2.1.            What information is provided in a balance sheet?

2.2.            How is a common-size balance sheet  created?

2.3.            Discuss how marketable securities are valued on the balance sheet.

2.4.            How can the allowance for doubtful accounts be used to assess earnings quality?

2.5.            Why is the valuation of inventories important in financial reporting?

2.6.            Why would a company switch to the LIFO method of inventory valuation in an inflation- ary period?

2.7.            Which inventory valuation method, FIFO or LIFO, will generally produce an ending inventory value on the balance sheet that is closest to current cost?

2.8.            Discuss the difference between the straight-line method of depreciation and the acceler- ated methods. Why do companies use different depreciation methods for tax reporting and financial reporting?

2.9.            What is the purpose of listing the account “Commitments and contingencies” on the bal- ance sheet even though no dollar amounts appear?

2.10.             How is it possible for a company with positive retained earnings to be unable to pay a cash dividend?

2.11.             The King Corporation has total annual revenue of $800,000; expenses other than depreci- ation of $350,000; depreciation expense of $200,000 for tax purposes; and depreciation expense of $130,000 for reporting purposes. The tax rate is 34%. Calculate net income for reporting purposes and for tax purposes. What is the deferred tax liability?

2.12.             Explain how treasury stock affects the stockholders’ equity section of the balance sheet and the calculation of earnings per share.