Answer:
1. $840,000
2. 2.1
Explanation:
1. Net income available to shareholders
Net income. $960,000
Less : Preferred stock $120,000
Net income available. $840,000
to common stockholders
2. Basic earnings per share for 2015
Earnings per share = Net income available to common stockholders / weighted average shares of common stock
= $840,000 / $400,000
= 2.1
B. Elements of your business plan
Answer:
1. 0.07161
2. 2.43
3. 0.02932
Explanation:
1. The computation of the return on total assets is shown below:
Return on assets = (Net income) ÷ (average of total assets)
where,
Net income is $355
Average total assets = (Beginning total assets + ending total assets) ÷ 2
= ($4,090 + $5,825) ÷ 2
= $4,957.50
Now put these values to the above formula
So, the ratio would equal to
= $355 ÷ $4,957.50
= 0.07161
2. The computation of the assets turnover is shown below:
Total asset turnover = (Net Sales ÷ average of total assets)
= ($12,105 ÷ $4,957.50)
= 2.43
3. The computation of the profit margin is shown below:
= (Net earnings ÷ net sales) × 100
= ($355 ÷ $12,105) × 100
= 0.02932
Answer: a. Material
Explanation: The major aim of auditing financial statements is to provide an opinion regarding the financial statements if they are fair, in all material respects, in reporting the financial position of the client—the condition being that real financial statements should be free from material misstatement. This is the function of auditors. They detect and correct material errors. To achieve this goal, the work of an auditor is planned based on the evaluation of
the functioning of internal control, information available on the functioning of the client and the auditor's professional
judgment based on past experience.