CFA - FSA Book 3 LM 1 & 2
Frog Company had a net income of $1,000,000 for 2010. It received dividends from available-for-sales securities for $60,000, paid cash dividends for $110,000, and reacquired common stock for $400,000. It also realized a gain on the sale of equipment for $65,000. Finally, it recorded unrealized loss from foreign currency translation for $15,000, unrealized loss from available-for-sale securities for $10,000, and unrealized gain from cash flow hedge for $30,000. What is the total comprehensive income?
$1,005,000
Arnold Jones, CFA, compiled the following information on Jamit Enterprises for the year ended 31 December 2012. He noted Jamit's tax rate was 28 percent and they paid cash dividends of $6 million in 2012. Revenue$4,000,000Cost of goods sold1,280,000Other operating expenses1,040,000Interest expenses320,000Other comprehensive income110,000 Jones calculated an operating profit for Jamit for 2012 of:
$1,680,000
The following information relates to Beta Inc. for the year ended 2018: Shares outstanding on January 1, 2018 = 2,000,000 3-2 stock split on March 1, 2018 Shares issued on July 31, 2018 = 200,000 5% stock dividend on October 31, 2018 Shares repurchased on December 1, 2018 = 100,000 Beta Inc. reported net income of $3.34 million for the year ended 2018. The company's EPS is closest to:
$1.03
Information for July Company is presented as follows: Net income in 20x7:$230,000Preferred stock outstanding:200 shares, 5%, 100 parCommon stock outstanding at start of 20x7:100,000Common stocks issued - 05/01/20x7:5,000Common stocks issued - 10/31/20x7:4,000Common stocks issued - 11/30/20x8:15,000Bonds issued:*400, 6%, 1000 par*Convertible to 100 shares of common stockTax rate:30% What is July's diluted EPS for 20x7?
$1.7069 per share.
A company had 500,000 common shares and $2,500,000 of a 7% convertible bond issue outstanding throughout the last accounting period. The convertible bond is convertible into 6 shares per $1,000. If the company's net income was $5,500,000 and the tax rate was 30%, the diluted earnings per share was closest to:
$10.92.
A company incurs the following costs on a particular project: Year200620072008TotalCosts incurred ($ '000)5007003001,500 The total revenue from the project is expected to be $2,000,000. Under the percentage-of-completion method, the project's net income in 2008 is closest to:
$100,000
Rhea Mart Inc., a retail company, reports the following information for the year ended December 31, 2013: The company reported net income for the year of $3,240 and the other comprehensive loss of $200 for the year. Also, the footnotes of financial statements disclosed contingent assets of $800. The company changed its depreciation method for property, plant, and equipment from the straight-line depreciation to double-declining-balance depreciation at the beginning of the year. As a result, the net book value changed by $560. The beginning balances of equity accounts were as follows: common stock of $22,400, retained earnings of $34,500, and accumulated other comprehensive income of $200. Assuming the company reported total liabilities of $40,620, the total assets reported in the balance sheet will be closest to:
$100,200.
Supernova Inc. is a manufacturer of industrial chemicals. At the beginning of 2009, it purchased a machine for $875,000. The machine has an estimate useful life of 8 years and a residual value of $60,000. Supernova's depreciation expense for 2009 under the straight-line method is closest to:
$101,875
The following transactions are available for Dan Company: 2015 Issued one half of the 950,000 ordinary shares ($1 par) at $15 per share Authorized the issuance of 500,000 preference shares ($5 par) Recorded net income of $1,025,000 Declared dividends of $230,000 2016 Issued 100,000 ordinary shares for $17 per share Issued 150,000 preference shares for $8 per share Authorized the purchase of a custom-made machine to be delivered in January 2017 Restricted $300,000 of retained earnings for the purchase of the machine Issued additional 50,000 preference shares for $9 per share Reported net income of $1,215,000 Declared dividends on December 31, 2016, of $635,000 to shareholders of record on January 15, 2017, to be paid on February 1, 2017 How much is the total shareholders' equity on December 31, 2016?
