Exam 2: A Further Look at Financial Statements

Information is _________ if independent measures, using the same methods, obtain similar results.

The current ratio is computed as current liabilities divided by current assets.

Which of the following statements is not true?

Earnings per share is a

It is possible for an asset to be a current asset even though the expected conversion of that asset into cash is to be longer than one year or the normal operating cycle.

Materiality relates to whether an item is large enough to likely influence the decision of an investor or creditor.

In order for accounting information to be relevant, it must

A liability is classified as a current liability if it is to be paid within the coming year.

The concept that a business has a reasonable expectation of remaining in business for the foreseeable future is called the

Characteristics associated with relevant accounting information are

To be faithfully representative, accounting information should predict future events, confirm prior expectations, and be reported on a timely basis.

For 2017 Kuhlman Corporation reported net income of $36,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2017 earnings per share?

The following information is available for Bradshaw Corporation and Newell Corporation: (in millions) Bradshaw Corporation Newell Corporation 2017 2016 2017 2016 Preferred dividends 25 10 0 30 Net income 500 480 490 520 Shares outstanding at the end of the year 200 180 150 200 Shares outstanding at the beginning of the year 180 150 200 220 Based on the information for both Bradshaw and Newell over the two-year period, the earnings per share calculations (rounded to two decimals) indicate that

Bathlinks Corporation has a debt to assets ratio of 73%. This tells the user of Bathlinks's financial statements that

Free cash flow represents

If a building is offered for sale at $100,000 and the buyer pays $95,000 cash for it, the buyer would record the building at $100,000.

Long-term creditors consider a high free cash flow amount an indication of solvency.

The current ratio takes into account the composition of current assets.

Using the following balance sheet and income statement data, what is the earnings per share? 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.

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