financial accounting solution chap 02

CHAPTER 2

A Further Look at Financial Statements

Study Objectives

1. Identify sections of a classified balance sheet.
2. Identify and compute ratios for analyzing a company’s profitability.
3. Explain the relationship between a retained earnings statement and a statement of stockholders’ equity.
4. Identify and compute ratios for analyzing a company’s liquidity and solvency using a balance sheet.
5. Use the statement of cash flows to evaluate solvency.
6. Explain the meaning of generally accepted accounting principles.
7. Discuss financial reporting concepts.

Summary of Questions by Study Objectives and Bloom’s Taxonomy

Item
SO
BT
Item
SO
BT
Item
SO
BT
Item
SO
BT
Item
SO
BT
Questions
1.
1
K 6.
2, 4, 5
C
10.
4, 5
K
14.
7
C
18.
7
K
2.
1
K 7.
2, 4, 5
K
11.
2, 4, 5
C
15.
7
C
19.
7
C
3.
1
C 8.
4
C
12.
6
K
16.
7
C
20.
7
C
4.
1
C 9.
4, 5
C
13.
6, 7
K
17.
6
C
21.
1
C
5.
1
K

Brief Exercises 1.
1
K 4.
3
K 7.
6
K 9.
7
K
11.
7
K
2.
1
AP 5.
4
AP 8.
7
K
10.
7
K
12.
7
K 3.
2
AP 6.
4, 5
AP

Do It! Review Exercises 1.
1
AP 2.
1
AP 3.
4, 5
K
4.
7
K

Exercises 1.
1
AP 4.
1
AP 7.
2
AP
10.
4
AP
12.
7
K 2.
1
AP 5.
1
AP 8.
1, 3, 4
AP
11.
4, 5
AP
13.
7
C 3.
1
AP 6.
1
AP 9.
4
AP

Problems: Set A 1.
1
AP 3.
1, 3
AP
5.
2, 4,
5

AP 7.
2, 4,
5

AP 8.
6, 7
E
2.
1, 3
AP
4.
2, 4,
5

AN 6.
2, 4,
5

AP

Problems: Set B 1.
1
AP 3.
1, 3
AP
5.
2, 4,
5

AP 7.
2, 4,
5

AP 8.
6, 7
E
2.
1, 3
AP
4.
2, 4,
5

AN 6.
2, 4,
5

AP

ASSIGNMENT CHARACTERISTICS TABLE

Problem
Number

Description

Difficulty
Level

Time
Allotted (min.)

1A

Prepare a classified balance sheet.

Simple

10–20