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Accounting 4356 test 1

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Stansfield Corp. started business in 2016 and uses the FIFO method. During 2016, it purchased 45,000 units of inventory at €10 each and sold 40,000 units for €20 each. In 2017, it purchased 50,000 units at €12 each and sold all 50,000 units at €22 each. Its 2017 Cost of Goods Sold was closest to: a) €590,000 b) €650,000 c) €725,000

A company has consistently and significantly increased its cash balance over the past three years. The least likely explanation for the increase in cash is: a) A potential acquisition. b) A forthcoming issue of new equity. c) A planned increase in the dividend.

A company that an excess of operating cash flow over amounts needed for capital expenditures and repayment of debt is most likely to have a) Positive FCFE b) Negative FCFE c) Negative FCFF

A company that an excess of operating cash flow over the amounts needed for capital expenditures and repayment of debt is most likely to have a) Positive FCFE b) Negative FCFE c) Negative FCFF

A company that has an excess of operating cash flow over and above amounts needed for capital expenditures and repayment of debt is most likely to have a: a) Positive FCFE b) Negative FCFE c) Negative FCFF

A retailer provides credit cards only to its most valued customers who pass a rigorous credit check. A credit card customer ordered an item from the retailer in May. The item was shipped and delivered in July. The item appeared on the customer's July credit card statement and was paid in full by the due date in August. The most appropriate month in which the retailer should recognize the revenue is: a) July. b) May. c) August

According to the International Financial Reporting Standards framework, which of the following qualities of financial information is least likely cited as one of the two fundamental characteristics that make financial information useful? a) Accrual accounting b) Relevance c) Faithful representation

Cellular Services Inc. (CSI) had 1 million average common shares outstanding during all of 2014. During 2014, CSI also had options outstanding on 10,000 shares with strike price of $10 per share. The average stock price of CSI during 2014 was $12.50, so the options were in-the-money. For purposes of computing diluted EPS, how many shares would be used in the denominator? a) 1,002,000 shares b) 1,003,750 shares c) 1,006,250 shares

Cellular Services Inc. (CSI) had 1 million average common shares outstanding during all of 2018. During 2018, CSI also had issued options on 10,000 shares with strike price of $10 per share. The average stock price of CSI during 2018 was $12.50, so the options were in-the-money. For purposes of computing diluted EPS, how many shares would be used in the denominator? a) 1,002,000 shares b) 1,003,750 shares c) 1,006,250 shares

For 2015 the Stansfield Corporation reported Net Income of $100m, depreciation expense of $40m, interest expense of $30m, and increased Net Working Capital by $5. The firm is in the 30% tax rate. The Free Cash Flow to the Firm is closest to: a) $156m b) $165m c) $166m

For 2015 the Stansfield corporation reported Net Income of $100m, depreciation expense of $40m, interest expense of $30m, and increased Net Working Capital by $5. The firm is in the 30% tax rate. The Free Cash Flow to the Firm is closest to: a) $156m b) $165m c) $166m

For the year ended 31 December 2014, Stansfield Products had a net income of $2.6 million. The company declared and paid $200,000 of dividends on preferred stock. The company also had the following common stock share information: Shares outstanding January 1 2014 1,000,000 Shares repurchased on 1 February 2014 (500,000) Shares issued on 1 May 2014 1,000,000 Shares issued November 1 2014 250,000 Shares outstanding 31 December 2014 1,750,000 The company's weighted average common shares outstanding is closest to. a) 1.25 million shares b) 1.5 million shares c) 1.75 million shares

For the year ended 31 December 2018, Stansfield Products had a net income of $2.6 million. The company declared and paid $200,000 of dividends on preferred stock. The company also had the following common stock share information: Shares outstanding January 1 2018 1,000,000 Shares repurchased on 1 February 2018 (500,000) Shares issued on 1 May 2018 1,000,000 Shares issued November 1 2018 250,000 Shares outstanding 31 December 2018 1,750,000 The company's weighted average common shares outstanding is closest to. a) 1.25 million shares b) 1.5 million shares c) 1.75 million shares

