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chapter 1
88. Review Coca-Cola's financial statements and answer the following questions:
(1) What is Coke's percent of current assets to total assets on its December 31, 2018 balance sheet?
(2) What is Coke's percentage of current liabilities to total stockholders' equity on its December 31, 2018, balance
sheet?
(3) What is the percentage increase in cash and cash equivalents from 2017 to 2018?
(4) What percentage did total assets decrease from 2017 to 2018?
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chapter 1
89. Review Coca-Cola's financial statements and answer the following questions:
(1) How are Coke's numbers reported (in what denomination)?
(2) What is Coke's net operating revenue for 2018?
(3) What is Coke's cost of goods sold for 2018?
(4) What is Coke's net income for 2018?
(5) What is Coke's percent of interest expense to net operating revenue on its 2018 income statement?
(6) What is Coke's percent of increase in net operating revenue from 2017 to 2018?
90. Name and describe the three forms of businesses and their advantages and disadvantages (if any).
91. Fill in the missing amounts of the following balance sheet.
Prova Company
Balance Sheet
December 31, 20Y8
Assets
Cash $ 3,300
Accounts Receivable 2,400
Supplies (a)
Inventory 5,700
Equipment 7,400
Land 9,250
Total Assets $32,550
Liabilities
Accounts Payable $ 850
Notes Payable (b)
Total Liabilities $ (c)
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Stockholders' Equity
Common Stock $18,500
Retained Earnings 4,200
Total Stockholders' Equity 22,700
Total Liabilities and Stockholders' Equity $ (d)
92. What is the basic accounting equation, and which financial statement is prepared from this equation?
93. The following are the financial statement data for Degen Temporary Services at December 31, 20Y8. Prepare Degen's
income statement.
Accounts Payable $ 850
Accounts Receivable 780
Cash 425
Common Stock 600
Dividends 200
Insurance Expense 75
Office Equipment 1,500
Retained Earnings, January 1, 20Y8 370
Salaries Expense 525
Notes Payable 40
Service Revenue 1,750
Inventory 35
Supplies Expense 50
Degen Temporary Services
Income Statement
For the Year Ended December 31, 20Y8
94. For each of the following companies, identify whether it is a service, merchandising, or manufacturing business.
A. Dillards
B. Time Warner Cable
C. Kohl's
D. Ford Motor Co.
E. Applebee's
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G. Best Buy
H. GAP
I. H & R Block
95. How do businesses make money? What strategies can they use to gain a competitive advantage?
96. Match the following items with the appropriate financial statement.
a. Income statement
b. Balance sheet
c. Retained earnings statement
d. Statement of cash flows
(1) Cash
(2) Salary expense
(3) Unearned revenue
(4) Depreciation expense
(5) Capital stock
(6) Cash flows from operating activities
(7) Accounts receivable
(8) Beginning balance of retained earnings
(9) Notes payable
(10) Accounts payable
(11) Changes in current assets and current liabilities
(12) Total expenses
97. Indicate whether each of the following activities would be reported on the statement of cash flows as an operating
activity, an investing activity, a financing activity, or does not appear on the statement of cash flows.
(a) Cash paid for building
(b) Cash paid to suppliers
(c) Cash paid for dividends
(d) Cash received from customers
(e) Cash received from the sale of capital stock
(f) Cash received from the sale of a building
(g) Borrowed cash from a bank
98. Describe business stakeholders. State the classification of business stakeholders.
99. Classify the following as an asset, liability, revenue, or expense.
(1) Unearned revenue
(2) Office equipment
(3) Wages payable
(4) Salary expense
(5) Dividends payable
(6) Art fees earned
(7) Prepaid rent
(8) Accounts receivable
(9) Income tax expense
(10) Office supplies
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chapter 1
100. On May 31, 20X8, Deana's Services Company had account balances as follows:
Accounts payable $ 9,900
Accounts receivable 26,950
Cash 11,390
Fees earned 70,800
Insurance expense 1,475
Land 74,400
Miscellaneous expense 1,510
Prepaid insurance 2,000
Rent expense 8,000
Salary expense 35,300
Dividends 15,100
Supplies 950
Supplies expense 825
Utilities expense 3,800
Capital stock 81,000
Retained earnings (beginning balance on May 1, 20Y8) 20,000
Present, in good form, (a) an income statement for May, (b) a statement of shareholders' equity for May, and (c) a balance
sheet as of May 31.
101. Match each statement with the appropriate accounting concept. (Some items may not be used. Others may be used
more than once.)
a. Accounting period concept
b. Adequate disclosure concept
c. Business entity concept
d. Cost concept
e. Going concern concept
f. Matching concept
g. Objectivity concept
h. Unit of measure concept
(1) Owners' transactions are separate from business transactions.
(2) Financial statements are prepared at the end of each year.
(3) Land purchased for $50,000, 10 years ago, is reported on the Balance Sheet at $50,000.
(4) December rent expense paid in January is reported with the December revenues.
(5) All transactions are recorded and reported in dollars.
(6) This provides a summary of significant accounting policies.
(7) This assumes that IBM will continue as a corporation forever.
(8) The length of time left on debt obligations is shown.
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Answer Key
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