At December 31 , 2014 , Shorts Company had retained earnings of $ 2,184,000 . During 2014 , the company issued stock for $ 98,000 , and paid dividends of $ 34,000 . Net income for 2014 was $ 402,000 . How much was the retained earnings balance at the beginning of 2014 ?
• Question 6 The current ratio measures liquidity . The debt to assets ratio measures solvency . We don ’ t know how many outstanding shares each company has , so we cannot compare profitability .
Current Ratio |
Debt to Assets Ratio |
Earnings |
per Share |
|
|
Leer Inc . |
2:1 |
75 % |
$ 3.50 |
Stable Inc . |
1.5:1 |
40 % |
$ 2.75 |
Compared to Stable Inc ., Leer Inc . has Lllustation 2-15
• Question 1 Which of the following ratios measures the ability of the company to survive over a long period of time ?
• Question 2 For what purpose might a company use free cash flow ?
• Question 3 What are the accounting rules that have substantial authoritative support and are recognized as a general guide for financial reporting purposes in the U . S .?
• Question 4 A company can change to a new method of accounting if management can justify that the new method results in terms of
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Q 3.1 : Which of the following would be considered an economic event that requires an accounting transaction ?