Recent data from the Harmony Health Foods Company is shown below: Current liabil
ID: 2434644 • Letter: R
Question
Recent data from the Harmony Health Foods Company is shown below:Current liabilities $180 Income before interest and taxes $125
10% Bonds, long-term 360 Interest expense 36
Total liabilities 540 Income before tax 89
Shareholders’ equity Income tax 27
Capital stock 200 Net income $ 62
Retained earnings 280
Total shareholders’ equity 480
Total liabilities and equity $1,020
HHF’S Times interested earned ratio is:
a. 3.47 times b. 1.73 times c. 2.47 times d. 10.0 times
An extraordinary event for financial reporting purposes is both:
a. Unusual and material.
b. Infrequent and significant.
c. Material and infrequent.
d. Unusual and infrequent.
The FASB’s standard-setting process includes, in the following order:
a. Exposure draft, research, discussion memorandum, SFAS.
b. Research, exposure draft, discussion memorandum, SFAS.
c. Research, discussion memorandum, exposure draft, SFAS.
d. Discussion memorandum, research, exposure draft, SFAS.
Accounting standard setting is based on:
a. The scientific method.
b. A political process.
c. Deductive reasoning.
d. Inductive reasoning.
Explanation / Answer
1 Times Interest Earned Income before Taxes / Interst Earned 125 / 36 = 3.47 2 An Extra ordinary item is both unusual and infrequent. 3 The FASB's standard- setting process includes Exposure draft,Research,discussion memorandum SFAS. 4 Accounting Standard is based on deductive reasoning.
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