HVG, LLC paid $12,000 of cash to a real estate company upon signing a lease on 31 December 2016. The payment represented a $4,000 security deposit and $4,000 of rent for each of January and February 2017. Assuming that the correct accounting is to reflect both January and February rent as prepaid, the most likely effect on HVG's accounting equation in December 2015 is a) No change in net assets b) A decrease in assets of $8,000 c) A decrease in assets of $12,000

HVG, LLC paid $12,000 of cash to a real estate company upon signing a lease on 31 December 2015. The payment represents a $4,000 security deposit and $4,000 of rent for each of January and February 2016. Assuming that the correct accounting is to reflect both January and February rent as prepaid, the most likely effect on HVG's accounting equation in December 2015 is a) No change in net assets b) A decrease in assets of $8,000 c) A decrease in assets of $12,000

In a common size balance sheet, all items are expressed as a percentage of a) total assets. b) total liabilities. c) total sales

In a common size balance sheet, all items are expressed as a percentage of a) total assets. b) total liabilities. c) total sales.

Long-Lived operating assets are capitalized and depreciated. Other long-lived assets such as intangibles are a) Amortized b) Depleted c) Depreciated.

On January 1, a firm buys a $25,000 asset with an expected life of 5 years. The estimated salvage value is $5,000. The firm uses straight-line depreciation. The asset was placed into service on April 1st. The final depreciation charge will be closest to: a) $1,000. b) $3,000. c) $4,000

Other things being equal, a firm will generally pay less in taxes when using a) LIFO b) FIFO c) Weighted average

Other things being equal, a firm will generally pay less in taxes when using the a) LIFO method b) FIFO method c) Weighted average method of inventory costing

Stansfield Corp. started business in 2016 and uses the FIFO method. During 2016, it purchased 45,000 units of inventory at €10 each and sold 35,000 units for €20 each. In 2017, it purchased 50,000 units at €12 each and sold 45,000 units at €22 each. Its 2017 Cost of Goods Sold was closest to: a) €520,000 b) €525,000 c) €540,000

Stansfield Corp. started business in 2016 and uses the weighted average cost method. During 2016, it purchased 40,000 units of inventory at €10 each and sold 35,000 units for €20 each. In 2017, it purchased 45,000 units at €15 each and sold 30,000 units at €22 each. Its 2017 Cost of Goods Sold was closest to: a) €435,000 b) €650,000 c) €725,000

The best measure of a firm's sustainable income is a) income from continuing operations. b) income before extraordinary items. c) net income.

Which of the following is least correct: a) Companies using IFRS order balance sheet information from most liquid to least liquid b) Companies using IFRS order balance sheet information from least liquid to most liquid c) Firms using U.S. GAAP order items on the balance sheet from most liquid to least liquid.

Your firm acquires an asset and places it into service on 1 January, 2017. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. Using the sum-of-years digits method, the book value 31 December, 2020 is closest to a) $24,091 b) $30,455 c) $45,909

Your firm acquires an asset and places it into service on 24 September 2018. The cost is $75,000, the expected salvage value is $15,000 and the expected life is 10 years. The first year's depreciation using the straight line method is closest to: a) $1,600 b) $4,400 c) $6,000

Your firm acquires an asset and places it into service on 27 September 2017. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. The first year's depreciation using the straight line method is closest to: a) $1,250 b) $3,750 c) $5,000

A December graduate has borrowed $40,000 at 3% APR for 10 years. He defers his student loan payments for 6 months, then makes his first monthly payment at the start of July. The amount of interest that can he deduct on the following April 15 of the next year is closest to: a) $97.86 b) $598.12 c) $887.26

A company has consistently and significantly increased its cash balance over the past three years. The least likely explanation for the increase in cash is a: a) planned increase in the dividend. b) forthcoming issue of new equity. c) potential acquisition.