$11,850,000
XYZ Company recently purchased a machine for $75,000. It expects to use the machine for 6 years, after which it will have a residual value of $5,000. How much depreciation should the company charge in the second year using double-declining balance depreciation?
$16,667
Brex Company recorded no purchase or sale of securities A and B, which are considered available for sale during 20X6. Brex recorded an unrealized loss of $100,000 against security C, which is considered held for trading, during 20X5. Initial cost and market value at the end of 20X6 are: SecurityCostMarket Value December 31, 20x6A$1,200,000$1,300,000B900,000500,000C1,600,0001,500,000 The cumulative loss recognized on these securities in Other Comprehensive Income (OCI) for the period ending December 31, 2006 will be closest to:
$300,000
In the year 2009 (its first year of operations), Indigo Computers made the following purchases: Units PurchasedCost per Unit ($)Total Cost ($)First quarter5,20028145,600Second quarter6,70023154,100Third quarter7,30019138,700Fourth quarter4,20025105,000Total23,400 543,400 It sold 15,100 units during the year at a price of $30 per unit. Indigo's cost of goods sold under the weighted average cost method for 2009 is closest to:
$350,656
A construction company, ABC Inc., enters into a contract with XYZ Inc. to construct a commercial building. The construction contract specifies consideration of $4 million. ABC expects to incur costs amounting to $3,400,000 to satisfy the terms of the contract. During Year 1, ABC incurs $2,380,000 in costs. Now assume that at the beginning of Year 2, the two parties to the contract agree to change the building floor plan and modify the contract. As a result, the contract will now be worth $4.4 million, and there will be a $600,000 bonus paid out to ABC if it is able to complete the project in another 1.5 years (2.5 years from initiation). The changes will result in an increase in ABC's costs amounting to $300,000. ABC believes that it does meet the criteria for being able to recognize the bonus as revenue. The amount that ABC will recognize as a cumulative catch-up adjustment on the date of contract modification is closest to:
$416,216
Mega Construction Pvt. Ltd. obtains a $75 million contract to construct a building. It estimates that it will take 4 years to complete the project. The estimated cost of the project is $60 million. Mega Construction incurs costs amounting to $20 million in Year 1, $15 million in Year 2, $13 million in Year 3, and $12 million in Year 4. Assuming that the outcome of the project can be estimated reliably and that Mega follows IFRS, the profit that the company should recognize in Year 1 is closest to:
$5 million
Jones Construction takes on a new project that it anticipates will take 2 years to complete. It agrees to a total contract price of $4 million, and its expected operating costs are $3 million. In the first year, it incurs costs of $1.8 million and receives payments of $2 million. If it is using the percentage-of-completion method to recognize revenue, then the operating income recorded in the first year will be:
$600,000.
Bodoni Technologies Inc. reported net income of $4 million for the year ended December 31, 2013. At the beginning of the year, the company had 500,000 common shares and issued 20,000 warrants with an exercise price of $60 on July 1, 2013. The average market price of the company's common stock during the year was $80 per share. Assuming there were no other potentially dilutive securities, the company's diluted earnings per share (EPS) using the treasury stock method is closest to:
$7.96.
Bart Company incurred research and development costs in the current year as follows: equipment acquired for various R&D projects, $975,000; depreciation, $135,000; materials used, $200,000; compensation for personnel, $500,000; outside consulting fees, $150,000; and indirect costs allocated, $250,000. How much is the total research and development cost to be recognized for the current year?
1,235,000
Based on Tipton Realty's 2016 balance sheet, what is Tipton's acid-test ratio? CashPhp 1,600,000Marketable securitiesPhp 2,500,000Accounts receivablePhp 7,450,000InventoryPhp 8,400,000BuildingPhp 16,000,000Accounts payablePhp 9,500,000Deferred tax liability (to reverse next year)Php 550,000
1.22
Cash = $22,250 Marketable securities = $13,480 Receivables = $4,330 Inventory = $4,240 Noncurrent assets = $79,700 Current liabilities = $31,450 Long-term liabilities = $33,340 Equity = $59,210 The company's current ratio is closest to:
1.41
The following information is available for Bear Company for the year 2015: Ordinary shares issued and outstanding (January 1):220,000AverageMarket price of the share over the year:$25Net income for the year:$1,100,000 Unexercised stock options to purchase 40,000 ordinary shares at a strike price of $20 exist for the whole year. What amount should be reported as diluted earnings per share?
