Reference no: EM13377077
Full disclosure in Financial Reporting
1. Which of the following subsequent events (post-balance-sheet events) would require adjustment of the accounts before issuance of the financial statements?
a. Loss of plant as a result of fire
b. Changes in the quoted market prices of securities held as an investment
c. Loss on an uncollectible account receivable resulting from a customer's major flood loss
d. Loss on a lawsuit, the outcome of which was deemed uncertain at year end.
2. Which of the following should be disclosed in a Summary of Significant Accounting Policies?
a. Types of executory contracts
b. Amount for cumulative effect of change in accounting principle
c. Claims of equity holders
d. Depreciation method followed
3. An operating segment is a reportable segment if
a. its operating profit is 10% or more of the combined operating profit of profitable segments.
b. its operating loss is 10% or more of the combined operating losses of segments that incurred an operating loss.
c. the absolute amount of its operating profit or loss is 10% or more of the company's combined operating profit or loss.
d. none of these.
4. On January 15, 2013, Vancey Company paid property taxes on its factory building for the calendar year 2013 in the amount of $840,000. In the first week of April 2013, Vancey made unanticipated major repairs to its plant equipment at a cost of $2,100,000. These repairs will benefit operations for the remainder of the calendar year. How should these expenses be reflected in Vancey's quarterly income statements?
Three Months Ended
3/31/13 6/30/13 9/30/13 12/31/13
a. $210,000 $9,10,000 $9,10,000 $9,10,000
b. $210,000 $2,310,000 $210,000 $210,000
c. $840,000 $1,400,000 $ -0- $ -0-
d. $735,000 $735,000 $735,000 $735,000
5. The following information pertains to Wamser Company:
Cash $ 40,000
Accounts receivable 125,000
Inventory 75,000
Plant assets (net) 360,000
Total assets $600,000
Accounts payable $ 75,000
Accrued taxes and expenses payable 25,000
Long-term debt 100,000
Common stock ($10 par) 160,000
Paid-in capital in excess of par 40,000
Retained earnings 200,000
Total equities $600,000
Net sales (all on credit) $1,000,000
Cost of goods sold 750,000
Net income 90,000
Instructions
Compute the following: (It is not necessary to use averages for any balance sheet figures involved.)
(a) Current ratio
(b) Inventory turnover
(c) Receivables turnover
(d) Book value per share
(e) Earnings per share
(f) Debt to total assets
(g) Profit margin on sales
(h) Return on common stock equity