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 company’s profitability.
3.
Explain the relationship between a retained earnings statement and a statement of
stockholders’ equity.
4.
Identify and compute ratios for analyzing a company’s 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 Bloom’s 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
2-1