4.82
Rising Stars Limited (RSL) reported revenue of $3,120,000 and net income of $546,000 for the fiscal year end 30 June 2012. At 1 June 2011, RSL had 465,000 common shares outstanding and 60,000 common stock options outstanding with an exercise price of $14 each. During that fiscal year, the average market price for RSL's shares was $24 per share. RSL had no other potentially dilutive securities. What amount of shares would be used for the weighted average number of common stock in the calculation of diluted EPS for the 2012 fiscal year?
490,000
Which of the following statements is least accurate?
A change in accounting principle is applied prospectively.
Three years ago, a company borrowed $20,000 to finance the purchase of a machine that cost $60,000. Given that the company uses historical cost to measure its assets and has charged accumulated depreciation of $10,000 over the 3 years, which of the following statements is most likely? The company will report:
A liability of $20,000.
Which of the following characteristics is least likely to be assessed by using only the Statement of Financial Position?
Ability to generate profit from its resources
Which of the following balance sheet presentation formats reports assets on the left-hand side, and liabilities and equity on the right-hand side?
Account format
Which of the following is an analyst most likely to examine in order to learn more about a firm's operating activities?
Accounts receivable
Mike sold goods worth $4,500, but is yet to receive cash for them. This will most likely lead to an increase in:
Accrued revenue.
Held-to-maturity investments are most likely measured at:
Amortized cost.
An accrued expense liability is most likely recognized when:
An expense is recognized before cash payment.
Lander, an analyst of Mexit Industries, is going through the financial statements of the company. He experienced constraints when checking the Statement of Financial Position. Which of the following is not one of the limitations of balance sheet analysis?
Balance sheet data presents data for a given period of time.
Which transaction would best be classified as a gain or loss?
Chase Crafters sold a large piece of equipment no longer used in its manufacturing process for 10 percent below its book value.
Using common-size statement analysis of the balance sheet of a company will help identify changes in:
Financial leverage.
If an analyst wants to review a firm's revenue recognition policies, she is most likely to refer to:
Financial statement footnotes.
What can be concluded from the following information? RevenueCOGSAdministrative ExpensesTraining ExpensesLioness Company100%67%15%8%Doe Company100%45%20%5%
From the operating profit margin, Doe Company is more profitable than Lioness Company.
Which of the following is the most appropriate classification of profit on sale of discontinued operations by a manufacturing firm?
Gain reported after continuing operations
Which of the following statements regarding available-for-sale securities is least accurate?
Gains and losses associated with these securities are reported on the income statement.
Barnes, an analyst, will check the financial statements of King Company. Which of the following items is likely to be classified as unusual or infrequent, but not both?
Impairments, write-offs, write-downs, and restructuring costs
The information from the financial statements of Erbium Products Inc. for the year 2013 is as follows: Total assets$10,750Total liabilities3,000Total revenues2,100Total expenses2,200Contributed capital6,750Gross profit200Operating profit(200)Dividends100 Based on the information provided, which of the following is the most likely reason for the difference in operating profit and net income?
Income from investing activities.
According to IFRS, expenses include decreases in economic benefits from:
Incurrence of liabilities, other than those related to owners' equity.
Which of the following is least likely included in the statement of changes in shareholders' equity?
Interest received
Which of the following statements regarding a vertical common-size balance sheet is least accurate?
It expresses each balance sheet item as a percentage of noncurrent assets.
Which of the following statements is true?
Liabilities are obligations as a result of past events that are expected to require an outflow of economic resources.
When an income statement explicitly shows gross profit as a subtotal, it most likely uses a:
Multi-step format.
Which of the following statements is most accurate?
Nonoperating items are generally reported separately from operating items in the income statement.
Which of the following is least likely an example of a potentially dilutive security?
Preference shares
If a company pays cash before it recognizes the associated expense it results in a(n):
Prepaid expense asset.
