Chapter 1 Quiz
•Why should the income statement be prepared first?
•Net income from the income statement flows into the retained earnings statement.
The ending retained earnings balance then flows into the balance sheet.
•Why are financial statement users interested in the statement of cash flows?
•It provides information about the sources and uses of cash, an important compant
resource.
•This information is for Campo Corporation for the year ended December 31, 2014.
•Cash received from lenders – $20,000
•Cash received from customers – $65,000
•Cash paid for new equipment – $30,000
•Cash dividends paid – $9,000
•Cash paid to suppliers – $28,000
•Cash balance 1/1/2014
Calculate the “net cash provided (used) by operating activities.”
• $37,000
•A balance sheet shows
•assets, liabilities, and stockholders’ equity.
•Which of he following groups uses accounting information to determine whether a
marketing proposal will be cost effective?
•Marketing managers
•
Chapter 2
•Comparative financial statement data for Arthur Corporation and Lancelot
Corporation, two competitors, appear below. All balance sheet data are as of
December 31, 2014.
•
Arthur Corporation: Net sales – $1,850000, Cost of goods sold – $1,225,000,
Operating expenses – $303,000, Interest expense – $9,000, Income tax expense –
$85,000, Current assets – $427,200, Plant assets (net) – $532,000, Current liabilities
– $66,325, Long-term liabilities – $148,500. Additional information: Cash from
operating activities – $153,000, Capital expenditures – $90,000, Common Stock
dividends paid – $36,000, Average number of shares outstanding – 100,000 shares.
Lancelot Corporation: Net sales – $620,000, Cost of goods sold – $365,000,
Operating expenses – $98,000, Interest expense – $3,800, Income tax expense –
$36,800, Current assets – $130,336, Plant assets (net) – $139,728, Current liabilities
– $35,348, Long-term liabilities – $29,620. Additional information: Cash from
operating activities – $44,000, Capital expenditures – $20,000, Common Stock
dividends paid – $15,000, Average number of shares outstanding – 50,000 shares.
Compute net income for 2014 for Arthur Corporation and Lancelot Corporation.
•$228,000 and $116,400
•Comparative financial statement data for Arthur Corporation and Lancelot
Corporation, two competitors, appear below. All balance sheet data are as of
December 31, 2014.
•
Arthur Corporation: Net sales – $1,850000, Cost of goods sold – $1,225,000,
Operating expenses – $303,000, Interest expense – $9,000, Income tax expense –
$85,000, Current assets – $427,200, Plant assets (net) – $532,000, Current liabilities
– $66,325, Long-term liabilities – $148,500. Additional information: Cash from
operating activities – $153,000, Capital expenditures – $90,000, Common Stock
dividends paid – $36,000, Average number of shares outstanding – 100,000 shares.
