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Exam 5: Communicating and Interpreting Accounting Information

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Question 21

Multiple Choice

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Which of the following would not be included within the operating activities section of a cash flow statement?

A) Cash received from customers.
B) Cash paid for insurance.
C) Cash paid for interest expense.
D) Cash paid to acquire a patent.

E) B) and D)
F) All of the above

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Question 22

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Which of the following statements regarding international financial reporting standards (IFRS) is false?

A) Common stock is titled as share capital.
B) Property,plant,and equipment can be reported on the balance sheet at either fair value or historical cost.
C) The last-in first-out (LIFO) inventory method is permitted.
D) Development costs are capitalized.

E) All of the above
F) A) and B)

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Question 23

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Which of the following are primarily responsible for the information provided in a company's financial statements?

Farrell Company has rent expense,wages expense,and utilities expense.Where will the company present these expenses on the income statement?

The gross profit percentage is calculated by dividing net sales by gross profit.

In what order are cash flow activities presented on the statement of cash flows?

Which of the following would not be included on an income statement?

The Callie Company has provided the following information: Operating expenses were $231,000; Cost of goods sold was $376,000; Net sales were $940,000; Interest expense was $32,000; Gain on sale of a building was $76,000; Income tax expense was $151,000. What was Callie's income before taxes?

The following data were taken from the adjusted trial balance of Kent Corporation. Kent Corporation Adjusted Trial Balance Data December 31,2019 Prepare a classified balance sheet in good form at December 31,2019.(Ignore income taxes).

The summary of significant accounting policies is typically included as one of the first notes to the financial statements.

Which of the following statements regarding earnings per share is false?

Corporate governance refers to the procedures designed to ensure that the company is managed in the interest of the board of directors who oversee management.

The Nellie Company has provided the following information: Operating expenses were $115,000; Gross profit was $629,000; Cost of goods sold was $470,000; Interest expense was $17,000; Income tax expense was $199,000. - What was Nellie's operating income?

The Callie Company has provided the following information: Operating expenses were $231,000; Cost of goods sold was $376,000; Net sales were $940,000; Interest expense was $32,000; Gain on sale of a building was $76,000; Income tax expense was $151,000. What was Callie's gross profit?

Marino Company has provided the following information: Net sales,$480,000 Net income,$24,000 Average total assets,$200,000 - What is Marino's total asset turnover?

Determine the effect of the following transactions on the identified financial statement components and ratios.Code your answers as follows: A: If the transaction results in an increase in the financial statement component or ratio. B: If the transaction results in a decrease in the financial statement component or ratio. C: If the transaction does not affect the financial statement component or ratio. Transaction 1: A company paid for research and development costs incurred to develop a patent. Net income _____ Property,plant,and equipment _____ Stockholders' equity _____ Net profit margin ratio _____ Transaction 2: Inventory was purchased on account. Net income _____ Current assets _____ Current liabilities _____ Return on assets ratio _____

Which of the following statements is correct?

The following information was taken from the income statement and balance sheet of The Mickey Company for the years 2018 and 2019: Compute the following ratios for 2019: A.Net profit margin B.Total asset turnover C.Return on assets

FocusMore,Inc. ,had the following list of accounts taken from its adjusted trial balance at December 31,2019: Required: Prepare a multiple step income statement for the year ended December 31,2019.(Include gross profit,but ignore income taxes. )

Which of the following is true about gross profit (gross margin) ?