Statement 1: Items under comprehensive income such as Revaluation Surplus are reported both on the Statement of Profit or Loss and Statement of Financial Position. Statement 2: A company's retained earnings balance increased P80,000 last year; therefore, net income last year must have been P80,000. a. Both statements are true b. Both statements are false c. Only statement 1 is true d. Only statement 2 is true

Statement 1: Items under comprehensive income such as Revaluation Surplus are reported both on the Statement of Profit or Loss and Statement of Financial Position. Statement 2: A company's retained earnings balance increased P80,000 last year; therefore, net income last year must have been P80,000. a. Both statements are true b. Both statements are false c. Only statement 1 is true d. Only statement 2 is true

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 20MC: Which of the following is a measurement of earnings that represents the profit before interest,...

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Which of the following is a measurement of earnings that represents the profit before interest, taxes, depreciation and amortization are subtracted? A. net income B. retained earnings C. EBITDA D. EPS
The process of communicating information that is relevant to investors, creditors, and others in making investment, credit, and similar decisions. The portion of total assets provided by stockholders' equity, computed as stockholders' equity divided by total assets. Refers to how productive a company is in using its assets. It is usually measured relative to how much revenue is generated for a certain level of assets. 1. Comparative Statement The application of analytical tools to general- purpose financial statements and related 2. Financial Reporting 3. Liquidity data for making business decisions. 4. Vertical Analysis Refers to the availability 5. Financial Statement Analysis of resources to meet short-term cash 6. Efficiency requirements. 7. Solvency Refers to a company's long-run financial viability and its ability to cover long-term obligations. 8. Equity Ratio 9. Profitability Comparative financial statements in which each 10. Common-size Statements amount is expressed as a…
(a) Notes receivable (b) Accounts receivable (c) Retained earnings (d) Sales (e) Operating expenses (f) Income taxes payable a. b. Using horizontal analysis, show the percentage change and direction (increase or decrease) from Year 1 to Year 2 with Year 1 as the base year. If an item is impossible to compute, enter a "0" in the percentage box and select "Not possible to compute" in the narrative box. C. d. e. f. X % X % X % X % X % Year 2 X % $25,500 $30,000 106,200 90,000 77,000 70,000 654,000 600,000 160,000 200,000 28,000 20,000 Decrease Increase Increase Increase Year 1 Decrease Increase ✓ ✓ ✓ ✓
Comparative information taken from the Friction Company's financial statements is shown below: (a) Notes receivable (b) Accounts receivable (c) Retained earnings (d) Sales (e) Operating expenses (f) Income taxes payable a. b. Required: Using horizontal analysis, show the percentage change and direction (increase or decrease) from Year 1 to Year 2 with Year 1 as the base year. If an item is impossible to compute, enter a "0" in the percentage box and select "Not possible to compute" in the narrative box. C. d. e. f. % % % % % Year 2 % Year 1 $25,500 $30,000 106,200 90,000 77,000 70,000 654,000 600,000 160,000 200,000 28,000 20,000
Which of the following statements is likely to be true, for a company making profits? Select one: a. Retained profits at the year-end will be greater than shareholders' equity. b. The profit for the year will be greater than the gross profit. c. Retained profits at the year-end will be greater than retained profits at the beginning of the year. d. The operating profit will be less than the profit for the year.
Required: (a) You are required to calculate the following ratios:(i) Gross profit margin(ii) Operating profit margin(iii) Expenses to sales(iv) Return on Capital Employed(v) Asset turnover(vi) Non-current asset turnover(vii) Current Ratio(viii) Quick Ratio(ix) Inventory days(x) Receivables days(xi) Payable days(xii) Interest cover (b) In light of your calculations comment on the performance of the company over thelast two years.
5. The following items affect the retained earnings account, except Group of answer choices a. net income or loss for the period b. prior period errors c. realization of revaluation surplus d. effect of change in accounting estimate
Which of the following statements regarding horizontal analysis is not true? a. It can be useful in interpreting the financial performance of a company. b. The amount of each item on a current financial statement is compared to the same item on an earlier statement. c. In horizontal analysis, the earlier year is used as the base year for calculating percentage changes. d. Each item on a current financial statement is compared to the same item on a competitor's statement.
The balance in retained earnings is not affected by Choose net income. aluation of a company's ability to pay current net loss. issuance of common stock. dividends.
Required: (a) You are required to calculate the following ratios:(iv) Return on Capital Employed(v) Asset turnover(vi) Non-current asset turnover(vii) Current Ratio(viii) Quick Ratio(ix) Inventory days(x) Receivables days(xi) Payable days(xii) Interest cover (b) In light of your calculations comment on the performance of the company over thelast two years.
Required: 1. Complete the following columns for each item in the comparative financial statements (Negative answers shoul be indicated by a minus sign. Round percentage answers to 2 decimal places, i.e., 0.1243 should be entered as 12.43.): Increase (Decrease) Year 2 over Year 1 Amount Percentage Statement of earnings: Sales revenue Cost of sales Gross margin Operating expenses and interest expense Earnings before income taxes Income tax expense Net earnings $ 45,770 38,650 7,120 4,020 3,100 1,050 $ 2,050 Statement of financial position: Cash (4,720) Accounts receivable (net) (4,220) Inventory 6,200 Property, plant, and equipment (net) 6,380 $ 3,640 Current liabilities (3,840) Long-term debt 3,530 Common shares 0 Retained earnings 3,950 $ 3,640
Retained profit from the statement of comprehensive income is________. Select one: a. subtracted from reserves in the statement of financial position b. added to reserves in the statement of financial position c. carried forward to form part of the trading profit for the next year d. shown as an asset in the statement of financial position