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Ex. 194 Selected data from Decco Company are presented below: Total assets$1,600,000 Average assets2,000,000 Net income380,000 Net sales1,500,000 Average common stockholders' equity1,000,000 Instructions Calculate the profitability ratios that can be computed from the above information. Ex. 195 The following data are taken from the financial statements of Dands Company:     2017      2016   Monthly average accounts receivable$   565,000$   700,000 Net sales on account$6,200,000$7,000,000 Terms for.
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S-A E 226(Ethics) A trusted employee of Outback Tours was caught in the act of embezzling funds. He confessed to earlier embezzlements, but retracted the confession on the advice of his attorney. Over the course of the most recent quarter, it has been determined that $20,000 was embezzled. Outback Tours has suffered.
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S-A E  217(Ethics) Sact Creek Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to.
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Ex. 178 Ladle Corporation had net income of $2,000,000 in 2015. Using 2016 as the base year, net income decreased by 70% in 2014 and increased by 180% in 2017. Instructions Compute the net income reported by Ladle Corporation for 2016 and 2017. Ex. 179 The following items were taken from the financial statements of.
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Ex. 193 Booker Corporation had the following comparative current assets and current liabilities: Dec. 31, 2017Dec. 31, 2016 Current assets Cash$  60,000$  30,000 Short-term investments40,00010,000 Accounts receivable55,00095,000 Inventory110,00090,000 Prepaid expenses    35,000    20,000 Total current assets$300,000$245,000 Current liabilities Accounts payable$140,000$110,000 Salaries payable40,00030,000 Income tax payable    20,000    15,000 Total current liabilities$200,000$155,000 During 2017, credit sales and cost of goods sold were $750,000 and $400,000, respectively. Ex. 193(Cont.) Instructions Compute the.
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MATCHING SET A 219.For each of the ratios listed below, indicate by the appropriate code letter, whether it is a liquidity ratio, a profitability ratio, or a solvency ratio. Code: L =Liquidity ratio P =Profitability ratio S=Solvency ratio ____              1.Price-earnings ratio ____              2.Asset turnover ____              3.Accounts receivable turnover ____              4.Earnings per share ____              5.Payout ratio ____              6.Current ratio ____              7.Acid-test ratio ____              8.Debt to.
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117.Blitzen Corporation had net income of $500,000 and paid dividends to common stockholders of $40,000 in 2017. The weighted average number of shares outstanding in 2017 was 60,000 shares. Blitzen Corporation's common stock is selling for $50 per share on the New York Stock Exchange. Blitzen Corporation's payout ratio for.
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21.Ending finished goods inventory appears on both the balance sheet and the income statement of a manufacturing company. 22.The beginning work in process inventory appears on both the balance sheet and the cost of goods manufactured schedule of a manufacturing company. 23.In calculating gross profit for a manufacturing company, the cost of.
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97.Nord Company had $375,000 of current assets and $150,000 of current liabilities before borrowing $70,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Nord Company's current ratio? a.The ratio remained unchanged. b.The change in the current ratio cannot be determined. c.The ratio decreased. d.The ratio increased. 98.If.
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67.In performing a vertical analysis, the base for sales revenues on the income statement is a.net sales. b.sales. c.net income. d.cost of goods available for sale. 68.In performing a vertical analysis, the base for sales returns and allowances is a.sales. b.sales discounts. c.net sales. d.total revenues. 69.In performing a vertical analysis, the base for cost of goods sold is a.total selling.
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21.Inventory turnover measures the number of times on the average the inventory was sold during the period. 22.Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness. 23.The rate of return on total assets will be greater than the rate of return on common stockholders' equity if the company.
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11.Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead. 12.Raw materials are equal to direct materials minus indirect materials. 13.Raw materials that can be conveniently and directly associated with a finished product are called materials overhead. 14.The total cost of a finished product does not.
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S-A E  215 Cash flows from operating activities can be calculated using the indirect or direct method. Briefly describe how the two methods differ yet arrive at the same information about the net cash flows from operating activities. S-A E  216 How is it possible for a company to suffer a net loss.
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57.A horizontal analysis performed on a statement of retained earnings would not show a percentage change in a.dividends paid. b.net income. c.expenses. d.beginning retained earnings. 58.Under which of the following cases may a percentage change be computed? a.The trend of the balances is decreasing but all balances are positive. b.There is no balance in the base year. c.There.
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BE 169 Using the following operating data for Complex Corporation, prepare a schedule showing a vertical analysis for 2017.    2017   2016 Net sales$360,000$320,000 Cost of goods sold210,000180,000 Operating expenses112,000100,000 Net income38,00040,000 BE 170 Using these data from the comparative balance sheet of Banner Company, perform vertical analysis. December 31, 2017December 31, 2016 Accounts receivable$   480,000$   336,000 Inventory720,000504,000 Total assets4,000,0003,000,000 BE 171 For each.
