Problem:
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 asset (A), liability (L), expense (E), fixed asset (FA), revenue (R), or stockholders' equity (SE).
Account Name (1) Statement (2) Type of Account
Accounts payable
Accounts receivable
Administrative expense
Buildings
Cash
Common stock
Cost of goods sold
Depreciation
Equipment
General expense
Land
Machinery
Notes payable
Operating expense
Prepaid salary
Retained earnings
Rent
Sales revenue
Selling expense
Income statement preparation. Use the appropriate items from the following list to prepare an Income Statement
for the year ended December 31, 2007. Make sure you calculate the net income/loss before and then after tax expense.
The tax rate is 40% for this company.
Item Values ($000) at or for year ended December 31, 2000
Accounts receivable $350
Accumulated depreciation 205
Cost of goods sold 285
Depreciation expense 55
General and administrative expense 60
Interest expense 25
Preferred stock dividends 10
Sales revenue 525
Selling expense 35
Stockholders' equity 265
In the income statement that you prepared above, calculate the following ratio:
Times Interest Earned = Net income + interest expense + tax expense interest expense
What are the three internal control objectives for financial reporting?