At the beginning of fiscal 1998 Jones Company had retained earnings of $1,000,000 and at the beginning of fiscal 1999 Jones Company had retained earnings of $1,200,000. During fiscal 1998 Jones Company declared a dividend of $300,000 and declared a 3 for 1 stock split. How much did Jones Company earn during fiscal1998?
Answer(s): D
The company's retained earnings increased by $200,000 during 1998 and dividends were paid of $300,000, therefore earnings had to be $500,000. The stock split has no effect on retained earnings.
Under what condition would a firm report cash, or cash equivalents as a long-term asset?
Answer(s): B
A firm may maintain cash equivalents that are earmarked for plant expansion, sinking fund payments, or other long-term uses. In these situations many firms would report this portion of its cash, or cash equivalents as long- term because these funds are not available in the daily operation of the business.
The amount by which a plant asset depreciated is classified as ________.
Depreciation is the periodic allocation of the cost of a tangible, long-term asset over its estimated useful life, and therefore a period expense.
The relationship of the total debt to the total equity of a firm is a measure of ________.
The ratio of total debt to total equity is a measure of risk to creditors because it helps in evaluating a company's relative reliance on debt and equity financing.
What entity is presently responsible for establishing accounting standards?
Answer(s): A
The Financial Accounting Standards Board.
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