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Homework answers / question archive / Which one of the following groups is considered an internal user of financial statements? a
Which one of the following groups is considered an internal user of financial statements?
a. A bank reviewing a loan application from a corporation
b .Factory managers who supervise production line workers
c. The labor union representing employees of a company that is involved in labor negotiations
d. The financial analysts for a brokerage firm who are preparing recommendations for the firm's brokers on companies in a certain industry
Which of the following statements would be true if you own stock in a company?
a. You have the right to a portion of the company's revenues each accounting period.
b. You have the right to receive interest on an annual basis.
c. You are an owner of the retained earnings and capital stock of the company.
d. You have a claim to the assets of the business.
Moore Industries
Moore Industries began operations on January 2, 2017, with an investment of $50,000 by each of its two stockholders. Net income for its first year of business was $240,000. Moore Industries paid a total of $100,000 in dividends to its stockholders during the year.
Read the information about Moore Industries. If the company's revenues were $500,000 for the year ended December 31, 2017, how much were total expenses?
a.$740,000
b.$160,000
c.$260,000
d.$640,000
Hopper, Inc.
Use the information from Hopper, Inc. to answer the following question.
2018 2017
Operating revenues $1,900,000 $1,600,000
Operating expenses 1,400,000 1,100,000
Income taxes 200,000 200,000
Read the information about Hopper, Inc. Which of the following statements is the best answer regarding the company's profit margin?
a. The profit margin was 31.5% in 2018.
b. The profit margin was 15.8% in 2017.
c. The profit margin was 31.5% in 2017.
d. The profit margin was 15.8% in 2018.
Business entities generally carry on
a. investing and operating activities, but only corporations engage in financing activities.
b. operating, investing, and financing activities.
c. operating activities, but only corporations engage in financing and investing activities.
d. either investing or financing activities, but not both.
Which of the following statements is true concerning external users of financial information?
a. External users rely on management to tell them whether the company is a good investment.
b. External users need detailed records of the business to make informed decisions.
c. External users are primarily responsible for the preparation of financial statements.
d. External users rely on the financial statements to help make informed decisions.
Relevant information can be quantitative or qualitative. In deciding whether to go to college part time or full time, which of the following is a qualitative factor for a student?
a. The price of football tickets
b. The cost of tuition
c. "Good Student" discounts on auto insurance rates
d. The opportunity to make friends
Which one of the following sections is least likely to be found in a corporate annual report?
a. Notes to the Financial Statements
b .Management's Discussion and Analysis
c. Report of Independent Accountants
d. Forecasts of Cash Flows and Earnings
What is the correct method for calculating working capital?
a. Current Assets + Current Liabilities
b. Total Assets – Total Liabilities
c. Current Assets – Current Liabilities
d. Current Assets – Total Liabilities
XYZ Corp. made cash sales to customers. What effect does this transaction have on the accounting equation?
a. There is no effect on the accounting equation as one asset account increases while another asset account decreases.
b. Assets increase and stockholders' equity increases.
c. Liabilities increase and stockholders' equity increases.
d. Assets increase and liabilities increase.
Which of the following statements regarding the activities of Casion Corp. is true?
a. Expenses decrease Casion's stockholders' equity.
b. Revenues decrease Casion's stockholders' equity.
c. Expenses increase Casion's stockholders' equity.
d. None of these choices are correct.
1) factory managers who supervise production line work and the labour union representing employees of the comapny that is involved in labour negotiations i.e b and c are the correct answers.
internal users refers to those users who for for the comapny. they are a part of the comapny. in the above questions neither banks nor financial anlyst works for the comapny hence they will not be a part of internal users infact they are external users.
2) the correct answer is all the statements except statement ' b' as owners dont receive interest they receive dividends and that too when comapny is doing well. but owning stocks does give you a right over a portion of comapny's revenue and also makes you entitled to the claims on assets and makes you the rightful owner of the retained earnings and the capital stocks
3) expense = total revenue - net income
= 500000 - 240000
= $ 260000
hence the correct answer is c
4) profit margin = (revenue - cost )/ revenue
profit margin in 2018 = (1900000 - 1400000)/ 1900000
= 21.5%
profit margin in 2017 = ( 1600000 - 1100000)/ 1600000
=31.5%
hence the correct answer is c
5) the correct answer is b
a firm carries all three types of business activities operating, investing and financing. there is no bar or law which says that a firm cannot engage in all three types of activities.
6) the correct answer is b and d
external users doesnt rely on management infact they rely on financial statements to take informed decisions about the company. also primary responsibility of making financial statement lies with management or auditor of the firm not external users.
7) the correct answer is b ie the cost of tution
all the other factors are irrelevant in deciding or taking a decision about college. opportunity to make friend is not a quantitative measure but it is a subjective thing.
8) the correct answer is a and b
notes to the financial statement and management's discussion and notes are shown in corporate annual report. since it is a document prepared by the employees of the company there is no way of finding any reports made by an independent accountants. and as far as cash flow estimates are considered, these are not shown in annual reports and are infact used by sales and production department for forcasting the future aboiut tge company's performace.
9) working capital tells us about the current requirement of the company to run its operations hence the best formula to show the exact working capital is = current assets - current liabilities. hence the correct answer is c
rest all the formulas are not for working capital
10) the correct answer is a
as when goods are sold we receive cash hence increasing our assets
but on the other hand when we sell goods our inventory is going down that is our asset is decreasing.
hence the impact of the above entry is that one asset increases while the other assets goes down.
11) the correct answer is d none of the choices are correct.
as expennse decrease or increase affects the cash account which is an assets account.
revenue increases stockholders equity.