The converged standards most likely follow which of the following approaches to revenue recognition?
Principles-based approach
Which of the following would be least likely to be included in comprehensive income?
Purchase of Treasury stock.
Under U.S. GAAP, the value of a brand name is:
Reported in the balance sheet only when purchased from another party.
The following ratios are ranked from smallest to highest. Which is correct? ABCCash ratioQuick ratioCurrent ratioQuick ratioCurrent ratioCash ratioCurrent ratioCash ratioQuick ratio
Row A
Under International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (GAAP), when an acquirer has purchased another company, giving rise to goodwill being recorded, should the goodwill then be amortized or tested for impairment? IFRSU.S. GAAPA.ImpairmentImpairmentB.ImpairmentAmortizationC.AmortizationImpairment
Row A
The following information relates to Global Manufacturers for the year ended 2009: Net income = $2,440,000 12% preferred stock = $850,000 Dividends paid to common shareholders = $50,000 Weighted average number of common shares outstanding = 2,000,000 The company also has $100,000 par of 8% convertible bonds outstanding, which are convertible into 20,000 shares of common stock. Given that Global Manufacturers pays taxes at the rate of 35%, its basic and diluted earnings per share are closest to: Basic EPS ($)Diluted EPS ($)A1.221.21B1.171.16C1.141.14
Row B
Which of the following ratios are correctly described as liquidity and solvency ratios? LiquiditySolvencyA.CashCurrentB.CurrentDebt to equityC.Debt to equityFinancial leverage
Row B
The following information relates to MY Traders for the year ended 2009: Net income = $3,540,000 10% preferred stock = $1,000,000 Dividends paid to common shareholders = $45,000 Weighted average number of common shares outstanding = 3,000,000 The company also has $200,000 par of 12% convertible bonds outstanding, which are convertible into 10,000 shares of common stock. Given that MY Traders pays taxes at the rate of 35%, its basic and diluted earnings per share are closest to: Basic EPS ($)Diluted EPS ($)A1.151.14B1.181.14C1.151.15
Row C
When available-for-sale securities are held by a firm, under U.S. GAAP, an unrealized gain is: Income StatementBalance SheetA.RecognizedRecognizedB.RecognizedNot recognizedC.Not recognizedRecognized
Row C
Simple Times Limited purchased 1,000 units throughout the year at an average price of $50. The account manager has detailed records and the company has an advanced inventory management system in place tracking information about each unit's purchase price, time in inventory, sales price, etc. At the end of the year, there are 125 units remaining in inventory. The accounting manager identified the purchase date and price for each unit to calculate ending inventory. The dates of the purchases span the entire year. Which inventory valuation method does this company most likely use?
Specific identification method.
Which of the following is least likely another name for the income statement?
Statement of financial position
Greyon Inc. purchased a 5% bond that pays semiannual interest, selling at par, for $100,000. The market value of the bond is increased by $3,000, and the company classifies the instrument as available for sale. Based on this information, which of the following statements is least accurate?
The asset is recorded at $100,000 in the balance sheet.
If a firm's quick ratio is above the industry average but the cash ratio is below the industry average, this might be explained by:
The firm has extended to its customers more favorable credit terms than its competitors.
Based on balance sheet data for the past three years, a company's reported total debt has declined from $3.4 billion to $2.9 billion and its reported total equity has risen from $5.6 billion to $6.2 billion. What would be the most reasonable explanation of the financial data?
The increase in the reported total equity resulted from earnings being retained and/or the issuance of equity securities.
Assets should most likely be recognized on the financial statements if:
The item has a cost or value that can be measured reliably.
Which of the following statements is true?
The phaseout period for discontinued operations is the time between the measurement period and the actual disposal date.
The following are transactions for Clear Water Company. Which of the following is not part of other comprehensive income (OCI)?
Unrealized gains and losses from trading securities
Working capital can be best described as the excess of:
current assets over current liabilities.
A subtotal that is least likely to be shown on both the single-step and the multi-step format income statements is:
gross profit.
