Chapter 2 Quiz/Homework on Canvas PDF

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Chapter 2--Corporate Financial Statements

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Question 1

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Question Which of the following is not a form of a business entity? Answer Sole proprietorship Partnership Entrepreneurship Corporation Add Question Here

Question 2

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Question In which of the following organization forms are the owners' legal responsibility for the debt of the business limited to the amount they invested in the business? Answer Sole proprietorship Corporation Partnership Cooperative Add Question Here

Question 3

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Question Which of the following best describes the term "current assets"? Answer

The amount of total profits earned by a business since it began operations plus all other resources. The amount of claim that the owners have in the business in the current year. Assets expected to be converted into cash within one year or one. The cumulative profits earned by a business less any dividends distributed in the current period. Add Question Here

Question 4

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Question Which one of the following items is a classification on the classified balance sheet? Answer Operating accounts Stockholders' equity Revenues and expenses Net income and dividends Add Question Here

Question 5

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Question Which of the following are noncurrent assets? Answer Machinery and equipment Accounts receivable Inventories Unearned revenues Add Question Here

Question 6

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Question Short-term investments are: Answer fixed assets. accounts receivables. intangible assets. current assets. Add Question Here

Question 7

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Question IPOD CORPORATION IPOD Corporation's end-of-year balance sheet consisted of the following amounts. Cash Propert y, plant & equip ment Capital stock Retained earnings

$ 250,000Accounts receivable 900,000Long-term debt 1,200,000Accounts payable ?Inventory

$500,000 300,000 100,000 450,000

Refer to the information provided for IPOD Corporation. What amount should IPOD report on its balance sheet for total assets? Answer $2,000,000 $2,550,000 $2,100,000

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$1,900,000 $250,000 (Cash) + 500,000 (Accounts receivable) + 900,000 (Property, plant & equipment) + 450,000 (Inventory) = $2,100,000 = Total assets $250,000 (Cash) + 500,000 (Accounts receivable) + 900,000 (Property, plant & equipment) + 450,000 (Inventory) = $2,100,000 = Total assets

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Question 8

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Question IPOD CORPORATION IPOD Corporation's end-of-year balance sheet consisted of the following amounts. Cash Propert y, plant & equip ment Capital stock Retained earnings

$ 250,000Accounts receivable 900,000Long-term debt 1,200,000Accounts payable ?Inventory

$500,000 300,000 100,000 450,000

Refer to the information provided for IPOD Corporation. What is IPOD's retained earnings balance at the end of the current year? Answer $ 500,000 $1,100,000 $ 400,000 $1,200,000 Correct Feedback

Total assets = $250,000 + 500,000 + 900,000 + 450,000 = $2,100,000 Total liabilities = $300,000 + 100,000 = $400,000 Total stockholders' equity = $2,100,000 ! 400,000 = $1,700,000 Retained earnings = $1,700,000 ! 1,200,000 = $500,000

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Total assets = $250,000 + 500,000 + 900,000 + 450,000 = $2,100,000 Total liabilities = $300,000 + 100,000 = $400,000 Total stockholders' equity = $2,100,000 ! 400,000 = $1,700,000 Retained earnings = $1,700,000 ! 1,200,000 = $500,000 Add Question Here

Question 9

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Question Peck Company The Peck Company reported the following items on its financial statements for the year ending December 31, 2012. Sales Selling, general and administrative expenses Dividends

$1,560,000Cost of sales Other expenses 40,000 10,000Income taxes

$1,400,000 30,000 25,000

Refer to the information provided for Peck Company. The income statement for Peck will report net income for the current year in the amount of: Answer $545,000. $ 65,000. $ 85,000. $120,000. Correct Feedback Incorrect Feedback

$1,560,000 (Sales) ! 1,400,000 (Cost of sales) ! 40,000 (Selling, general and administrative expenses) ! 30,000 (Other expenses) ! 25,000 (Income tax expense) = $65,000 = Net income $1,560,000 (Sales) ! 1,400,000 (Cost of sales) ! 40,000 (Selling, general and administrative expenses) ! 30,000 (Other expenses) ! 25,000 (Income tax expense) = $65,000 = Net income Add Question Here

Question 10

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Question Peck Company The Peck Company reported the following items on its financial statements for the year ending December 31, 2012. Sales Selling, general and administrative expenses Dividends

$1,560,000Cost of sales Other expenses 40,000 10,000Income taxes

$1,400,000 30,000 25,000

Refer to the information provided for Peck Company. How much will be reported as retained earnings on its balance sheet at December 31, 2012, if this is the first year of operations? Answer

$45,000 $55,000 $85,000 $65,000

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Net Income: Retained Earnings Net Income: Retained Earnings

