2 Information that is free from error 3 Information presented in a clear and

2 information that is free from error 3 information

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_____ 2. Information that is free from error. _____ 3. Information presented in a clear and concise fashion. _____ 4. Information that makes a difference in a decision. _____ 5. Information accurately depicts what really happened. Ans: N/A, LO: 3, Bloom: C, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting Solution 200 (5 min.) 1. d 2. c 3. b 4. e. 5. f
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Test Bank for Financial Accounting: Tools for Business Decision Making, Eighth Edition FOR INSTRUCTOR USE ONLY 2-52 Be. 201 Presented below are the basic assumptions and principles underlying financial statements. a. Historical cost principle d. Going concern assumption b. Economic entity assumption e. Monetary unit assumption c. Full disclosure principle f. Periodicity assumption Identify the basic assumption or principle that is described below. ____ 1. The economic life of a business can be divided into artificial time periods. ____ 2. The business will continue in operation long enough to carry out its existing objectives. ____ 3. Assets should be recorded at their cost. ____ 4. Economic events can be identified with a particular unit of accountability. ____ 5. Circumstances and events that make a difference to financial statement users should be disclosed. ____ 6. Only transaction data that can be expressed in terms of money should be included in the accounting records. Ans: N/A, LO: 3, Bloom: K, Difficulty: Easy, Min: 5, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting Solution 201 (5 min.) 1. f 4. b 2. d 5. c 3. a 6. e
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A Further Look at Financial Statements FOR INSTRUCTOR USE ONLY 2-53 EXERCISES Ex. 202 The following information is available for Mullen Company for the year ended December 31, 2017: Accounts payable 4,700 Stock investments (long-term) 8,400 Accumulated depreciation, equipment 4,000 Retained earnings 16,000 Common stock 4,800 Intangible assets 2,500 Notes payable (due in 5 years) 6,000 Accounts receivable 1,500 Cash 2,600 Debt investments (short-term) 3,000 Land 10,000 Equipment 7,500 Instructions Use the above information to prepare a classified balance sheet for the year ended December 31, 2017. Ans: N/A, LO: 1, Bloom: AP, Difficulty: Medium, Min: 20, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting Solution 202 (20 min.) MULLEN COMPANY Balance Sheet December 31, 2017 Assets Current assets Cash ........................................................................ $ 2,600 Debt investments .................................................... 3,000 Accounts receivable ............................................... 1,500 Total current assets(Cash + Debt inv. + Acc. rec.) .............. $7,100 Investments Stock investments ................................................... 8,400 Property, plant, and equipment Land .................................................................... 10,000 Equipment ............................................................... $7,500 Less Accumulated depreciation-equipment ............. 4,000 3,500 13,500 Intangible assets ............................................................... 2,500 Total assets …… . ............................................................... $31,500 (Tot. cur. assets + Stock inv. + Land + Equip. – Acc. dep. + Int. assets)
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Test Bank for Financial Accounting: Tools for Business Decision Making, Eighth Edition FOR INSTRUCTOR USE ONLY 2-54 Solution 202 (Cont.) Liabilities and Stockholders’ Equity Current liabilities Accounts payable ................................................... $ 4,700 Long-term liabilities Notes payable .......................................................... 6,000 Total liabilities ..................................................................... $10,700 Stockholders’ equity Common stock ......................................................... 4,800 Retained earnings .................................................... 16,000 Total stockholders’ equity .................................................... 20,800 Total liabilities and stockholders’ equity ............................... $31,500 (Acc. pay. + Not. pay. + Com. stock + Ret. earn.) Ex. 203
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