Chapter 2

44. McKinney Corporation had beginning retained earnings of 2,292,000 and ending retained earnings of 2,499,000. During the year they issued common stock totaling 141,000. What was their net income for the year?

A. 207,000

34. Use the following data to determine the total dollar amount of assets to be classified as current assets

A. 220,000

45. Wilton Corporation had beginning retained earnings of 2,292,000 and ending retained earnings of 2,499,000. During the year they issued common stock totaling 141,000. What was their net income for the year?

A. 69,000

23. Which of the following would not be classified as a long term liability

A. Current maturities of long-term debt

21. Trademarks would appear in which balance sheet section

A. Intangible assets

1. Cash and supplies are both classified as current assets

A. True

10. The excess of current assets over current liabilities is called working capital

A. True

3. A liability is classified as a current liability if it is to be paid within the coming year

A. True

4. Stockholder's equity is divided into two parts: common stock and retained earnings

A. True

8. The retained earnings statements describes the changes in retained earnings during the period

A. True

9. Revenues have the effect of increasing retained earnings

A. True

19. An intangible asset

A. derives its value from the rights and privileges it provides the owner.

43. Reporting a net income of 95,000

A. increase retained earnings

40. Dividends appear on

A. the retained earnings statement only

13. Two primary objectives of management are to achieve profitability and liquidity

A. true

38. Use the following data to calculate the current ratio

B. 2.92:1

37. Use the following data to determine the total amount of working capital

B. 250,000

47. Based on the following data, what is the amount of current assets

B. 350,000

30. Use the following data to determine the total dollar amount of assets to be classified as current assets

B. 430,000

31.. Use the following data to determine the total dollar amount of assets to be classified as property, plant, equipment

B. 430,000

20. Which of the following is not considered an asset

B. Dividends

11. The current ration takes into account the composition of current assets.

B. False

12. Solvency ratios measures the short-term ability of the company to pay its maturing obligations

B. False

14. If a building is offered for sale at 100,000 and the buyer pays 95,000 cash for it, the buyer would record the building at 10,000

B. False

2. Long-term investments appear in the property, plant, and equipment section of the balance sheet

B. False

5. It is possible for an assert to be a current asset even though the expected conversion of that asset into cash is to be longer than one year or the normal operating cycle.

B. False

6. The investment category on the balance sheet normally includes investments that are intended to be held for a short period of time (less than one year)

B. False

7. The main difference between intangible assets and property, plant and equipment is the length of the assets life

B. False

26. It is not true that current assets are resources that are expected to be

B. Sold within one year

42. Declaring a cash dividend earnings

B. decrease retained earnings

46. The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is

B. liquidity

29. Ratios that measure the income or operating success of a company for a given period of time are

B. profitability ratios

25. Equipment is classified on the balance sheet as

B. property, plant and equipment

32. Use the following data to determine the total dollar amount of assets to be classified as investments

C. 150,000

35. N3 Coporation has assets of 3.6 million, common stock of 936,000, and retained earnings of 571,000. What are the creditors claims on their assets

C. 2,093,000

36. Use the following data to determine the total dollar amount of assets to be classified as current assets

C. 380,000

16. On a classified balance sheet, marketable securities are classified as

C. a current asset

39. A measure of profitability is the

C. earnings per share

41. Issuing new shares of common stock will

C. increase common stock

33. Use the following data to calculate the current ratio

D. 2.69:1

27. What is the total amount of property, plant, and equipment, that will appear on the balance sheet

D. 950,000

18. Which of the following is not classified properly as a current asset

D. A receivable from the sale of an assets to be collected in two years

24. Which of the following is not a current liability

D. Bonds payable

15. In a classified balance sheet, assets are usually classified as:

D. Current assets, long term investments, property, plant, and equipment, and intangible assets

22. Liabilities are general.ly classified on a balance sheet as

D. current liabilities and long term liabilities

28. What is the order in which assets are generally listed on the classified balance sheet

D. current, long term investments, property, property and equipment, intangibles

17. A current asset is

D. expected to be converted to cash or used in thee business within a relatively short period of time