Ratio Analysis
A supplier could rely on this ratio to evaluate whether to extend credit to a customer
What is the current ratio? OR
What is working capital?
The type of business activity that results if a company receives cash for the sale of inventory
What is an operating activity?
An external user of accounting information relies on this statement to determine if a company pays cash dividends
What is the retained earnings statement? OR
What is the statement of cash flows?
The definition of Property, Plant and Equipment
What is a long-term physical resource that is used by a business?
The relevant accounting principle that allows a company to issue financial statements on a monthly basis
What is the periodicity assumption?
The significance of an increase in the debt-to-assets ratio is the current period compared to a prior period
What is a decline in solvency?
The type of business activity that results if a company pays cash dividends
What is a financing activity?
This statement includes the account Cost of Goods Sold
What is the income statement?
The book value of property, plant and equipment if
$10,000 Depreciation Expense; $20,000 Accumulated Depreciation; $200,000 Equipment; $50,000 Supplies; and $80,000 Land (held for resale)
What is $180,000?
The generally accepted accounting principle that is violated if an audited company lists inventory at fair market value on the corporate balance sheet
What is the cost principle?
The resulting current ratio if a company has $200,000 of total assets, $20,000 of current assets, $80,000 of current liabilities and $180,000 of total liabilities
What is .25? OR
What is 25% OR
What is .25:1?
Calculation: $20,000/$80,000
The type of business activity that results if a university receives cash for selling one of its buildings
What is an investing activity?
This statement is dated the last day of the accounting period
What is the balance sheet?
The total dollar amount of current liabilities if a company has $80,000 Notes Payable (5-year note) and $10,000 of the Notes Payable is due within the year; $60,000 of Salaries Payable; $5,000 of Unearned Revenue; $25,000 of Bonds Payable and $50,000 of Revenue
What is $75,000?
The type of audit opinion that an independent CPA auditor would issue if a company listed on a public stock exchange issues financial statements once every 18 months
What is an adverse audit opinion?
The resulting current ratio if a company with $100,000 of current assets and $200,000 of current liabilities pays $50,000 cash for new equipment
What is .25?
Current Assets = $100,000 - $50,000 = $50,000
Current Liabilities = $200,000
New Current Ratio = $50,000/$200,000 = .25
The type of business activity that results if a company purchases a 5-year insurance policy
What is an operating activity?
The amount of retained earnings at the end of the period if the ending account balances consist of $20,000 of Cash, $10,000 of Prepaid Rent, $5,000 of Accumulated Depreciation, $100,000 of Equipment, $80,000 of Unearned Rent Revenue, and $6,000 of Common Stock
What is $39,000?
A = L + SE
A =$20,000 + $10,000 + ($100,000 - $5,000)
A = $125,000
L = $80,000
A $125,000 = L $80,000 + SE
SE = $45,000
SE $45,000 = CS $6,000 + ending RE
Ending RE = $39,000
The correct order for listing accounts in the current assets section of a classified balance sheet if the company's assets consist of Land, Inventory, Prepaid Subscriptions, Patent, Inventory, Accounts Receivable Cash and Supplies
What is Cash, Accounts Receivable, Inventory, Supplies, Prepaid Subscriptions?
The accounting principle that requires an independent external CPA auditor to comment if a company's total liabilities exceed total assets
What is the going concern assumption?
The significance of a decrease in earnings per share in the current period compared to prior period
What is a decline in profitability? OR
What is an increasingly difficult time in attracting stockholders?
The type of activity that results if a company repurchases its stock from existing shareholders
What is a financing activity?
The resulting net income if at the end of the period the corporate records show the following account balances:
Cash $50,000; $20,000 Unearned Revenue; $5,000 Common Stock; $1,000 beginning retained earnings $800; and $200 Dividends
What is $23,800?
A $50,000 = L $20,000 + SE?
SE = $30,000
SE $30,000 = $5,000 CS + Ending RE
End RE = $25,000
End RE $25,000 = Beg. RE $1,000 + NI - $200 DIV
NI = $25,000 - $1,000 - $200 = $23,800
The classification of land on a classified balance sheet if a company uses the land for its corporate parking lot
What is Property, Plant & Equipment?
The two characteristics of useful accounting information based on the accounting literature
What is relevant and reliable information?