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Ex. 192 Flite Corporation has issued common stock only. The company has been successful and has a gross profit rate of 20%. The information shown below was taken from the company's financial statements. Beginning inventory$   482,000 Purchases4,036,000 Ending inventory? Average accounts receivable800,000 Average common stockholders' equity3,500,000 Sales (all on credit)5,000,000 Net income385,000 Instructions Compute the following: (a)Accounts receivable turnover and the.
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Ex. 184 Operating data for Lewis Corporation are presented below.    2017   Net sales$500,000 Cost of goods sold310,000 Operating expenses120,000 Net income70,000 Instructions Prepare a schedule showing a vertical analysis for 2017. Ex. 185 The following information was taken from the financial statements of Lawson Company:     2017     2016  Gross profit on sales................................$900,000$840,000 Income before income taxes..........................280,000230,000 Net income.......................................240,000216,000 Net income as a percentage of.
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BE 174 Shelly Company reported the following financial information: 12/31/1712/31/16 Accounts receivable$   340,000$   360,000 Net credit sales2,450,000 2,420,000 Compute (a) the accounts receivable turnover and (b) the average collection period for 2017. BE 175 Prepare a partial income statement, beginning with income before income taxes using the following information for Stone Corporation for the fiscal year ended.
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Ex. 189 The following ratios have been computed for Mason Company for 2017. Profit margin12.5% Times interest earned8 times Receivables turnover4 times Acid-test ratio2 : 1 Current ratio3 : 1 Debt to assets ratio20% Mason Company’s 2017 financial statements with missing information follow: MASON COMPANY Comparative Balance Sheet December 31, ——————————————————————————————————————————— Assets     2017     2016  Cash...............................................$  30,000$  45,000 Short-term Investments.................................10,00025,000 Accounts receivable (net)...............................?(6)40,000 Inventory...........................................?(8)50,000 Property, plant, and equipment.
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EXERCISES Ex. 176 Selected financial information for Trant Corporation is presented below. December 31, 2017December 31, 2016 Current assets$  55,000$  40,000 Long-term liabilities90,00080,000 Retained earnings125,000100,000 Instructions Prepare a schedule showing a horizontal analysis for 2017 using 2016 as the base year. Ex. 177 Comparative information taken from the Foren Company financial statements is shown below:     2017    2016  (a)Notes receivable$  20,000$    -0- (b)Accounts.
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MULTIPLE CHOICE QUESTIONS 37.Which one of the following is primarily interested in the liquidity of a company? a.Federal government b.Stockholders c.Long-term creditors d.Short-term creditors 38.Which one of the following is not a characteristic generally evaluated in analyzing financial statements? a.Liquidity b.Profitability c.Marketability d.Solvency 39.In analyzing the financial statements of a company, a single item on the financial statements a.should be reported in.
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Ex. 182 The comparative condensed balance sheets of Able Corporation are presented below. ABLE CORPORATION Comparative Condensed Balance Sheets December 31 20172016 Assets Current assets$  72,000$  80,000 Property, plant, and equipment (net)95,40090,000 Intangibles    33,600    40,000 Total assets$201,000$210,000 Liabilities and stockholders' equity Current liabilities$  40,320$  48,000 Long-term liabilities142,500150,000 Stockholders' equity    18,180    12,000 Total liabilities and stockholders' equity$201,000$210,000 Instructions (a)Prepare a horizontal analysis of the balance sheet data for.
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Ex. 190 Selected data for Irma's Store appear below.     2017     2016  Net sales$800,000$520,000 Cost of goods sold600,000345,000 Inventory at end of year65,00085,000 Accounts receivable at end of year140,000110,000 Instructions Compute the following for 2017: (a)Gross profit rate. (b)Inventory turnover. (c)Accounts receivable turnover. Ex. 191 Selected financial statement data for Homer Company are presented below. Net sales$1,500,000 Cost of goods sold700,000 Interest expense10,000 Net income205,000 Total assets (ending)$900,000 Total.
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Ex. 180 The comparative balance sheet of Nathan Company appears below: NATHAN COMPANY Comparative Balance Sheet December 31, ——————————————————————————————————————————— Assets   2017 2016 Current assets .............................................$   420$333 Plant assets ...............................................     780  567 Total assets ...............................................$1,200$900 Liabilities and stockholders' equity Current liabilities ...........................................$   168$144 Long-term debt ............................................300162 Common stock .............................................432306 Retained earnings ..........................................     300  288 Total liabilities and stockholders' equity ........................$1,200$900 Instructions (a)Using horizontal analysis, show the percentage.
