Exam 2: A Further Look at Financial Statements

Using the following balance sheet and income statement data, what is the earnings per share? Current assets \ 7,000 Net income \ 15,000 Current liabilities 4,000 Stockholders' equity 21,000 Average assets 44,000 Total liabilities 9,000 Total assets 30,000 Average common shares outstanding was 10,000.

In the statement of cash flows, Net cash provided by operating activities indicates the cash-generating capability of the company.

Sunshine Sugar grows sugar cane in Florida, California, and Hawaii. Its investment in land to grow sugar exceeds $2 million. Currently, land whose original cost was more than $300,000 in Florida is threatened by plans to flood the Everglades to reclaim the wetlands. Sunshine plans to fight vigorously to keep its land in production, particularly because most of the rest of its land is in California, which is threatened by water shortages. The land in Florida is also significantly more productive than that in California, and the wages paid to workers to process the sugar cane are substantially less. Current plans include litigation to prevent government seizure of the land, an extensive public education campaign, and intense lobbying efforts. Required: Sunshine has determined that a footnote disclosure should be made in the financial statements to alert the investors of the threat to the land. Carefully consider how much of the above information is appropriate for inclusion in the footnote. Write the footnote.

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

Earnings per share are calculated by dividing

Wilton Corporation had beginning retained earnings of $724,000 and ending retained earnings of $833,000. During the year they issued common stock totaling $47,000. No dividends were paid. What was Wilton's net income for the year?

Kingery Corporation has current assets of $1,800,000 and current liabilities of $750,000. If they issue $100,000 of new stock what will their new current ratio be? (rounded)

Which of the following is a measure of liquidity?

The periodicity assumption states that the business will remain in operation for the foreseeable future.

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

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

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.

The most generally accepted value used in accounting is market value.

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

Which of the following statements is not true?

GAAP stands for generally accepted accounting procedures.

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

The two fundamental qualities of useful information are

Most companies use a retained earnings statement rather than a statement of stockholders' equity.

Accounting information should be neutral in order to enhance