Exam 2: A Further Look at Financial Statements

The economic entity assumption states that economic events

A material item is one that is likely to influence an investor's decision.

Characteristics associated with faithfully representative accounting information are

Equipment is classified on the balance sheet as

Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments?

The main difference between intangible assets and property, plant and equipment is the length of the asset's life.

Based on the following data, what is the amount of current assets? Accounts payable \ 62,000 Accounts receivable 100,000 Cash 70,000 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

Kingery Corporation has current assets of $1,800,000 and current liabilities of $750,000. If they pay $350,000 of their accounts payable what will their new current ratio be?

It is assumed that the activities of Ford Motor company can be distinguished from those of General Motors because of the

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment. Eddy Auto Supplies Balance Sheet December 31, 2017 Cash \ 126,000 Accounts payable \ 165,000 Accounts receivable 120,000 Salaries and wages payable 30,000 Inventory 210,000 Mortgage payable 270,000 Prepaid insurance 90,000 Total liabilities \4 65,000 Stock investments 255,000 Land 285,000 Buildings \3 39,000 Common stock \ 360,000 Less: Accumulated Retained earnings 750,000 depreciation (60,000) 279,000 Total stockholders' equity \1 ,110,000 Trademarks 210,000 Total liabilities and Total assets \1 ,050,000 stockholders' equity \1 ,575,000

Under IFRS and under GAAP, current assets are listed in $\quad \text { IFRS } \quad \quad \quad \quad \quad \quad \quad \text { GAAP }$ a.order of liquidity $\quad$$\quad$$\quad$$\quad$ order of liquidity b.reverse order of liquidity $\quad$ order of liquidity c.order of liquidity $\quad$$\quad$$\quad$$\quad$ reverse order of liquidity d.reverse order of liquidity $\quad$ reverse order of liquidity

The operating cycle of a company is the average time that is required to go from cash to

The periodicity assumption states that every economic entity can be separately identified and accounted for.

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment. 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

Suppose that Morgan Corporation produced and sold 4,800 laptop computers during 2017. It reported $130,000 cash provided by operating activities. In order to maintain production at 4,800 laptops, Morgan invested in $8,600 in equipment. Morgan paid $1,400 in dividends. What is Morgan's free cash flow?

Use the following data to determine the total amount of working capital. 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

Use the following data to determine the total dollar amount of assets to be classified as investments. 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

Using the following balance sheet and income statement data, what is the debt to assets ratio? Current assets \ 32,000 Net income \ 42,000 Current liabilities 16,000 Stockholders' equity 78,000 Average assets 160,000 Total liabilities 42,000 Total assets 120,000 Average common shares outstanding was 15,000.

Information that is presented in a clear fashion, so that users of that information can interpret it is an example of

On a classified balance sheet, companies usually list current assets