$1,560,000 ! 1,400,000 ! 40,000 ! 30,000 ! 25,000 = $65,000 $65,000 ! 10,000 = $55,000 $1,560,000 ! 1,400,000 ! 40,000 ! 30,000 ! 25,000 = $65,000 $65,000 ! 10,000 = $55,000 Add Question Here

Question 11

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Question Paradise Company reports the following information at December 31, 2012: Sales $18,000,000 Cash 3,000,000 Salaries payable 400,000 Dividends 1,000,000 Cost of sales 12,500,000 What is Natural Company's Gross Profit? Answer $ 6,100,000

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$ 6,500,000 $ 5,500,000 $12,000,000 Correct Feedback $18,000,000 (Sales) ! 12,500,000 (Cost of sales) = $5,500,000 (Gross profit) Incorrect Feedback $18,000,000 (Sales) ! 12,500,000 (Cost of sales) = $5,500,000 (Gross profit) Add Question Here

Question 12

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Question Wing Company Cash Inventories Land

$234,000Accounts payable 121,000Notes payable (due 2020) 453,000Accounts receivable

$ 97,000 211,000 46,000

Refer to the information provided for Wing Company. Calculate current assets. Answer

$498,000 $401,000 $854,000 $709,000

Correct Feedback $234,000 (Cash) + 46,000 (Accounts receivable) + 121,000 (Inventory) = $401,000 Incorrect Feedback $234,000 (Cash) + 46,000 (Accounts receivable) + 121,000 (Inventory) = $401,000 Add Question Here

Question 13

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Question Wing Company $234,000Accounts payable 121,000Notes pay able (due 2020) 453,000Accounts receivable

Cash Inventories Land

$ 97,000 211,000 46,000

Refer to the information provided for Wing Company. Calculate current liabilities. Answer

$ 97,000 $211,000 $354,000 $143,000 ($97,000 Accounts payable) ($97,000 Accounts payable)

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Question 14

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Question Which one of the following is a source of equity? Answer

Notes payable Accounts payable Land Contributed capital Add Question Here

Question 15

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Question Jarret Company Cash Land Equipment

$125,000Inventory 275,000Unearned revenue 350,000Common stock

$215,000 117,000 300,000

Refer to the information provided for Jarret Company. Calculate current assets. Answer

$457,000 $615,000 $125,000 $340,000

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$125,000 (Cash) + 215,000 (Inventory) = $340,000 $125,000 (Cash) + 215,000 (Inventory) = $340,000 Add Question Here

Question 16

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Question Which of the following accounts are normally reported as current liabilities on a classified balance sheet? Answer

Accounts payable and Prepaid insurance Interest payable and Interest receivable Income taxes payable and Salaries payable Capital stock and Accounts payable Add Question Here

Question 17

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Question Which one of the following is not categorized as a long-term assets? Answer Intangibles Property, plant, and equipment Inventory Patents

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Question 1 8

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Question Which of the following would not be considered an intangible asset? Answer Franchise rights Copyrights Investments Trademarks Add Question Here

Question 1 9

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Question If assets are expected to be realized in cash, sold, or consumed within one year, how are they reported on a classified balance sheet? Answer Property, plant, and equipment Current assets Intangible assets Current liabilities Add Question Here

Question 20

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Question Which set of items below are classified as current assets? Answer Accounts receivable, Net income, Inventory, and Dividends Cash, Accounts receivable, Capital stock, and Sales Net income, Cash, Office supplies, and Inventory Cash, Accounts receivable, Inventory, and Office supplies Add Question Here

Question 21

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Question Pacific Corporation $380,000Accounts receivable 290,000Accounts payable 129,000Unearned revenue 33,000Common stock 220,000Long-term notes payable

Inventory Land Cash Prepaid rent Retained earnings

$190,000 180,000 110,000 312,000 200,000

Calculate the total amount of current assets for Pacific Corporation. Answer $ 842,000 $1,022,000 $ 732,000 $ 842,000 Correct Feedback $129,000 (Cash) + 190,000 (Accounts receivable) + 380,000 (Inventory) + 33,000 (Prepaid rent) = $732,000 Incorrect Feedback $129,000 (Cash) + 190,000 (Accounts receivable) + 380,000 (Inventory) + 33,000 (Prepaid rent) = $732,000 Add Question Here

Question 22

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Question Which of the following would appear on an income statement? Answer Unearned revenue Cost of sales Retained earnings Dividends Add Question Here

Question 2 3

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Question Gain and losses are reported on the multi-step income statement under which of the following classifications? Answer Cost of sales Other revenues and expenses Operating revenues and expenses Gross margin Add Question Here

Question 2 4

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Question A question asked by stockholders is, "How much gross profit did the company make?" What financial statement would have the "gross profit" indicated as a separate line item? Answer

The balance sheet because retained earnings represents gross profits The statement of cash flows as cash inflows and outflows represents gross profits The multi-step income statement The single-step income statement Add Question Here

Question 25

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Question On a multi-step income statement, subtracting total operating expenses from gross profit will equal: Answer gross margin. operating income. income before taxes. net income.