Arnold Jones, CFA, notices in his review of Jamit Enterprises' income statement that the company reports various subtotals including gross profit. From his studies, he remembers this format is called:
multi-step format.
For financial assets classified as "held to maturity," unrealized gains and losses directly impact:
neither the income statement nor the balance sheet.
Impairment write-down for long-lived assets will most likely result in a decrease in total:
non-current assets.
The transaction least likely to be recorded at amortized cost is the:
realized profit of $200,000 by exercising the put option on swap contract.
Under the cost method, an impairment to property, plant, and equipment (PP&E) occurs when the asset's:
recoverable amount is less than the carrying amount.
On 1 January 2010 Visionary Toys purchased advanced 3D printers for their design studio at a cost of €820,000. The printers have an estimated useful life of four years and an estimated salvage value of €60,000. Assuming Visionary Toys uses the straight-line method of depreciation for reporting purposes, what will be the net book value of the printers at the end of 2012?
€250,000
On 1 January 2010 Visionary Toys purchased advanced 3D printers for their design studio at a cost of €820,000. The printers have an estimated useful life of four years and an estimated salvage value of €60,000. What depreciation expense would the company report for financial reporting purposes under the double-declining balance method in year 1?
€410,000
When a company recognizes a warranty expense in the same accounting period as the sale of a good, this is an application of:
The matching principle.
In order to evaluate a company's ability to meet its long-term obligations, an analyst will most likely examine its:
Total debt ratio.
Which of the following is most likely classified as an identifiable intangible asset?
Trademarks
Cromwell Associates has 15 million authorized shares, 8 million issued shares, and 6.5 million outstanding shares. Which of the following statements regarding Cromwell Associates is most accurate?
Treasury stock amounts to 1.5 million shares.
A company's other comprehensive income most likely includes:
Unrealized gains and losses from cash flow hedging derivatives.
Which of the following statements regarding held-to-maturity securities is most accurate?
Unrealized gains and losses from changes in market value are ignored and not recognized on the financial statements.
Robert Smith, CFA, analyzes investment transactions of Chovita Inc. When recorded, which of the following outcomes is least likely to impact net income?
Unrealized profit of $7,000 on available-for-sale securities.
For 2012 Chyme Enterprises' beginning and ending shareholders' equity was €225 million and €250 million, respectively. In that year, Chyme reported revenue of €130 million and net income of €42 million, the company paid €5.5 million in cash dividends, and there were no other issuances or repurchase of common stock. Calculate the amount of other comprehensive income Chyme reported in 2012.
−€11.5 million.
When there is no inventory:
Current ratio will be equal to quick ratio.
Bizcom International uses historical cost as a measurement base for its assets, while Telecard Inc. uses fair value. Given that over the past few years, prices of noncurrent assets have significantly increased, Bizcom is most likely to report:
Lower assets than Telecard.
Which of the following is least likely a format for the balance sheet?
Multi-step format
Cash = $22,250 Marketable securities = $13,480 Receivables = $4,330 Inventory = $4,240 Noncurrent assets = $79,700 Current liabilities = $31,450 Long-term liabilities = $33,340 Equity = $59,210 The company's financial leverage ratio is closest to:
2.09
Here are the transactions for Forrest Company for the year 2011: Received dividends of $100 from investments in held-for-trading securities Recorded an unrealized loss from foreign currency transaction of $300 Received dividends of $200 from investments in AFS securities Purchased treasury stocks for $500 Paid dividends to shareholders of $450 Recorded a gain of $800 on sale of equipment Arrived at a net income figure of $10,000 What is the total comprehensive income?
$ 9,700
On January 1, 20x5, Benjie Company acquired a new milling machine. The company uses the straight line method of depreciation and residual value of the machine is nil. The machine uses a special component that requires replacement before the end of the useful life of the machine. The asset was originally recorded in two accounts: one for the main unit and the other for the special component. Details on the main unit and special component are displayed below: Main milling machine:Purchase price:$7,500,000Residual valuenilEstimated useful life:10 yearsSpecial componentPurchase price:$2,000,000Residual value::$400,000Estimated useful life:4 years The total depreciation recognized in the account for 20x5 is closest to
$1,150,000
Information for Rattlesnake Company is as follows: current assets of $30,000, noncurrent assets of $70,000, current liabilities of $8,000, and noncurrent liabilities of $62,000. What is the company's debt to equity ratio?
