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Unformatted text preview: CHAPTER 2 A Further Look at Financial Statements Study Objectives 1. Identify sections of a classified balance sheet. 2. Identify and compute ratios for analyzing a companys profitability. 3. Explain the relationship between a retained earnings statement and a statement of stockholders equity. 4. Identify and compute ratios for analyzing a companys liquidity and solvency using a balance sheet. 5. Use the statement of cash flows to evaluate solvency. 6. Explain the meaning of generally accepted accounting principles. 7. Discuss financial reporting concepts. Summary of Questions by Study Objectives and Blooms Taxonomy Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT Questions 1. 1 K 5. 1 K 9. 4, 5 C 13. 6, 7 K 17. 6 C 2. 1 K 6. 2, 4, 5 C 10. 4, 5 K 14. 7 C 18. 7 K 3. 1 C 7. 2, 4, 5 K 11. 2, 4, 5 C 15. 7 C 19. 7 C 4. 1 C 8. 4 C 12. 6 K 16. 7 C 20. 7 C Brief Exercises 1. 1 K 4. 3 K 7. 6 K 9. 7 K 11. 7 K 2. 1 AP 5. 4 AP 8. 7 K 10. 7 K 12. 7 K 3. 2 AP 6. 4, 5 AP Exercises 1. 1 AP 4. 1 AP 7. 1, 3, 4 AP 9. 4 AP 11. 7 K 2. 1 AP 5. 1 AP 8. 4 AP 10. 4, 5 AP 12. 7 C 3. 1 AP 6. 2 AP Problems: Set A 1. 1 AP 3. 1, 3 AP 5. 2, 4, 5 AP 7. 2, 4, 5 AP 8. 6, 7 E 2. 1, 3 AP 4. 2, 4, 5 AN 6. 2, 4, 5 AP Problems: Set B 1. 1 AP 3. 1, 3 AP 5. 2, 4, 5 AP 7. 2, 4, 5 AP 8. 6, 7 E 2. 1, 3 AP 4. 2, 4, 5 AN 6. 2, 4, 5 AP 21 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Prepare a classified balance sheet. Simple 1020 2A Prepare financial statements. Moderate 2030 3A Prepare financial statements. Moderate 2030 4A Compute ratios; commenting on relative profitability, liquidity, and solvency. Moderate 2030 5A Compute and interpret liquidity, solvency, and profitability ratios. Simple 1020 6A Compute and interpret liquidity, solvency, and profit ability ratios. Moderate 1525 7A Compute ratios and compare liquidity, solvency, and profitability for two companies. Moderate 1525 8A Comment on the objectives and qualitative characteristics of accounting information. Simple 1020 1B Prepare a classified balance sheet. Simple 1020 2B Prepare financial statements. Moderate 2030 3B Prepare financial statements. Moderate 2030 4B Compute ratios; commenting on relative profitability, liquidity, and solvency. Moderate 2030 5B Compute and interpret liquidity, solvency, and profitability ratios. Simple 1020 6B Compute and interpret liquidity, solvency, and profit ability ratios. Moderate 1525 7B Compute ratios and compare liquidity, solvency, and profitability for two companies. Moderate 1525 8B Comment on the objectives and qualitative characteristics of accounting information. Simple 1020 22 ANSWERS TO QUESTIONS 1. A company s operating cycle is the average time that is required to go from cash to cash in prod ucing revenues....
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This note was uploaded on 06/03/2008 for the course BUAD 250A taught by Professor 10:0010:50 during the Summer '06 term at USC.
 Summer '06
 10:0010:50
 Balance Sheet

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