The revenue recognition principle dictates that revenue be recognized i
n the accounting period in which the performance obligation is satisfie
d.
· Question 22
Lankston Company began the year by issuing $90,000 of common stoc
k for cash. The company recorded revenues of $825,000, expenses of $
720,000, and paid dividends of $45,000. What was Lankston‘s net inco
me for the year?
· Question 23
The multiplestep income statement is considered more useful than the singlestep income statement because it highlights the components of net inco
me.
· Question 24
Use the following data to calculate the current ratio.
Carne Auto Supplies
Balance Sheet
December 31, 2014
Cash
$
$ 65,000
Accounts receivable
yable
10,000
Inventory
90,000
Prepaid insurance
$165,000
Stock investments
Land
Buildings
$100,000
$120,000
35,000
50,000
70,000
40,000
Accounts payable
Salaries and wages pa
Mortgage payable
Total liabilities
80,000
95,000
Common stock