A firm buys a $75,000 asset with an expected life of 10 years. The estimated salvage value is $15,000. The firm uses straight-line depreciation. The asset was placed into service on 24 September 2018. The final depreciation charge will be closest to: a) $1,600 b) $4,400 c) $6,000

A retailer provides credit cards only to its most valued customers who pass a rigorous credit check. A credit card customer ordered an item from the retailer in April. The item was shipped and delivered in June. The item appeared on the customer's June credit card statement and was paid in full after the July due date in August. The most appropriate month in which the retailer should recognize the revenue is: a) July. b) June. c) August.

According to the International Financial Reporting Standards framework, which of the following qualities of financial information is least likely cited as one of the two fundamental characteristics that make financial information useful? a) Relevance b) Accrual accounting c) Faithful representation

Assume a company has the following: - Net income of $1,750,000 - 500,000 shares of common stock outstanding - 20,000 shares of convertible preferred outstanding - No other potentially dilutive securities Each share of convertible preferred pays a dividend of $10 per share, and each is convertible into five shares of the company's common stock. The company's diluted EPS is closest to: a) $2.58 b) $2.92 c) $3.10

Assume a company has the following: Net income of $1,750,000 500,000 shares of common stock outstanding 20,000 shares of convertible preferred outstanding No other potentially dilutive securities Each share of preferred pays a dividend of $10 per share, and each is convertible into five shares of the company's common stock. Calculate the company's basic EPS. a) $2.92 b) $3.10 c) $3.50

Cellular Services Inc. (CSI) had 1 million average common shares outstanding during all of 2014. During 2014, CSI also had options outstanding on 10,000 shares with strike price of $10 per share. The average stock price of CSI during 2014 was $20, so the options were in-the-money. For purposes of computing diluted EPS, how many shares would be used in the denominator? a) 1,002,000 shares b) 1,005,000 shares c) 1,010,000 shares

During 2009, Argo Company sold 10 acres of prime commercial zoned land to a builder for $5,000,000. The builder gave Argo a $1,000,000 down payment and will pay the remaining balance of $4,000,000 to Argo in 2010. Argo purchased the land in 2002 for $2,000,000. Using the installment method, how much profit will Argo report for 2009? a) $0 b) $600,000 c) $1,000,000

During 2017, Argo Company sold 10 acres of prime commercial zoned land to a builder for $5,000,000. The builder gave Argo a $1,000,000 down payment and will pay the remaining balance of $4,000,000 to Argo in 2018. Argo purchased the land in 2002 for $2,000,000. Using the installment method, how much profit will Argo report for 2017? a) $0 b) $600,000 c) $1,000,000

Fairplay had the following information related to the sale of its products during 2017, which was its first year of business: Revenue $1,000,000 Returns of goods sold $100,000 Cash collected $800,000 Cost of goods sold $700,000 Under the accrual basis of accounting, how much net revenue would be reported on Fairplay's 2017 income statement? a) $200,000 b) $900,000 c) $1,000,000

For the year ended 31 December 2016, Stansfield Products had a net income of $2.6 million. The company declared and paid $200,000 of dividends on preferred stock. The company also had the following common stock share information: Shares outstanding January 1 2016 1,000,000 Shares repurchased on 1 February 2016 (500,000) Shares issued on 1 May 2016 1,000,000 Shares issued November 1 2016 1,750,000 Shares outstanding 31 December 2016 3,250,000 The company's weighted average common shares outstanding is closest to. a) 1.25 million shares b) 1.50 million shares c) 1.75 million shares

In a common size balance sheet, all items are expressed as a percentage of a) total sales. b) total assets. c) total liabilities

In a common size balance sheet, all items are expressed as a percentage of a) total sales. b) total assets. c) total liabilities.

