Chapter 2 Quiz Question 1 Cash and supplies are both classified as current assets. Question 2 Earnings per share measures the net income earned on each share of common stock. Question 3 Net cash provided by operating activities takes into account that a company must invest in capital expenditures just to maintain its current level of operations. Question 4 In order for information to be relevant, it must be reported on a monthly basis. Question 5 For accounting purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business Question 6 In a classified balance sheet, assets are usually classified as Question 7 Equipment is classified on the balance sheet as Question 8 Use the following data to determine the total dollar amount of assets to be classified as current assets. Question 9 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? Question 10 The following information is available for Bradshaw Corporation and Newell Corporation: Based on this information, the earnings per share calculations (rounded to two decimals) Question 11 Reporting a net income of $95,000 will Question 12 Based on the following data, what is the amount of current assets? Accounts payable”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�.. � � $62,000 Accounts receivable”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�.. � � 100,000 Cash”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�. � � 50,000 Intangible assets”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”� � � 100,000 Inventory”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�. � � 138,000 Long-term investments”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�. � � 160,000 Long-term liabilities”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”� � � 200,000 Short-term investments”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�. � � 80,000 Notes payable”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�. � � 56,000 Property, plant, and equipment”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”� � 1,340,000 Prepaid insurance”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�”�.. � � � 2,000 Question 13 Using the following balance sheet and income statement data, what is the debt to assets ratio? Current assets � � � � $ 14,000 � � � Net income � � � � $ 21,000 Current liabilities � � � � 8,000 � � � Stockholders’ equity � � 39,000 Average assets � � � �80,000 � � � Total liabilities � � � � 21,000 Total assets � � � � � 60,000 � � � Average common shares outstanding was 10,000. Question 14 Which of the following is not considered a measure of liquidity? Question 15 Free cash flow provides an indication of a company’s ability to Question 16 If Morris Corporation has a negative $131 million free cash flow, which of the following statements is most likely true? Question 17 Accounting information should be neutral in order to enhance Question 18 The principle that indicates that assets should be reported at the price received to sell an asset is the Question 19 Garrison Company prepares quarterly reports, which it distributes to all stockholders and other entities that rely on its accounting information. Which of the following is the best term for the key assumption in financial reporting that Garrison is following? Question 20 Each of the following statements is justified by a fundamental quality or an enhancing of quality accounting. Write the letter in the blank next to each statement corresponding to the quality involved.
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