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Principles of Managerial Finance Text Problems
Tamala R. Brent
University of Phoenix
Finance for Decision Making
FIN 419
Thomas Prince
June 13, 2013
Principles of Managerial Finance Text Problems
Chap 2/P2-1
Reviewing basic financial statements - The income statement for the year ended December 31, 2009, the balance sheets for December 31, 2009 and 2008, and the statement of retained earnings for the year ended December 31, 2009, for Technical, Inc., are given on pages 82 and 83. Briefly discuss the form and informational content of each of these statements.
Answer
Income Statement: A net profit was shown for 2006 and the ability to pay its stockholders a cash dividends.
Balance Sheet: Shows an outline of liabilities and assets for December 31, 2005 and 2006. There is a surplus of current assets over current liabilities, which show liquidity. The firm’s fixed assets 270,000 represent over one-half of total assets $408,300. The firm is financed by common stock, short/long-term debt, and retained earnings.
Statement of Retained Earnings: A net profit of $42,900 was earned in 2006, while paying out cash dividends of $20,000. The reconciliation of the retained earnings account from $50,200 to $73,100 shows the net amount of $22,900 which was retained by the firm.
Chap 4/P2-2
Financial statement account identification Mark each of the accounts listed in the
following table as follows:
a. In column (1), indicate in which statement—income statement (IS) or balance
sheet (BS)—the account belongs.
b. In column (2), indicate whether the account is a current asset (CA), current
liability (CL), expense (E), fixed asset (FA), long-term debt (LTD), revenue (R),
or stockholders’ equity (SE).
(1) (2)
Account name Statement Type of account
Accounts payable BS CL
Accounts receivable BS CA
Accruals BS CL
Accumulated depreciation BS...