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BRIEF EXERCISES BE 165 The following items were taken from the financial statements of Henager, Inc., over a three-year period:       Item         2017       2016    2015  Net Sales$355,000$340,000$300,000 Cost of Goods Sold  214,000  202,000  186,000 Gross Profit$141,000$138,000$114,000 Instructions Compute the following for each of the above time periods. a.The amount and percentage change from 2015 to 2016. b.The amount.
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Ex. 205 Deane Company has income from continuing operations of $520,000 for the year ended December 31, 2017. It also has the following items (before considering income taxes): (1)A gain of $80,000 on the discontinuance of a major segment. (2)A correction of an error in last year's financial statement that resulted in a.
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Set B 220.Match the ratios with the appropriate ratio computation by entering the appropriate letter in the space provided. A.Current ratioF.Times interest earned B.Acid-test ratioG.Inventory turnover C.Profit marginH.Average collection period D.Asset turnoverI.Days in inventory E.Price-earnings ratioJ.Payout ratio                                           Cost of goods sold ____              1.              —————————                                           Average inventory                             Net income ____              2.—————                                          .
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Ex. 183 The comparative condensed income statements of Marks Corporation are shown below. MARKS CORPORATION Comparative Condensed Income Statements For the Years Ended December 31     2017        2016    Net sales$620,000$500,000 Cost of goods sold 450,000  400,000 Gross profit170,000100,000 Operating expenses   54,000    40,000 Net income$116,000$  60,000 Instructions (a)Prepare a horizontal analysis of the income statement data for Marks Corporation using 2016.
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47.In analyzing financial statements, horizontal analysis is a a.requirement. b.tool. c.principle. d.theory. 48.Horizontal analysis is also called a.linear analysis. b.vertical analysis. c.trend analysis. d.common size analysis. 49.Vertical analysis is also known as a.perpendicular analysis. b.common size analysis. c.trend analysis. d.straight-line analysis. 50.In ratio analysis, the ratios are never expressed as a a.rate. b.negative figure. c.percentage. d.simple proportion. 51.The formula for horizontal analysis of changes since the base period is the.
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SHORT-ANSWER ESSAY QUESTIONS S-A E 221 Horizontal and vertical analyses are analytical tools frequently used to analyze financial statements. What type of information or insights can be obtained by using these two techniques?  Explain how the output of horizontal analysis and vertical analysis can be compared to industry averages and/or competitive companies. S-A.
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MULTIPLE CHOICE QUESTIONS 38.Managerial accounting applies to each of the following types of businesses except a.service firms. b.merchandising firms. c.manufacturing firms. d.Managerial accounting applies to all types of firms. 39.Managerial accounting information is generally prepared for a.stockholders. b.creditors. c.managers. d.regulatory agencies. 40.Managerial accounting information a.pertains to the entity as a whole and is highly aggregated. b.pertains to subunits of the entity and may.
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TRUE-FALSE STATEMENTS 1.Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports. 2.Managerial accounting information generally pertains to an entity as a whole and is highly aggregated. 3.Managerial accounting applies to all forms of business organizations. 4.Determining the unit cost of manufacturing a product is an.
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87.Trading on the equity (leverage) refers to the a.amount of working capital. b.amount of capital provided by owners. c.use of borrowed money to increase the return to owners. d.number of times interest is earned. 88.The current assets of Myers Company are $250,000. The current liabilities are $100,000. The current ratio expressed as a proportion is a.250%. b.2.5.
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Ex. 186 Selected financial statement data for Mure Company are presented below. December 31, 2017December 31, 2016 Cash$  40,000$30,000 Short-term investments20,00018,000 Receivables (net)100,00090,000 Inventories80,00060,000 Total current liabilities100,00090,000 During 2017, net sales were $950,000, and cost of goods sold was $770,000. Instructions Compute the following ratios at December 31, 2017: (a)Current. (b)Acid-test. (c)Accounts receivable turnover. (d)Inventory turnover. Ex. 187 Selected information from the comparative financial statements of.
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TRUE-FALSE STATEMENTS 1.Intracompany comparisons of the same financial statement items can often detect changes in financial relationships and significant trends. 2.Calculating financial ratios is a financial reporting requirement under generally accepted accounting principles. 3.Measures of a company's liquidity are concerned with the frequency and amounts of dividend payments. 4.Analysis of financial statements is enhanced.
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107.An aircraft company would most likely have a.a high inventory turnover. b.low profit margin. c.high volume. d.a low inventory turnover. 108.Net sales are $8,000,000, beginning total assets are $2,500,000, and the asset turnover is 4.0 times. What is the ending total asset balance? a.$2,000,000 b.$1,500,000 c.$2,800,000 d.$2,500,000 109.Earnings per share is calculated a.only for common stock. b.only for preferred stock. c.for common and.