2.33
During 2009, Solar Corporations earned profits amounting to $4.5 million and paid preference dividends amounting to $100,000. The company had 3.5 million shares outstanding throughout the year with an average market price of $50. It also had 50,000 stock options outstanding, which had an exercise price of $40. Given that the market price of the company's shares at year-end was $60 and that the company pays taxes at the rate of 35%, its diluted EPS using the treasury stock method is closest to:
$1.254
(Use the following information to answer the questions below.) The following information is available regarding Max Company for 2005. BeginningEndingCurrent assets$240,000Property, plant, and equipment$1,600,000$1,700,000Current liabilities$130,000Noncurrent liabilities$580,000 Other information: Working capital of $92,000 remains unchanged from year to year Net income of $64,000 for 2005 No dividends declared for 2005 No changes in owner's equity for 2005 i. How much is the company's current liabilities as of December 31, 2004?
$148,000 $1,176,000 $222,000 $616,000
In the year 2009 (its first year of operations), Indigo Computers made the following purchases: Units PurchasedCost per Unit ($)Total Cost ($)First quarter5,20028145,600Second quarter6,70023154,100Third quarter7,30019138,700Fourth quarter4,20025105,000Total23,400 543,400 It sold 15,100 units during the year at a price of $30 per unit. Indigo's ending inventory under the first in, first out (FIFO) method is closest to?
$182,900
The following information relates to Pharma One Ltd. for the year ended 2009: Net income = $2,150,000 Preferred dividends = $210,000 Dividends paid to common shareholders = $170,000 Weighted average number of common shares outstanding = 800,000 Pharma One's basic EPS is closest to:
$2.43
A company had 2 million common shares outstanding throughout the last year. Total dividends of $1 million were paid to common stockholders and dividends of $400,000 were paid to preferred stockholders. Net income was $6 million and the tax rate was 40%. The company also had 100,000 options on common stock outstanding throughout the period; the exercise price is $20.00. The average share price over the year was $27.00 and the end year price was $35.00. The diluted earnings per share was closest to:
$2.76.
The following information regarding stockholders' equity are available for Mix Company for the year 2011. Contributed capital:$1,000Preferred shares:500Noncontrolling interest:250Retained earnings:2,500Treasury shares:250Investment in equity instruments:500 How much is the stockholders' equity to be reported by the Mix Company in the balance sheet?
$3,750
Luxury Mansions Corporation reported net earnings of $3 million for the year ended June 30, 2013. The company had 800,000 common shares and 10,000 shares convertible preferred, payable at $10 per share, at the beginning of the year. Each preferred share is convertible into two common shares. There were no other potentially dilutive securities, and the tax rate was 25%. The company's diluted EPS, using the if-converted method under U.S. GAAP and IFRS, is closest to:
$3.66.
Use the following information to answer the following questions. Matrix Company purchased AFS securities on January 1, 20x5. CostMarket 12/31/20x5Market 12/31/20x6Security R*$3,000$3,200—Security S4,0003,5003,700Security T5,0004,6004,700 *Sold on January 31, 20x6, for $3,500. i. How much is the unrealized gain/loss on the financial assets left which would be reported under OCI in the 20x6 Statement of Comprehensive Income?
$300 gain
In the year 2009 (its first year of operations), Indigo Computers made the following purchases: Units PurchasedCost per Unit ($)Total Cost ($)First quarter5,20028145,600Second quarter6,70023154,100Third quarter7,30019138,700Fourth quarter4,20025105,000Total23,400 543,400 It sold 15,100 units during the year at a price of $30 per unit. Indigo's cost of goods sold under FIFO for 2009 is closest to:
$360,500
Information for Mayline Company is presented as follows: Net income:$95,000Cash dividends to preferred stockholders:8,500Cash dividends to common stockholders:16,000Common stock outstanding - 01/01/20x6:15,000Common stocks issued - 03/01/20x6:2,000Common stocks issued - 10/31/20x6:8,000Common stocks issued - 11/30/20x7:15,000 Assuming a simple capital structure, what is Mayline's basic EPS for 20x6?
