O Question 30 The major components of the income statement are listed below: A = results from discontinued operations B = gross profit C= earnings per share D = income from continuing operations !! E = operating expenses In what sequence do they normally appear on the income statement? OB-E-D-A -C OD-E-B-A -C OB-D-E-A-C OD-B-E-C -A

9

15- If you would like to measure the effectiveness of asset management of a company, which of the following ratios would be the least useful?     Average days in inventory     Times interest earned ratio     Average collection period     Inventory turnover ratio     Days sales outstanding

The following events were experienced by Sequoia, Inc.: 1. Issued cumulative preferred stock for cash. 2. Issued common stock for cash. 3. Issued noncumulative preferred stock for cash. 4. Paid cash to purchase treasury stock. 5. Sold treasury stock for an amount of cash that was more than the cost of the treasury stock. 6. Declared a cash dividend. 7. Declared a 2-for-1 stock split on the common stock. 8. Distributed a stock dividend. 9. Appropriated retained earnings. 10. Paid a cash dividend that was previously declared. Required Show the effect of each event on the elements of the financial statements using a horizontal statements model. Use + for increase, for decrease, and leave the cell blank if there is no effect. In the Cash Flow column indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element was not affected by the event, leave the cell blank. The first transaction is entered as an example.