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127.The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures.  Assume that all sales were on credit. a.27.8% b.70.6% c.65.4% d.46.2% 128.The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures.  Assume that all sales.
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Ex. 200 Lewis Corporation experienced a fire on December 31, 2017, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances. December 31, 2017December 31, 2016 Cash$  30,000$  10,000 Receivables (net)85,000125,000 Inventory200,000180,000 Accounts payable50,00090,000 Notes payable30,00060,000 Common stock, $100 par400,000400,000 Retained earnings130,000101,000 Additional information: 1.The inventory turnover.
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COMPLETION STATEMENTS               206.In analyzing and interpreting financial statement information, three major characteristics are generally evaluated:  (1)____________, (2)_____________, and (3)_____________.               207.______________ analysis, also called trend analysis, is a technique for evaluating a percentage increase or decrease for a financial statement item over a period of time.               208.Expressing each item within a.
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Ex. 202 Venti Corporation had income from continuing operations of $420,000 for the year ended December 31, 2017. It also had the following item (before income taxes): 1.Loss of $50,000 on discontinuance of a division. All items are subject to income taxes at a 25% tax rate. Instructions Prepare a partial income statement, beginning with.
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137.The following financial statement information is available for Buil Corporation: a..31:1. b.3.2:1. c.1.5:1. d.4.24:1. 138.The following financial statement information is available for James Corporation: a.15.4%. b.47.9%. c.32.1%. d.13.5%. 139.The following financial statement information is available for Penn Corporation: a.21.7%. b.32.9%. c.28.6%. d.26%. 140.The following financial statement information is available for Long Corporation: a.7.4 times. b.6.4 times. c.9.1 times. d.7.8 times. 141.Dean Corporation reported net income $58,000, net sales $500,000, and.
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147.Beacon, Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a $350,000 loss in the year of disposal. The loss on disposal of the segment was $150,000. If the tax rate is 30%, and income before income taxes was $2,300,000, a.the income tax expense on.
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Ex. 196 State the effect of the following transactions on the current ratio. Use increase, decrease, or no effect for your answer. (a)Collection of an accounts receivable. (b)Declaration of cash dividends. (c)Additional stock is sold for cash. (d)Short-term investments are purchased for cash. (e)Equipment is purchased for cash. (f)Inventory purchases are made for cash. (g)Accounts payable are paid. Ex..
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Ex. 204 Greene Corporation had the information listed below available in preparing an income statement for the year ended December 31, 2017. All amounts are before income taxes. Assume a 30% income tax rate for all items. Sales$ 800,000 Income from operation of discontinued cement division$ 100,000 Loss from disposal of cement division$  (90,000) Operating.
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S-A E  223 What do the following classes of ratios measure? (a)Liquidity ratios. (b)Profitability ratios. (c)Solvency ratios. S-A E  224 (a)What is meant by trading on the equity? (b)How would you determine the profitability of trading on the equity? S-A E  225 Why is it important to report discontinued operations separately from income from continuing operations? .
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Ex. 198 The income statement for Pointe Company for the year ended December 31, 2017 appears below. Sales$720,000 Cost of goods sold  380,000 Gross profit340,000 Expenses  190,000* Net income$150,000 *Includes $20,000 of interest expense and $25,000 of income tax expense. Additional information: 1.Common stock outstanding on January 1, 2017 was 50,000 shares. On July 1, 2017, 10,000 more shares.
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Ex. 188 The financial statements of Hainz Company appear below: HAINZ COMPANY Comparative Balance Sheet December 31, ——————————————————————————————————————————— Assets    2017     2016  Cash..................................................$  20,000$  40,000 Short-term investments....................................20,00060,000 Accounts receivable (net)..................................40,00030,000 Inventory..............................................60,00070,000 Property, plant and equipment (net)..........................  260,000  300,000 Total assets .........................................$400,000$500,000 Ex. 188  (cont.) Liabilities and stockholders' equity Accounts payable........................................$  20,000$  30,000 Short-term notes payable..................................40,00090,000 Bonds payable..........................................80,000160,000 Common stock..........................................150,000150,000 Retained earnings........................................  110,000    70,000 Total liabilities and stockholders' equity.....................$400,000$500,000 HAINZ COMPANY Income Statement For the.
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77.Turnbull Department Store had net credit sales of $18,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,500,000. Inventory turnover for the year is a.7.2 times. b.15 times. c.6 times. d.1.5 times. 78.Turnbull Department Store had net credit sales of $18,000,000 and cost of goods.
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