 and 2017 is $346,000 and $109,000,respectively. ​ $\begin{array}{lrr}&\text { December 31, } 2018&\text { December 31, } 2017\\\text { Current assets } & \$ 2,228,186 & \$ 2,544,683 \\\text { Property, plant, and equipment } & 530,589 & 376,647 \\\text { (net) } & 131,206 & 118,121\\\text { Total assets }&\$ 2,889,981&\$ 3,039,451\\\\\text { Current liabilities } & \$ 1,429,674 & \$ 1,003,906 \\\text { Long-term obligations } & 3,360 & 7,240 \\\text { Warranty and other liabilities } & 112,971 & 98,081 \\\quad \text { Total liabilities } & \$ 1,546,005 & \$ 1,109,227\\\text { Stockhol ders' equity: }\\\text { Common stock } & \$ 1,566 & \$ 501,631 \\\text { Additional paid-in capital } & 365,986 & 799,483 \\\text { Retained earnings } & 980,509 & 634,509\\\text { Accumulated other }&(4,085) & (5,399) \\\text { comprehensive loss }\\\text { Total stockholders' equity } & \$ 1,343,976 & \$ 1,930,224 \\\text { Total liabilities and stockholders' } & \$ 2,889,981 & \$ 3,039,451\\\text { equity }\end{array}$ -Read the information about Fellsmere Corporation. Required (A)Did Fellsmere's current ratio increase or decrease from 2017 to 2018? Make any necessary calculations and explain your answer.Which financial statement users are most concerned with this ratio? (B)The balance sheets show a large increase in retained earnings during 2018.Identify the possible reason(s)for this increase.

Fasoli,Inc. The following balance sheet items from Fasoli,Inc.are listed for December 31,2017: $\begin{array}{lr}\text { Accounts payable } & \$ 32,650 \\\text { Interest payable } & 2,200 \\\text { Accounts receivable } & 26,500 \\\text { Land } & 250,000\\\text { Accumulated depreciation-buildings } & 40,000 \\\text { Marketable securities } & 15,000 \\\text { Merchandise inventory } & 112,900 \\\text { Accumulated depreciation-equipment } & 12,500 \\\text { Notes payable, due April 15, 2018 } & 6,500 \\\text { Office supplies } & 200\\\text { Notes payable, due December } 31,2021 & 251,630 \\\text { Paid-in capital in excess of par value } & 75,000 \\\text { Buil dings } & 150,000 \\\text { Patents } & 45,000 \\\text { Capital stock, } \$ 1 \text { par value } & 200,000\\\text { Prepaid rent } & 3,800 \\\text { Cash } & 60,990 \\\text { Retained earnings } & 113,510 \\\text { Equipment } & 84,500 \\\text { Salaries payable } & 7,400 \\\text { Income taxes payable } & 7,500\end{array}$ -Read the information about Fasoli,Inc. ​ Required Present the Current Assets section (including the total)of a classified balance sheet.

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?

Unideno Corporation was organized on January 1, 2017, with the investment of $225,000 in cash by its stockholders. The company immediately purchased an office building for $300,000, paying $201,000 in cash and signing a three-year promissory note for the balance. Unideno signed a five-year, $50,000 promissory note at a local bank during 2017 and received cash in the same amount. During its first year, Unideno collected $93,000 from its customers. It paid $60,600 for inventory, $22,400 in salaries and wages, and another $5,100 in taxes. Unideno paid $5,300 in cash dividends. Required 1. Prepare a statement of cash flows for the year ended December 31, 2017. 2. What does this statement tell you that an income statement does not?

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

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 Seikoson.What is Seikoson's profit margin (to the closest tenth of a percent) ?

How is income from operations determined?

Most businesses have an operating cycle of greater than one year.

Although businesses engage in a wide variety of activities,all of these activities can be categorized into three types.Which of the following choices best reflects these three types of business activities?

Which of the following sections on a statement of cash flows is used to report the cash flow effects of transactions involving a company's stock?

How is a classified balance sheet useful to decision makers?

Which of the following includes only current assets?

Which of the following items will be found in a corporate annual report?

Jobston,Inc. The balance sheet of Jobston Inc.includes the following items: ​ $\begin{array}{lr}\text { Cash } & \$ 22,400 \\\text { Accounts receivable } & 11,700 \\\text { Inventory } & 23,300 \\\text { Prepaid insurance } & 1,040 \\\text { Land } & 80,000 \\\text { Accounts payable } & 47,500 \\\text { Salaries payable } & 1,200 \\\text { Capital stock } & 84,040 \\\text { Retained earnings } & 5,700\end{array}$ ​ -Read the information about Jobston,Inc.What is Jobston's current ratio?

During 2017,Wimbrow Images reported $60,000 of net income and generated $80,000 of cash from operations.During the year,Wimbrow Images paid $15,000 to purchase a new delivery truck and also paid dividends in the amount of $30,000.Wimbrow Images borrowed $40,000 cash from the bank.At the beginning of the year,cash amounted to $50,000. A) Frepare a statement of cash flows for the year ended December 31, 2017. B) How much more cash does Wimbrow Images have available at the end of the year than at the begir C) Why is there a difference between net income and cash flows from operations?

Bevco Company has provided the following information from its accounting records for the current year: $\begin{array}{lrlr}\text { Cash } & \$ 55,000 & \text { Accounts receivable } & \$ 45,000 \\\text { Inventory } & 65,000 & \text { Land } & 75,000 \\\text { Accounts payable } & 50,000 & \text { Notes payable (due 2021) } & 150,000 \\\text { Retained earnings } & ? & \text { Capital stock } & 20,000\end{array}$ -Read the information for Bevco Company.What are Bevco' current liabilities?

In preparing financial statements,accountants should consider all of the following except