accounting ch 2

At December 31, 2014, Shorts Company had retained earnings of $2,184,000. During 2014, the company issued stock for $98,000, and paid dividends of $34,000. Net income for 2014 was $402,000. How much was the retained earnings balance at the beginning of 2014?

$1,816,000

Current liabilities are $10,000, long-term liabilities are $20,000, common stock is $50,000, and retained earnings totals $70,000. How much is total stockholders' equity?

$120,000

Net income is $200,000, preferred dividends are $20,000, and average common shares outstanding are 50,000. How much is earnings per share?

$3.60

Which of these measures is an evaluation of a company's ability to pay current liabilities?

Current ratio

Which of the following is not classified as a current asset?

Patents

Current assets are economic resources that are expected to be converted to cash or used up by the business within one year or the normal operating cycle, whichever is shorter.

false

Issuing new shares of common stock will

increases common stock

Earnings per share is computed by dividing net income

less preferred stock dividends by the average common shares outstanding.

The current ratio is a liquidity ratio that is computed as current assets divided by current liabilities.

true

For 2014, Stoneland Corporation reported net income, $24,000; net sales, $400,000; and average shares outstanding, 6,000. There were no preferred stock dividends. How much was the 2014 earnings per share?

$4.00

Which of the following does not properly reflect a financial ratio?

$7,200

A company purchased a tract of land on which it expects to build a production plant on in approximately five years. During the five years before construction, the land will be idle. In what classification should the land be reported?

A long-term investment

In what order are current assets listed?

By liquidity

Which of the following is the correct order for listing current assets on the balance sheet?

Cash, short-term investments, accounts receivable, inventories, prepaid expenses

In a classified balance sheet, how are assets usually classified?

Current assets; long-term investments; property, plant, and equipment; and intangible assets

Which is an indicator of profitability?

Earnings per share

Which one of the following does not affect retained earnings?

Issuance of common stock

Which of the following is considered property, plant, and equipment on a classified balance sheet?

Land

The following balances and amounts were taken from the financial statements of Ortiz, Inc. The data are presented in alphabetical order. Accounts payable $35,000 Cash provided by operations $90,000 Accounts receivable 37,500 Net income 36,000 Average common shares 20,000 Salaries and wages payable 8,000 Average current liabilities 110,000 Stockholders' equity 240,000 Average and total assets 600,000 Total current assets 300,000 Average total liabilities 320,000 Total current liabilities 120,000 Cash 100,000

$1.80

Which one of the following is not an alternate means of expressing a ratio?

Dollar amount

Which statement is used by most corporations instead of the retained earnings statement?

Statement of stockholders' equity

Which of the following is an example of an intangible asset?

Trademarks

What is measured by current assets minus current liabilities?

Working capital

The correct order of presentation in a classified balance sheet for the following current assets is

cash, accounts receivable, inventories, prepaid insurance.