Chapter 3 ANSWERS TO QUESTIONS Q31 A primary objective of financial reporting is to provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit, and similar decisions. An accounting system is the means by which a company records and stores the financial and managerial information from its transactions so that it can retrieve and report the information in an accounting statement. A doubleentry system standardizes the method
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Return on year - end capital employed Comparing the ratios of return on year end capital employed that have been calculated for Venice ltd for 30th september 2010 which is 7.1% and for 30th september 2011 which is 11.21%, it has an increase of 4.11%. This increase in the percentage indicates the efficiency and profitability of Venice ltd capital investment have increase. From the Chief Executive's report of Venice's performance for year ended 30th september 2011, gross profit margin up from
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=Sales/Fixed Assets Total asset Turnover Ratio = Sales/Total Assets Debt Ratio=Total liabilities/Total assets Time-Interest-Earned (TIE) Ratio =EBIT/Interest expense 1 EBITDA coverage ratio = (EBITDA + Lease payment) / (Interest Expense + Principle payment + Lease payment) Profit Margin = Net Income / Sales Basic Earning Power (BEP) Ratio = EBIT/Total assets Return on Assets (ROA) = Net Income / Total Assets Return on Equity (ROE) = Net Income / Total Equity PE Ratio = Price per share / Earnings
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TO: TO WHOM IT MAY CONCERN FROM: SUBJECT: CITY OF DENVER CO, CAFR, ANALYSIS OF MD&A DATE: The following memo highlights 4 interesting aspects of the Comprehensive Annual Financial Report of the City of Seattle Washington for Calendar Year January 1st – December 31st 2009. The complete report can be found following this link: http://www.seattle.gov/cafrs/2009/default.htm 1. On page #2 (and on the relevant statements on pages 10 and 11) of the Management’s Discussion and Analysis, it is noted
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Incremental Analysis 1. (Segmented Analysis) Consider the following data regarding two product lines: Clip Art Sales | 75000 | Computer Game Sales | 125000 | Variable COGS: Clip | 20000 | Variable COGS: Computer | 40000 | Other Variable: Clip | 5000 | Other Variable: Computer | 15000 | Traceable Fixed Expenses: Clip | 30000 | Traceable Fixed: Computer | 40000 | Common Fixed Expenses | 10,000 | a) Create a Segmented Income Statement by product line. b) Which product
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assessing cash flow prospects | Self Test, Question 5 | | | | Correct. | | | The term GAAP means: | generally accepted accounting practices. | | generally accepted accounting purposes. | | generally accepted accounting principles. | | generally accepted auditing practices. | Self Test, Question 6 | | | | Correct. | | | Which one of the following organizations has not been instrumental in the development of financial accounting standards? | SEC
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Intermediate Accounting II Study Guide Final Exam 1. Liabilities are a. any accounts having credit balances after closing entries are made. b. deferred credits that are recognized and measured in conformity with generally accepted accounting principles. c. obligations to transfer ownership shares to other entities in the future. d. obligations arising from past transactions and payable in assets or services in the future. 2. Which of the following is a characteristic of a current
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Accounting FOR DUMmIES 4TH ‰ EDITION By John A. Tracy, CPA Accounting For Dummies®, 4th Edition Published by Wiley Publishing, Inc. 111 River St. Hoboken, NJ 07030-5774 www.wiley.com Copyright © 2008 by Wiley Publishing, Inc., Indianapolis, Indiana Published by Wiley Publishing, Inc., Indianapolis, Indiana Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical
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1. Georgia Lazenby believes a current liability is a debt that can be expected to be paid in one year. Is Georgia correct? Explain. Yes, I believe that Goergia Lazeby is correct, because it is a debt making it a liability that needs to be paid within a year. 7. (A) what are long-term liabilities? Give two examples. (b) What is a bond? A long-term liability is something like a bond or long term notes that should be paid with in one year. A bond is something issues by the government or corporation
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The matching principle is one of the cornerstones of the accrual basis of accounting. Under the matching principle, when you record revenue, you should also record at the same time any expenses directly related to the revenue. Thus, if there is a cause-and-effect relationship between revenue and the expenses, record them in the same accounting period. Matching principle is relevant to the time period assumption. Revenue Recognition is an accounting principle under generally accepted accounting principles
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