Current ratio Total current assets Total current Liabilities Tot Paid in capital Common stock Preferred stock Paid in capital in exess of par Common size statement goodwill Goodwill Total Assets Vertical analysis Selling general administrative expenses total revenues Cash short term investments accounts recievable current liabilities acid test COGS Net revenue Common size statement COGS Proceeds from sale of land acquisition of equipment collection of notes receivables net cash for investing activities Net income Preferred dividends Total revenues Return on total revenues ROS 7 STEP PROCESS Cost of goods sold Average inventory Inventory turnover Days in year Inventory turnover DIO Revenue Net credit sales Net credit sales 365 average daily sales Average net receivables average daily sales Daily Sales DSO COGS Average accounts payable Accounts payable turnover Days in year Accounts payable turnover DPO DIO DSO DPO Cash conversion cycle CALCULATING INTEREST EXPENSE Straight line amortization method Face value interest rate interest payment Face value issue price Number of years Amortization expense Interest payment discount amortization interest expense BOND CARRYING AMOUNT Discount amount par value of the bonds cash received on issuance Amortization of discount discount number of interest periods Discount account balance discount amount Discount ammoritization per period 2 Bond carrying amount bonds payable discount account balance EPS Net income loss Preferred Dividends EPS Common shares outstanding Net income Preferred Dividend Common shares outstanding EPS PAR VALUE Common shares issued par value per share total par value Total par value par value per share common shares issued HORIZONTAL ANALYSIS 2014 2013 dollar amount of change Dollar amount of change Base year amount 2013 Percentage change INDIRECT METHOD NET CASH Net income depreciation loss on sale of land increase in accounts receivable decrease in inventories increase in accounts payable net cash TOTAL STOCKHOLDERS EQUITY Common stock preferred stock paid in capital in excess of par retained earnings treasury stock stockholders equity TIMES INTEREST EARNED RATIO Operating income interest expense times interest earned ratio 2013 long term debt interest rate Interest expense sale price per share par shares issued paid in capital trend current revenue oldest revenue Short answer MC An auditor report by independent accounts Gives investors assurance that the company s financial statements conform to GAAP The sale of inventory for cash is reported on the statement of cash flows under operating activities Selling equipment for cash is reported on the statement of cash flows under investing activities The purchase of a treasury stock decreases total assets and decreases stockholders equity Amortizing the discount on bonds payable increases the recorded amount of interest expense Which of the following is a characteristics of a corporation limited liability of stockholders Which statement is true Auditors of public companies audit financial statements as well as internal controls Bond carrying value equals bonds payable plus premium on bonds payable minus discount on bonds payable On an indirect method statement of cash flows and increase in a prepaid insurance would be deducted from net income The paid in capital portion of stockholders equity does not include retained earnings What type of account is discount on bonds payable and what is its normal balance contra liability Debit Selling equipment for cash is reported on the statement of cash flows under investing activities Paying off bonds payable is reported on the statement of cash flows under financing activities All except which of the following activities are reported on the statement of cash flows marketing activities When treasury stock is sold for less than its cost the entry should include a debit to retained earnings A contingent liability should be recorded in the accounts if the amount can be reasonably estimated if the related future even will probably occur Carrying value of bonds payable bonds payable discount on bonds payable An end of period adjusting entry that debits unearned revenue most likely will credit a revenue Preferred stock is least likely to have which of the following characteristics Preference as to voting On the statement of cash flows activities affecting long term assets are investing activities The discount on a bond payable becomes additional interest expense over the life of the bonds Failure to accrue interest expense results in and overstatement of net income and an understatement of liabilities Recording estimated warranty expense in the year the related products are sold best follows which accounting principle Expense recognition On an indirect method statement of cash flows an increase in accounts payable would be added to net income in the operating activities section Which of the following terms appears on a statement of cash flows indirect method Depreciation expense The quality of earnings suggest that income from continuing operations is a more relevant predictor of future performance than income from one time transactions On a statement of cash flows activities that obtain the cash needed to launch and sustain a company are financing activities Par value is an arbitrary amount that establishes the legal capital for each share The stockholders equity section of a corporations balance sheep reports NO discount on bonds payable YES treasury stock The main purpose of the statement of stockholders equity is to report reasons for changes in the equity accounts Which of the following classifications represents the most shares of common stock Authorized shares Which of the following items is most closely related to prior period adjustments Retained earnings Extended MC Fails to make adjustment for sales tax net income overstated liabilities under Continues to report the current position as a long term liability the effect will be to overstate the current ratio The entry to sell the treasury stock includes a credit to paid in capital from treasury stock transactions MULTISTEP INCOME STATEMENT 201000 Net sales revenue 69000 COGS 132000 Gross profit 62000 Operating expenses 70000 Operating income Other gains loss 23000 Income from continuing operations b4 income tax Income tax expense Income from continuing operations Loss on discontinued operations 15000 lesss income tax savings of 4800 10200 Income before extraordinary item 21760