ACIS 2115 Chapter Notes - Chapter 2: Historical Cost, Financial Accounting Standards Board, Public Company Accounting Oversight Board

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grayelephant515

9 Feb 2016

School

Virginia Tech

Department

Accounting and Information Systems

Course

ACIS 2115

Professor

Lynn Almond

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Document Summary

Chapter 2 outline: investments of assets into the business by stockholders, retained earnings. Ii: the income retained for the business. Evaluating profitability, liquidity, and solvency using ratios: ratio analysis, expresses the relationship between selected items of financial statement data, a ratio expresses the mathematical relationship between two quantities, types of comparisons, intracompany comparisons, industry-average comparisons. Compares the company to the average ratios for particular industries. Compares the company with one of its competitors in the industry c. The difference between the amounts of current assets and current liabilities. More dependable indicator of liquidity than working capital. Weakness: does not take into account the composition of the current assets. Assets can either be cash or inventory. Cash is more liquid than objects: solvency ratios. Chapter 2 outline: measures the ability of the company to survive ii. over a long period of time.

Related Questions

In the blank next to each account, write the letter indicatingto which category of the Classified Balance Sheet it wouldbelong.

A. Current Assets E. Current Liabilities

B. Long-Term Investments F. Long-Term Liabilities

C. Property, Plant, and Equipment G. Stockholdersâ Equity

D. Intangible Assets H. Not on the Balance Sheet

Accumulated Depreciation
Common Stock
Building (used in operations)
Salaries Payable
Land (not used in operations)
Inventory
Unearned Revenue
Depreciation Expense
Dividends
Patents
Prepaid Rent
Mortgage Payable (due 2020)
Salaries Expense
Short-Term Debt investment
Income Tax Payable
Goodwill

erinturtle874

Six Measures of Solvency or Profitability

The following data were taken from the financial statements of Olvideo Enterprises Inc. for the current fiscal year.

Property, plant, and equipment (net)				$1,526,000
Liabilities:
	Current liabilities		$152,000
	Mortgage note payable, 8%, issued 2003, due 2019		763,000
	Total liabilities			$915,000
Stockholders' equity:
	Preferred $4 stock, $100 par (no change during year)			$915,000
	Common stock, $10 par (no change during year)			915,000
Retained earnings:
	Balance, beginning of year	$976,000
	Net income	319,000	$1,295,000
	Preferred dividends	$36,600
	Common dividends	38,400	75,000
	Balance, end of year			1,220,000
Total stockholders' equity				$3,050,000
Net sales				$8,850,100
Interest expense				$61,040

Assuming that long-term investments totaled $1,983,000 throughout the year and that total assets were $3,767,000 at the beginning of the current fiscal year, determine the following. When required, round to one decimal place.

a. Ratio of fixed assets to long-term liabilities
b. Ratio of liabilities to stockholders' equity
c. Ratio of net sales to assets
d. Rate earned on total assets	%
e. Rate earned on stockholders' equity	%
f. Rate earned on common stockholders' equity	%

limeantelope842

Statement of Cash Flows
Angela's Cleaning Consortium			Seymour-Johnson, Inc.
Comparative Balance Sheet			Income Statement
December 31, 2020 and 2019			For the Year Ended December 31, 2020
	2020	2019	Net sales	$ 386,000
ASSETS			Cost of goods sold	(212,000)
Current assets			Gross profit	174,000
Cash	$ 66,500	$ 62,000	Operating expenses
Accounts receivable	95,000	113,000	Salaries and wages expense	(66,000)
Merchandise inventory	172,000	165,000	Depreciation expense	(25,000)
Total current assets	333,500	340,000	Other operating expenses	(28,000)
Long-term investments			Income from operations	55,000
Investment in Walking Dead Co.	-	50,000	Other revenues and gains
Property, buildings, and equipment	507,000	304,000	Interest revenue	15,000
Less: Accumulated depreciation	(59,500)	(42,000)	Dividend revenue	9,700
Total assets	$ 781,000	$ 652,000	Gain on disposal of plant assets	12,000
Liabilities and Stockholders' Equity			Other expenses and losses
Current liabilities			Interest expense	(15,000)
Accounts payable	$ 144,000	$ 175,000	Income before income taxes	76,700
Accrued liabilities	17,000	47,000	Income tax expense	(14,000)
Total current assets	161,000	222,000	Net Income	$ 62,700
Long-term Liabilities
Notes payable, long-term	160,000	90,000
Totalliabilities	321,000	312,000
Stockholders' equity
Common stock	370,000	250,000
Retained earnings	140,000	90,000
Treasury stock	(50,000)	-
TotalStockholdersâ Equity	460,000	340,000
Total Liabilities & Stockholders' Equity	$ 781,000	$ 652,000

Additional Information:
A. Sold plant assets with a cost of$75,000 and accumulated depreciation of $7,500,
yielding again of disposal of plant assets of $12,000.
B. Purchased plant assets by payingcash.
C. Issued Notes Payable for Cash.
D. Sold investment in Walking Dead Coat cost (zero gain/loss).
E. Issued Common Stock for Cash.
F. Purchased Treasury Stock for Cash.

Requirements:
Prepare, in good form, a Statement of Cash Flowsusing the indirect method.

beigesardine151

ACIS 2115 Chapter Notes - Chapter 2: Historical Cost, Financial Accounting Standards Board, Public Company Accounting Oversight Board

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