Concept explainers
Concept Introduction:
Accounting is an art of recording, classifying, analyzing and summarizing the financial statement to produce meaningful information and reports.
Accounting is done with two methods as follows:
Cash Basis accounting:
Under the cash basis accounting all the cash receipts for the period are considered as revenue and all the cash payments for the period are considered as expenses and net income us calculated.
Accrual Basis accounting:
Under the accrual basis, the revenue and expenses are recorded accreting to their accrual for the given period and cash receipts and payments are not considered to decide their accrual. The net income is calculated using the accrued revenue and accrued expenses belonging to the particular period.
To Calculate:
The difference between the
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Survey of Accounting (Accounting I)
- The following data (in millions) are taken from the financial statements of Target Corporation: a. For Target Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. What conclusions can you draw from your analysis of the revenue and the total operating expenses?arrow_forwardThe following data (in millions) were taken from the financial statements of Costco Wholesale Corporation: a. For Costco, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. Comment on the results of your horizontal analysis in part (a). c. Based upon Exercise 2-23, compare and comment on the operating results of Target and Costco for the recent year.arrow_forwardReturn on assets The following data (in millions) were adapted from recent financial statements of Tootsie Roll Industries Inc. (TR): The percent a company adds to its cost of sales to determine selling price is called a markup. What is Tootsie Roll’s markup percent? Round to one decimal place.arrow_forward
- Lory Group (Financial ratios) (amounts in millions): A skeleton of Lory Group's financial statements (i.e., Statement of financial position and Statement of profit or loss) for the year ending on 31 December 20X9, appears as follows Statement of financial position Inventories Trade receivables Cash and cash equivalents Current assets Non-current assets Total assets Share capital Reserves Retained earnings Equity Trade payables Long-term liabilities Equity and liabilities Statement of profit or loss Net sales Cost of sales Administrative expenses Interest expense Profit before taxes Income tax expense Profit for the year 9 h -9.533 i 17.566 j k a 3.026 7.196 b C d 63.574 22.023 39.066 124.663 34.998 e f Required: Use the following ratio data to complete Lory Group's financial statements: Return on equity = 0.1347 Total asset turnover = 0.5427 Net operating margin = 0.164135 Current ratio = 0.3554 Acid test ratio = 0.29207 Inventory turnover = 48.2942 Gearing (total finance) = 0.4383arrow_forwardPlease Helparrow_forwardNiantic reported the following financial information (amounts in millions). $ 8,550 11,977 950 4,900 201 Current assets Total assets Current liabilities Net sales Net Income Compute the current ratio and profit margin. Note: Round your answers to 2 decimal places. Current ratio Profit margin %arrow_forward
- Prepare a vertical analysis of the balance sheets for Year 4 and Year 3. (Percentages may not add exactly due to rounding. Round your percentage answers to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) Assets Current assets Cash Marketable securities Accounts receivable (net) Inventories Prepaid items Total current assets Investments Plant (net) Land Total long-term assets Total assets Liabilities and stockholders' equity Lishilitinn WALTON COMPANY Vertical Analysis of Balance Sheets Year 4 $ Amount 17,800 21,300 55,100 136,900 25,700 256,800 27,600 270,600 30,300 328,500 585,300 Percentage of Total % $ $ Amount Year 3 13,700 6,800 47,500 144,700 10,500 223,200 21,100 256,000 24,900 302,000 525,200 Percentage of Total %arrow_forwardThe Kingwood Company reported net income of $200,000 and average total assets of $2,025,000.Calculate the company’s return on assets. (Round to one decimal.) Answer%arrow_forwardPlease help me with show all calculation thankuarrow_forward
- Prepare a vertical analysis of the balance sheets for Year 4 and Year 3. (Percentages may not add exactly due to rounding Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).) Assets Current assets Cash Marketable securities Accounts receivable (net) Inventories Prepaid items Total current assets Investments Plant (net) Land Total long-term assets Total assets Liabilities and stockholders' equity Liabilities Current liabilities Notes payable Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Bonds payable Other RUNDLE COMPANY Vertical Analysis of Balance Sheets Year 4 Total noncurrent liabilities Total liabilities Stockholders' equity Preferred stock (par value $10, 4% cumulative, nonparticipating; 6,000 shares authorized and issued) Common stock (no par; 50,000 shares authorized; 10,000 shares issued) Retained earnings Total stockholders' equity Total liabilities & stockholders' equity Amount $ 16,900 21,000 55,100…arrow_forwardThe following financial data (in thousands) were taken from recent financial statements of Staples, Inc.: Please see the attachment for details: 1. Determine the times interest earned ratio for Staples in Year 3, Year 2, and Year 1? Round your answers to one decimal place.2. Evaluate this ratio for Staples.arrow_forwardam. 119.arrow_forward
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