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Question 2 6

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Question The list below contains several items that appear on a multi-step income statement. 1. 2. 3. 4. 5. 6. 7.

Other incomes and expenses Income before income taxes Net income Operating expenses Gross margin Net sales Income from operations

Select the choice that lists the items in the order they would appear on a multi-step income statement. Answer 6, 5, 4, 7, 1, 2, 3 7, 6, 1, 4, 2, 3, 5 6, 5, 4, 1, 7, 2, 3 6, 7, 4, 1, 2, 3, 5 Add Question Here

Question 2 7

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Question Trump Company Other revenues

$110,000General and administrative expenses $120,000Gross profit $220,000Income tax expense

Dividends Selling expenses

$250,000 $750,000 $117,000

Refer to the information provided for Trump Company. What is Trump Company's income from operations? Answer $160,000 $280,000 $220,000 $120,000 Correct Feedback $750,000 (Gross profit) ! 250,000 (General and administrative expenses) ! 220,000 (Selling expenses) = $280,000 Incorrect $750,000 (Gross profit) ! 250,000 (General and administrative expenses) ! 220,000 (Selling expenses) = Feedback $280,000 Add Question Here

Question 28

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Question Trump Company Other revenues

$110,000General and administrative expenses $120,000Gross profit $220,000Income tax expense

Dividends Selling expenses

$250,000 $750,000 $117,000

Refer to the information provided for Trump Company. What is Trump Company's net income? Answer $390,000 $200,000 $273,000 $280,000 Correct Feedback

Income from operations = $750,000 (Gross profit) ! 250,000 (General and administrative expenses) ! 220,000 (Selling expenses) = $280,000 Net income = $280,000 (Income from operations) + 110,000 (Other revenues) ! 117,000 (Income taxes) = $273,000

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Income from operations = $750,000 (Gross profit) ! 250,000 (General and administrative expenses) ! 220,000 (Selling expenses) = $280,000 Net income = $280,000 (Income from operations) + 110,000 (Other revenues) ! 117,000 (Income taxes) = $273,000 Add Question Here

Question 29

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Question Trump Company Other revenues

$110,000General and administrative expenses $120,000Gross profit $220,000Income tax expense

Dividends Selling expenses

$250,000 $750,000 $117,000

Refer to the information provided for Trump Company. By what amount will net income on a single-step income statement differ from net income on a multi-step income statement if Trump Company prepares both formats? Answer

$12,000 $8,000 $0 $6,000 Add Question Here

Question 30

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Question As used in accounting, the "Notes to the Financial Statements" should be: Answer

shown at the bottom of the income statement. shown in the notes section of the balance sheet. included as an integral part of the financial statements. considered an optional part of the financial statements.

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Question 31

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Question Which of the following items will be found in a corporate annual report? Answer Industry standards Notes to the financial statements Selected financial data from non-competitor companies Management’s statement on auditors responsibility for the financial statements. Add Question Here

Question 3 2

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Question Which one of the following items is least likely to be found in a corporate annual report? Answer Notes to the financial statements Internal budget reports Auditor’s report Management's discussion and analysis Add Question Here

Question 33

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Question Management's discussion and analysis: Answer is a report of the independent accountants. can be a substituted for the notes to the financial statements. provides a discussion and analysis of the financial activities of the company by the company’s management. provides assurances that the auditors are responsible for the financial statements. Add Question Here

Question 34

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Question In which section of the annual report would you find: "The financial statements, in our opinion, present fairly the financial position, operating results, and cash flows, in conformity with U.S. generally accepted accounting principles"? Answer Management report Notes to the financial statements Management's discussion and analysis Independent auditor’s report Add Question Here

Question 3 5

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Question Which of the following represents one of the purposes of the auditor's report? Answer To provide a place for management to justify questionable items in the statements To provide comparative ratios for the company's financial data To provide the CPA's opinion of the fairness of the financial statements To satisfy the need for full disclosure of all the facts relevant to a company's results and financial position Add Question Here

Question 36

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Question Which of the following organizations is primarily responsible for establishing GAAP in the United States? Answer Securities and Exchange Commission (SEC) Financial Accounting Standards Board (FASB) International Accou...