$4.806 per share
When Tync Sales Companies (TSC) launched, it agreed with its supplier to purchase 40 units of inventory at the beginning of each quarter at a predetermined price of $100, increasing $5 each quarter. Its supplier required notice of 90 days in advance to cancel the order. On 1 June 2012, TSC canceled the planned purchases for the fourth quarter because of lower than expected sales. In the first two quarters combined, TSC sold only 50 units at a price of $120 each. TSC had no inventory on hand at the beginning of the year. By the end of the year, TSC had sold an additional 20 units at the same price. Under the FIFO method, what is TSC's cost of goods sold?
$7,150.
In the year 2009 (its first year of operations), Indigo Computers made the following purchases: Units PurchasedCost per Unit ($)Total Cost ($)First quarter5,20028145,600Second quarter6,70023154,100Third quarter7,30019138,700Fourth quarter4,20025105,000Total23,400 543,400 It sold 15,100 units during the year at a price of $30 per unit. Indigo's gross profit for 2009 if it uses FIFO is closest to:
$92,500
Cash = $22,250 Marketable securities = $13,480 Receivables = $4,330 Inventory = $4,240 Noncurrent assets = $79,700 Current liabilities = $31,450 Long-term liabilities = $33,340 Equity = $59,210 The company's quick ratio is closest to:
1.27
Information for the equipment purchase of Eshy25 Company for 20X6 is as follows: Date of purchaseJanuary 1Purchase of machine$5,000,000Useful life5 years It is Eshy's policy to use double-declining balance for the first two years of the asset's life and switch to straight-line depreciation from the third year onward. How much is the accumulated depreciation for the December 31, 20X8 balance sheet?
3,800,000
A company had 60,000 shares outstanding on January 1 and issues a 50% stock dividend on June 30. The weighted average number of shares outstanding over the year ending December 31 is:
90,000.
If a firm delivers a good or a service for which cash will be received in the following month, it is most likely to record the transaction as an:
Accrued revenue asset.
Information on the relationships between the elements of financial performance for Lioness Company is as follows: Revenue is 100%, Cost of Goods Sold is 67%, Administrative expense is 15%, and Training expense is 8%. What can be concluded from this?
Assuming an operating profit of $30,000, training expenses must be $24,000
Which of the following is least likely to be included in equity?
Bank borrowings
ABC Corporation sells electronic goods. It typically offers a 2-year warranty on its products. It calculates annual warranty expense as 2% of total sales. ABC Corporation should recognize a particular year's warranty expense on its income statement:
In the current period, based on the matching principle.
Which of the following financial assets/liabilities is most likely to be measured at amortized cost?
Bonds payable
The balance sheet amounts of assets, net of liabilities, is most likely viewed as a measure of the:
Book value of a company's equity.
U.S. Treasury bills, commercial paper, and money market funds are best classified as what type of assets?
Cash and cash equivalents.
Which of the following assets will have the least difference in relative terms between its amortized cost and fair value?
Cash and cash equivalents.
Which of the following is least likely to be classified as other comprehensive income under U.S. GAAP?
Changes in the value of long-lived assets that are measured using the revaluation model
If payment is received in advance of transferring the goods, the seller will most likely report a:
Contract liability
Which of the following is least likely an example of grouping an expense by nature?
Cost of goods sold
Which of the following is least likely an example of the measurement bases used to value items listed on the balance sheet?
Economic cost
Goodwill based on a company's performance and its future prospects is most likely known as:
Economic goodwill.
Which of the following statements is false?
In all cases, expressing expenses as a percentage of revenue is appropriate.
Which of the following will most likely lead to a decrease in equity?
Dividends paid
Noncontrolling interests are typically presented under which balance sheet element?
Equity
Balance sheet items are usually reported:
In the order of liquidity.
The comprehensive income statement contains:
Information on changes in stockholders' equity.
