ACC/556 ACC556 ACC 556 WEEK 1 Chapter 2 Exercise

Each of the following statements is justified by a fundamental quality or an enhancing of quality accounting. Write the letter in the blank next to each statement corresponding to the quality involved.

N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors’ claims on their assets?

In order for information to be relevant, it must be reported on a monthly basis.

Earnings per share measures the net income earned on each share of common stock.

Cash and supplies are both classified as current assets.

Equipment is classified on the balance sheet as

Garrison Company prepares quarterly reports, which it distributes to all stockholders and other entities that rely on its accounting information. Which of the following is the best term for the key assumption in financial reporting that Garrison is following?

In a classified balance sheet, assets are usually classified as

Cash and supplies are both classified as current assets.

For accounting purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business.

Equipment is classified on the balance sheet as

If Morris Corporation has a negative $131 million free cash flow, which of the following statements is most likely true?

Net cash provided by operating activities takes into account that a company must invest in capital expenditures just to maintain its current level of operations.

Based on the following data, what is the amount of current assets?
Accounts payable………………………………………………………..             $62,000
Accounts receivable……………………………………………………..             100,000
Cash……………………………………………………………………….              50,000
Intangible assets…………………………………………………………             100,000
Inventory………………………………………………………………….             138,000
Long-term investments………………………………………………….             160,000
Long-term liabilities………………………………………………………            200,000
Short-term investments………………………………………………….              80,000
Notes payable…………………………………………………………….              56,000
Property, plant, and equipment……………………………………………      1,340,000
Prepaid insurance………………………………………………………..                2,000

Use the following data to determine the total dollar amount of assets to be classified as current assets.
Koonce Office Supplies
Balance Sheet
December 31, 2014
 
Cash                                       $    130,000            Accounts payable                        $  140,000
Accounts receivable                     100,000            Salaries and wages payable             20,000
Inventory                                      110,000            Mortgage payable                           160,000
Prepaid insurance                          60,000                 Total liabilities                          $320,000
Stock investments                        170,000            
Land                                             180,000                                                                                 
Buildings                 $210,000                               Common stock                              $240,000
Less: Accumulated                                                Retained earnings                           500,000
        depreciation       (40,000)     170,000               Total stockholders’ equity          $740,000
Trademarks                                  140,000                  Total liabilities and 
Total assets                             $1,060,000                    stockholders’ equity           $1,060,000

Free cash flow provides an indication of a company’s ability to

Accounting information should be neutral in order to enhance

Which of the following is not considered a measure of liquidity?

Earnings per share measures the net income earned on each share of common stock.

Using the following balance sheet and income statement data, what is the debt to assets ratio?
Current assets                      $  14,000                  Net income                      $  21,000
Current liabilities                        8,000                  Stockholders’ equity            39,000
Average assets                       80,000                  Total liabilities                      21,000
Total assets                             60,000                  
Average common shares outstanding was 10,000.

The principle that indicates that assets should be reported at the price received to sell an asset is the

The following information is available for Bradshaw Corporation:

 
Based on this information, the earnings per share calculations (rounded to two decimals) suggest

Reporting a net income of $95,000 will