Author: Anonymous

The measurement of key relations among financial statement items is known as:

Return on assets is often stated in ratio form as the amount of average total assets divided by income.

Refer to the following selected financial information from Dinosaur Incorporated. Compute the company’s times interest earned for Year 2.    Year 2 Year 1 Net sales $ 478,500   $ 426,250   Cost of goods sold   276,300     250,120   Interest expense   9,700     10,700   Net income before tax   67,250     52,680   Net income after tax   46,050     39,900   Total assets   317,100     288,000   Total liabilities   181,400     167,300   Total equity   135,700     120,700  

Use the following information about the current year’s operations of a company to calculate the cash paid for merchandise.           Cost of goods sold $ 226,000   Merchandise inventory, January 1   54,800   Merchandise inventory, December 31   57,400   Accounts payable, January 1   54,400   Accounts payable, December 31   59,800  

Adjusting entries made at the end of an accounting period accomplish all of the following except:

The statement of cash flows helps analysts evaluate all but which of the following?

Capital structure refers to a company’s long-run financial viability and its ability to cover long-term obligations.

Refer to the following selected financial information from Neanderthal, LLC. Compute the company’s acid-test ratio for Year 2.    Year 2   Year 1 Cash $ 37,500   $ 36,850   Short-term investments   90,000     90,000   Accounts receivable, net   85,500     86,250   Merchandise inventory   121,000     117,000   Prepaid expenses   12,100     13,500   Plant assets   388,000     392,000   Accounts payable   113,400     111,750   Net sales   711,000     706,000   Cost of goods sold   390,000     385,500  

When preparing the operating activities section of the statement of cash flows using the indirect method, decreases in current operating assets are added to net income.

The purchase of stock in another company is classified as a financing activity.