A balance sheet includes the following accounts: interest receivable, deferred tax assets, fixed assets, and goodwill. Which of the following lists is in the correct order of liquidity in order to conform with a liquidity-based balance sheet presentation?
Interest receivable; fixed assets; goodwill; deferred tax assets.
Which of the following inventory methods is not allowed under IFRS?
Last in, first out (LIFO)
TAC Party Inc. (TPI) made the following purchases during the year. TPI had no inventory on hand at the beginning of the year. At the end of the year, TPI has 50 units still in inventory. Inventory PurchasesUnitsPrice/Unit1st Quarter100$482nd Quarter200$503rd Quarter100$544th Quarter75$58Total475 Which of the following methods would result in the highest cost of goods sold?
Last in, first out (LIFO).
The costs of long-lived assets are usually allocated:
Over a period that is chosen by the firm.
The balance sheet is useful because it:
Provides information to creditors on assets that are available as collateral for debt.
The following information relates to Alpha One Ltd. for the year ended 2009: Net income = $2,360,000 10% preferred stock = 500,000 Dividends paid to common shareholders = $44,000 Weighted average number of shares outstanding = 500,000 The company also has 500 convertible preferred shares outstanding, which pay a dividend of $75 per share every year. Each convertible preferred share can be converted into 50 common shares. Alpha One's basic and diluted earnings per share are closest to: Basic EPS ($)Diluted EPS ($)A4.654.50B4.554.40C4.624.42
Row B
Which of the following statements are true? Statement 1: A firm is required by both the IFRS and U.S. GAAP to present balance sheet items with current and noncurrent items separated from each other. Statement 2: A firm is allowed by the IFRS to use a liquidity-based format if it makes presentation more relevant and reliable. Statement 3: A firm is required by the U.S. GAAP to present the balance sheet items based on current and noncurrent items, or using the liquidity-based format if it makes the presentation more relevant and reliable.
Statements 1 and 2
Statement 1: Revenues are the amounts reported from the sale of goods and services in the ordinary course of business. Statement 2: Gross profit is the amount that remains after the direct costs of producing a product or service are subtracted from revenue. Statement 3: Grouping expenses by nature is sometimes referred to as the cost of sales method. Which statement(s) is/are true?
Statements 1 and 2 only.
The basic EPS of a company is equal to its diluted EPS when:
The capital structure has no potentially dilutive securities.
The balance sheet helps the analyst to assess which of the following?
The company's ability to make distributions to owners.
A company manufactures a product that it expects to be sold within one operating cycle. However, the operating cycle is longer than one year. The inventory should be classified as:
a current asset.
When a company reissues shares of its own stock held in treasury, it records an increase in:
both assets and shareholders' equity.
Retrospective application is least likely to be used for accounting:
changes in accounting estimates.
Rising Stars Limited (RSL) reported revenue of $3,120,000 and net income of $546,000 for the fiscal year end June 30, 2012. At June 1, 2011, RSL had 465,000 common shares outstanding and 60,000 common stock options outstanding with an exercise price of $14 each. During that fiscal year, the average market price for RSL's shares was $24 per share. RSL had no other potentially dilutive securities. If the average market price increased to $30 per share, diluted EPS would most likely:
decrease.
An investor concerned whether a company can meet its long-term obligations is most likely to calculate the:
financial leverage ratio.
Deferred income (deferred revenue) is:
income that has been received, but has not yet been reported on the income statement.
A company reports under U.S. GAAP and must decide on how to measure the value of its inventory. Under U.S. GAAP, inventory measured using LIFO must be measured at:
the lower of cost or market value.
Using the last five years of reported data for a company, an analyst has prepared a horizontal common-size balance sheet. The type of analysis the analyst has most likely used is:
trend analysis.
For the year ended 31 December 2012 Skyline Products reported net income of €1,300,000. At the beginning of that fiscal year, the company had 750,000 shares of common stock outstanding. On 1 April 2012, the company repurchased 150,000 common shares. That year the company also paid its common shareholders dividends in the amount of $325,000. What was the basic EPS Skyline reported on its income statement for 2012?
€2.04.
