Exam 2: A Further Look at Financial Statements

Connor Corporation hired a new accountant. Over the next four years, the accountant used four different accounting methods to depreciation for Connor's equipment. Which of the following qualities of useful information has Connor most likely violated?

Accounting information should be verifiable in order to enhance

Long-term investments appear in the property, plant, and equipment section of the balance sheet.

Using the following balance sheet and income statement data, what is the debt to assets ratio? Current assets \ 21,000 Net income \ 45,000 Current liabilities 12,000 Stockholders' equity 63,000 Average assets 132,000 Total liabilities 27,000 Total assets 90,000 Average common shares outstanding was 15,000.

Different companies using the same accounting principles is an application of

The monetary unit assumption has led to an increase in the notes to financial statements.

For information to be useful, it must be both relevant and faithfully representative.

In 2017 Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000. Grider's ending cash balance at December 31, 2017 was $78,000. What was Grider's beginning cash balance?

The historical cost principle requires that when assets are acquired, they be recorded at

Use the following data to calculate the current ratio. Carne Auto Supplies Balance Sheet December 31, 2017 Cash \ 70,000 Accounts payable \ 130,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 140,000 Mortgage payable 180,000 Prepaid insurance 80,000 Total liabilities \ 330,000 Stock investments 180,000 Land 190,000 Buildings \ 230,000 Common stock \2 40,000 Less: Accumulated Retained earnings 500,000 depreciation (60,000) 170,000 Total stockholders' equity \7 40,000 Trademarks 140,000 Total liabilities and Total assets \1 ,070,000 stockholders' equity \1 ,070,000

Relevance and cost are two constraints in accounting.

Valuing assets at their fair value rather than at their cost is inconsistent with the

How can a company improve its current ratio?

Stockholders' equity is divided into two parts: common stock and retained earnings.

Which statement about long-term investments is not true?

Mitchell Corporation has current assets of $1,600,000 and current liabilities of $750,000. If they issue $200,000 of new stock what will their new current ratio be? (rounded)

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

A major function of management is to provide the accountant with relevant and useful information.

Long-term creditors are usually most interested in evaluating

Use the following data to determine the total amount of working capital. Koonce Office Supplies Balance Sheet December 31, 2017 Cash \ 195,000 Accounts payable \ 210,000 Accounts receivable 150,000 Salaries and wages payable 30,000 Inventory 165,000 Mortgage payable 240,000 Prepaid insurance 90,000 Total liabilities \ 480,000 Stock investments 255,000 Land 270,000 Buildings \ 315,000 Common stock \3 60,000 Less: Accumulated Retained earnings 750,000 depreciation (60,000) 255,000 Total stockholders' equity \1 ,110,000 Trademarks 210,000 Total liabilities and Total assets \ 1,590,000 stockholders' equity \1 ,590,000