Long-Lived operating assets are capitalized and depreciated. Other long-lived assets such as intangibles are a) also depreciated. b) amortized. c) depleted.

Long-Lived operating assets are capitalized and depreciated. Other long-lived assets such as intangibles are a) depleted. b) amortized. c) also depreciated.

On January 1 of 2014 the ABC firm issues $10,000,000 par value of 10-year 3 percent coupon bonds with semi-annual payments. Payments are due December 31 and June 30 of each year. The first payment was made June 30 2014. On the date of issuance interest rates were 3.50%. The carrying value of these bonds on July 1 2017 was closest to: a) $776,713.41 b) $9,711,558.98 c) $9,672,677.99

On January 1 of 2016 the ABC firm issues $10,000,000 par value of ten-year 3 percent coupon bonds with semi-annual payments. Payments are due June 30 and December 31 of each year. The first payment was made June 30 2016. On the date of issuance interest rates were 3.50%. The carrying value of these bonds on January 1, 2018 was closest to: a) $7,581,176.65 b) $9,653,737.58 c) $9,672,677.99

Other things being equal, a firm will generally pay less in taxes when using a) FIFO b) LIFO c) Weighted average

Stansfield Corp. started business in 2015 and uses the FIFO method. During 2015, it purchased 45,000 units of inventory at €10 each and sold 40,000 units for €20 each. In 2016, it purchased 50,000 units at €12 each and sold 45,000 units at €22 each. Its 2016 Cost of Goods Sold (CoGS) was closest to: a) €490,000 b) €530,000 c) €540,000

Stansfield Corp. started business in 2015 and uses the FIFO method. During 2015, it purchased 45,000 units of inventory at €10 each and sold 40,000 units for €20 each. In 2016, it purchased 50,000 units at €12 each and sold 45,000 units at €22 each. Its 2016 Cost of Goods Sold was closest to: a) €490,000 b) €530,000 c) €540,000

Stansfield Corp. started business in 2015 and uses the weighted average cost method. During 2015, it purchased 45,000 units of inventory at €10 each and sold 40,000 units for €20 each. In 2016, it purchased 50,000 units at €12 each and sold 45,000 units at €22 each. Its 2016 Cost of Goods Sold was closest to: a) €490,000 b) €530,000 c) €540,000

Stansfield Corp. started business in 2016 and uses the LIFO method. During 2016, it purchased 45,000 units of inventory at €10 each and sold 40,000 units for €20 each. In 2017, it purchased 50,000 units at €12 each and sold 55,000 units at €22 each. Its 2017 Cost of Goods Sold was closest to: a) €490,000 b) €650,000 c) €725,000

Stansfield Corp. started business in 2016 and uses the weighted average cost method. During 2016, it purchased 45,000 units of inventory at $10 each and sold 35,000 units for $20 each. In 2017, it purchased 50,000 units at $12 each and sold 45,000 units at $22 each. Its 2017 Cost of Goods Sold was closest to: a) $520,000 b) $525,000 c) $540,000

The best measure of a firm's sustainable income is a) net income b) income from continuing operations. c) income before extraordinary items.

The statement of cash flows presents the flows into which three groups of business activities? a) Inflows, Outflows, and Net Flows b) Operating, Investing, and Financing c) Operating, Nonoperating, and Investing

You are considering opening a gold mine. In addition to the cost of the land, start-up costs will be $500,000. In one year, your mine will earn $500,000 and in two years $1,000,000. At the end of year 3 the site will require clean-up costs of $800,000. If your cost of capital is 10%, what is the most that you could pay for the land and still have a positive NPV? Assume that you can sell the land at the end of year 3 and that land prices increase at 5% per year. a) $179,939.89 b) $1,381,398.70 c) $1,599,141.67

Your firm acquires an asset and places it into service on 1 January 2016. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. Using the sum-of-years digits method, the book value at year 3 is closest to a) $25,455 b) $30,455 c) $45,909

