Financial Accounting Homework – 90 minute time limit
July 29th, 2022
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Question 11 pts
A debt to equity ratio of 1.0 means that half of the company’s assets are financed by creditors.
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Question 21 pts
The Sarbanes-Oxley Act requires a company to guarantee that its financial statements are 100 percent accurate.
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Question 31 pts
The cost-benefit convention holds that the benefits to be gained from providing accounting information should be greater than the costs of providing it.
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Question 41 pts
The investments category on the balance sheet normally includes investments that are intended to be held for a long period of time.
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Question 51 pts
Investors and creditors use financial statements to evaluate a company’s ability to pay dividends and interest.
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Question 71 pts
The normal operating cycle helps define which of the following balance sheet sections?
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Question 91 pts
The user can depend on the accuracy of financial information when which of the following qualitative characteristics has been followed?
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Question 111 pts
___________ is related to both the nature of an item and its size.
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Question 121 pts
The lower-of-cost-or-market method of accounting for inventories follows the convention of
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Question 131 pts
A practical decision to expense a $120 printer rather than record it as property, plant, and equipment and depreciate it probably is made on the basis of the convention of
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Question 141 pts
The convention of consistency refers to consistent use of accounting principles
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Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.
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National Textile
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Balance Sheet
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December 31, 20×5
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Assets
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Liabilities
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| Current assets |
$ 12,000
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Current liabilities |
$ 8,000
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| Investments |
2,000
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Long-term liabilities |
2,000
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| Property, plant, and equipment |
16,000
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Total liabilities |
$ 10,000
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| Intangible assets |
10,000
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Stockholders’ Equity
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| Common stock |
30,000
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| Total liabilities and | |||||
| Total assets |
$40,000
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stockholders’ equity |
$40,000
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National Textile
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Income Statement
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For the Year Ended December 31, 20×5
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| Net sales |
$48,000
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| Cost of goods sold |
16,000
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| Gross margin |
$32,000
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| Operating expenses |
22,400
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| Net income |
$ 9,600
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The current ratio for National Textile is
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Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.
|
National Textile
|
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|
Balance Sheet
|
|||||
|
December 31, 20×5
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Assets
|
Liabilities
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| Current assets |
$ 12,000
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Current liabilities |
$ 8,000
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||
| Investments |
2,000
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Long-term liabilities |
2,000
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| Property, plant, and equipment |
16,000
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Total liabilities |
$ 10,000
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| Intangible assets |
10,000
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Stockholders’ Equity
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| Common stock |
30,000
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| Total liabilities and | |||||
| Total assets |
$40,000
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stockholders’ equity |
$40,000
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National Textile
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Income Statement
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For the Year Ended December 31, 20×5
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| Net sales |
$48,000
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| Cost of goods sold |
16,000
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| Gross margin |
$32,000
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| Operating expenses |
22,400
|
| Net income |
$ 9,600
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The return on assets for National Textile is
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Use this information to answer the following question.
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Sunshine Travel
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Balance Sheet
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December 31, 20×5
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Assets
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| Cash |
$ 40,000
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| Short-term investments |
20,000
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| Notes receivable (due in ten months) |
15,000
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| Accounts receivable |
10,000
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| Merchandise inventory |
35,000
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| Land held for future use |
40,000
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| Land |
45,000
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| Building |
$50,000
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| Less accumulated depreciation |
10,000
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40,000
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| Trademark |
35,000
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| Total assets |
$280,000
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Liabilities
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| Notes payable (due in six months) |
$ 25,000
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| Accounts payable |
10,000
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| Salaries payable |
5,000
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| Mortgage payable (due in seven years) |
45,000
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| Total liabilities |
$85,000
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Stockholders’ Equity
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| Common Stock |
100,000
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| Retained Earnings |
95,000
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| Total Stockholders’ Equity |
195,000
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| Total liabilities and stockholders’ equity |
$280,000
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The total dollar amount of assets to be classified as current assets is
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Use this information to answer the following question.
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Coyle Company
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Balance Sheet
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December 31, 20×5
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Assets
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| Cash |
$ 70,000
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| Short-term investments |
56,000
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| Accounts receivable |
28,000
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| Notes receivable (due in six months) |
42,000
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| Merchandise inventory |
98,000
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| Special fund for purchasing a building |
112,000
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| Land |
140,000
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| Building |
$150,000
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| Less accumulated depreciation |
28,000
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122,000
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| Trademark |
92,000
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| Total assets |
$760,000
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Liabilities
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| Notes payable (due in one year) |
$ 70,000
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| Accounts payable |
130,000
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| Salaries payable |
14,000
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| Mortgage payable (due in seven years) |
46,000
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| Total liabilities |
$260,000
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Stockholders’ Equity
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| Common stock |
500,000
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| Total liabilities and stockholders’ equity |
$760,000
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The total amount of working capital is
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Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question. Use ending balances whenever average balances are required for computing ratios.
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Cane Construction
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Balance Sheet
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December 31, 20×5
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Assets
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Liabilities
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| Current assets |
$ 14,000
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Current liabilities |
$ 8,000
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| Investments |
6,000
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Long-term liabilities |
2,000
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| Property, plant, and equipment |
24,000
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Total liabilities |
$ 10,000
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| Intangible assets |
16,000
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Stockholders’ Equity
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| Common stock |
50,000
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| Total liabilities and | |||||
| Total assets |
$60,000
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stockholders’ equity |
$60,000
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Cane Construction
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Income Statement
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For the Year Ended December 31, 20×5
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| Net sales |
$80,000
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| Cost of goods sold |
32,000
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| Gross margin |
$48,000
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| Operating expenses |
26,400
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| Net income |
$21,600
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The current ratio for Cane Construction is
