Exam 2: A Further Look at Financial Statements

Working capital is calculated by taking

A company using the same accounting principles from year to year is an application of

Which accounting assumption requires that only those things that can be expressed in dollar values are included in the accounting records?

Which of the following statements is true?

Working capital is a measure of

A useful measure of solvency is the

When preparing financial statements, the accountant assumes that the business will stay in business for the foreseeable future.

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

The current ratio is

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

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

You are provide with the following information for Trent Company, effective as of its April 30, 2014, year-end. Accounts payable \ 834 Accounts receivable 810 Buildings, net of accumulated depreciation 3,537 Cash 770 Common stock 900 Cost of goods sold 2,500 Current portion of long-term debt 450 Depreciation expense 335 Dividends paid during the year 475 Equipment, net of accumulated depreciation 1,220 Income tax expense 265 Income taxes payable 265 Interest expense 400 Inventory 967 Land 1,600 Long-term debt 3,500 Prepaid expenses 12 Retained earnings, beginning 1,600 Service revenue 9,600 Selling expenses 310 Debt investments 1,200 Salaries and wages expense 700 Salaries and wages payable 222 Instructions Prepare an income statement and a retained earnings statement for Trent Company for the year ended April 30, 2014.

If accounting information has relevance, it is useful in making predictions about

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

The debt to assets ratio is computed by dividing

Intangible assets are

In order for accounting information to be relevant, it must

Which of the following is a constraint in accounting?

IFRS

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