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Exam 2: A Further Look at Financial Statements

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Question 61

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You and the CEO of your company are waiting on an elevator. You are going to the 25^th floor and the CEO is going to the 35^th floor. The CEO says "What is the difference between consistency and comparability?" You have two minutes to respond. What will you say?

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Question 62

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Valuing assets at their fair value rather than at their cost is inconsistent with the

A) economic entity assumption.
B) historical cost principle.
C) periodicity assumption.
D) full disclosure principle.

E) B) and C)
F) None of the above

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Question 63

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Using the following balance sheet and income statement data, what is the debt to assets ratio? $\begin{array}{lrlr}\text { Current assets } & \$ 14,000 & \text { Net income } & \$ 21,000 \\\text { Current liabilities } & 8,000 & \text { Stockholders' equity } & 39,000 \\\text { Average assets } & 80,000 & \text { Total liabilities } & 21,000\\\text { Total assets } 60,000\end{array}$ Average common shares outstanding was 10,000.

Stockholders' equity is divided into two parts: common stock and retained earnings.

For 2014 Kuhlman Corporation reported net income of $28,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2014 earnings per share?

Free cash flow is net cash provided by operating activities less capital expenditures.

The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is

At December 31, 2014 Keen Company had retained earnings of $1,292,000. During 2014 they issued stock for $49,000, and paid dividends of $17,000. Net income for 2014 was $201,000. The retained earnings balance at the beginning of 2014 was

The most important information needed to determine if companies can pay their current obligations is the

Which of the following is not classified properly as a current asset?

Most companies use a(n) _________ rather than a retained earnings statement.

The primary accounting standard-setting body in the United States is the Securities and Exchange Commission.

The following information is available for Cooke Corporation: $\begin{array} { | l | c | } \hline & \text { (in million) } \\\hline \text { Cash receipts from operating activities } & \$ 980 \\\hline \text { Cash payments from operating activities } & \$ 240 \\\hline \text { Net cash used by investing } & \$ 210 \\\hline \text { Net cash provided by financing } & \$ 750 \\\hline \text { Net increase in cash and equivalents } & ? \\\hline \text { Cash and equivalents at start of year } & \$ 550 \\\hline \text { Cash and equivalents at year-end } & ? \\\hline\end{array}$ What is the net increase in cash and equivalents?

Solvency is a company's ability to pay interest as it comes due and to repay the balance of a debt due at its maturity.

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

Earnings per share measures the net income earned on each share of common stock.

In general, the FASB indicates that most assets must follow the fair value principle.

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

Identify the two parts of stockholders' equity in a corporation and indicate the purpose of each.

Cash and supplies are both classified as current assets.