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Exam 2: A Further Look at Financial Statements

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Question 101

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N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors' claims on their assets?

A) $2,695,000
B) $1,255,000
C) $1,745,000
D) $3,305,000

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Question 102

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Which statement about long-term investments is not true?

A) They will be held for more than one year.
B) They are not currently used in the operation of the business.
C) They include investments in stock of other companies and land held for future use.
D) They do not include long-term notes receivable.

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Question 103

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

Which of the following would not be classified as a long-term liability?

These are selected account balances on December 31, 2014. $\begin{array} { l r } \text { Land } & \$ 100,000 \\\text { Land (held for future use) } & 150,000 \\\text { Buildings } & 800,000 \\\text { Inventory } & 200,000 \\\text { Equipment } & 450,000 \\\text { Furniture } & 100,000 \\\text { Accumulated Depreciation } & 300,000\end{array}$ What is the total amount of property, plant, and equipment that will appear on the balance sheet?

The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

Generally accepted accounting principles are rules and practices that are recognized as a general guide for financial reporting purposes.

The operating cycle of a company is the average time that is required to go from cash to

Using the following balance sheet and income statement data, what is the total amount of working capital? $\begin{array}{lrlr}\text { Current assets } & \$ 7,000 & \text { Net income } & \$ 15,000 \\\text { Current liabilities } & 4,000 & \text { Stockholders' equity } & 21,000 \\\text { Average assets } & 44,000 & \text { Total liabilities } & 9,000\\\text { Total assets } \quad 30,000\end{array}$ Average common shares outstanding was 10,000.

Which measure would a long-term creditor be least interested in reviewing?

In order for information to be relevant, it must be reported on a monthly basis.

Cost constraint weighs the cost that companies incur to provide a type of information against its benefit to financial statement users.

On a classified balance sheet, short-term investments are classified as

The use of fair value to report assets

Which of the following is not considered an asset?

A measure of profitability is the

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

Different companies using the same accounting principles is an application of

Most companies that follow IFRS present balance sheet (statement of financial position) information in this order.

Characteristics associated with faithfully representative accounting information are