Fa Analysis

Topics: Balance sheet, Generally Accepted Accounting Principles, Asset Pages: 8 (1637 words) Published: January 7, 2013
Subject: Financial Statement Analysis
Date: October 1, 2012
Topic: Balance Sheet

1.The balance sheet reports:
a.| the assets, liabilities, gains, and losses for a period of time| b.| the changes in assets, liabilities, and equity for a period of time| c.| the assets, expenses, and liabilities as of a certain date| d.| the probable future benefits, probable future sacrifices, and residual interest for a period of time| e.| the financial condition of an accounting entity as of a particular date|

2.Which of the following would not appear on a conventional balance sheet? a.| income taxes payable|
b.| funds from operations|
c.| cash surrender value of life insurance|
d.| appropriation for contingencies (restriction of retained earnings)| e.| patents|

3.At the beginning of the year, Execon Company had total assets of $200,000, total liabilities of $110,000, and shareholders' equity of $90,000. For the year, Execon Company earned net income of $75,000 and declared cash dividends of $30,000. At the end of the year, the company had total assets of $300,000 and its shareholders' equity was at $135,000. At the end of the year, Execon Corporation had total liabilities of: a.| $0|

b.| $45,000|
c.| $50,000|
d.| $165,000|
e.| none of the answers are correct|

4.Ownership of debt instruments of the government and other companies that can be readily converted to cash are best reported as: a.| long-term investments|
b.| cash|
c.| marketable securities|
d.| intangibles|
e.| inventory of near-cash items|

5.Tangible assets on the balance sheet should include:
a.| equipment|
b.| taxes payable|
c.| trademarks|
d.| bonds payable|
e.| none of the answers are correct|
6.The current asset section of the balance sheet should include: a.| land|
b.| trademarks|
c.| investment in C Company (for purposes of control)|
d.| dividends payable|
e.| work in process inventory|

7.The current liability section of the balance sheet should include: a.| buildings|
b.| goodwill|
c.| land held for speculation purposes|
d.| accounts payable|
e.| none of the answers are correct|
8.Which of the following is not a current asset?
a.| marketable securities|
b.| material inventory|
c.| unearned rent income|
d.| prepaid interest|
e.| prepaid insurance|

9.If a parent has some control over a subsidiary but the subsidiary is not consolidated, the subsidiary is accounted for as: a.| a marketable security|
b.| an investment|
c.| a liability|
d.| a fixed asset|
e.| none of the answers are correct|

10.Which of the following is not a proper use of notes?
a.| To describe the nature and effect of a change in accounting principle, such as from FIFO to LIFO.| b.| To indicate the basis for asset valuation.|
c.| To indicate the method of depreciation.|
d.| To correct an improper financial statement presentation.| e.| To describe a firm's debt.|

1.The purpose of a balance sheet is to show the financial condition of an accounting entity for a period of time.
2.In a period of rising prices, LIFO usually results in a realistic cost of goods sold.
3.Generally accepted accounting principles and the Internal Revenue Code of tax law require that the same depreciation method be used for both the financial statements and the federal tax return.

4.All intangibles are amortized over their useful lives or their legal lives, whichever is shorter.
5.Deferred taxes are caused by using different accounting methods for tax and financial reporting purposes.
6.Assets are probable future economic benefits obtained or controlled by an entity as a result of past
7.Minority interest reflects the ownership of minority shareholders in the equity of consolidated subsidiaries that are less...
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