Your firm acquires an asset and places it into service on 1 January 2018. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. Using the sum-of-years digits method, the book value at year 3 is closest to a) $25,455 b) $30,455 c) $45,909

Your firm acquires an asset and places it into service on 2/19/2018. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. The first year's depreciation using the straight line method is closest to: a) $800 b) $4,500 c) $5,000

Your firm acquires an asset and places it into service on 26 October 2016. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. The first year's depreciation using the straight line method is closest to: a) $800 b) $900 c) $5,000

A company has consistently and significantly increased its cash balance over the past three years. The least likely explanation for the increase in cash is: a) An upcoming acquisition. b) A planned increase in the dividend. c) A forthcoming issue of new equity

Cellular Services Inc. (CSI) had 1 million average common shares outstanding during all of 2016. During 2016, CSI also had options outstanding on 30,000 shares with strike price of $10 per share. The average stock price of CSI during 2016 was $15, so the options were in-the-money. For purposes of computing fully diluted EPS, how many shares would be used in the denominator? a) 1,002,000 shares b) 1,003,750 shares c) 1,010,000 shares

During 2016, Argo Company sold 10 acres of prime commercial-zoned land to a builder for $5,000,000. The builder gave Argo a $2,000,000 down payment and will pay the remaining balance of $3,000,000 to Argo in 2017. Argo purchased the land in 2015 for $2,000,000. Using the installment method, how much profit will Argo report for 2017? a) $600,000 b) $1,200,000 c) $1,800,000

For 2016 the Stansfield Corporation reported Net Income of $100m, depreciation expense of $40m, (pre-tax) interest expense of $30m, and decreased Net Working Capital by $5m. The firm is in the 30% tax rate. The Free Cash Flow to the Firm is closest to: a) $124m b) $156m c) $166m

For the year ended 31 December 2017, Stansfield Products had a net income of $2.6 million. The company declared and paid $200,000 of dividends on preferred stock. The company also had the following common stock share information: Shares outstanding January 1 2017 1,000,000 Shares repurchased on 1 April 2017 (500,000) Shares issued on 1 May 2017 1,000,000 Shares issued November 1 2017 500,000 Shares outstanding 31 December 2017 2,000,000 The company's weighted average common shares outstanding is closest to. a) 463,541 shares b) 1,250,000 shares c) 1,370,000 shares

In a Statement of Cash Flows prepared according to IFRS, which of the following best describes whether interest received and interest paid, respectively, are classified as operating or investing cash flows? Interest received Interest paid a) Operating Operating ←GAAP b) Operating Investing c) Investing Operating ←IFRS

On January 1 of 2014 the ABC firm issues $10,000,000 par value of ten-year 3 percent coupon bonds with semi-annual payments. Payments are due December 31 and June 30 of each year. The first payment was made June 30 2014. On the date of issuance interest rates were 3.50%. The carrying value of these bonds on July 1 2016 was closest to: a) $776,713.41 b) $7,696,517.83 c) $9,672,677.99

On January 1 of 2014 the ABC firm issues $10,000,000 par value of ten-year 3 percent coupon bonds with semi-annual payments. Payments are due December 31 and June 30 of each year. The first payment was made June 30 2014. On the date of issuance interest rates were 3.50%. The carrying value of these bonds on July 1 2018 was closest to: a) $776,713.41 b) $9,672,677.99 c) $9,751,812.70

Stansfield Corp. started business in 2015 and uses the LIFO method. During 2015, it purchased 45,000 units of inventory at €10 each and sold 40,000 units for €20 each. In 2016, it purchased 50,000 units at €12 each and sold 45,000 units at €22 each. Its 2016 Cost of Goods Sold (CoGS) was closest to: a) €490,000 b) €530,000 c) €540,000

Stansfield Corp. started business in 2015 and uses the LIFO method. During 2015, it purchased 45,000 units of inventory at €10 each and sold 40,000 units for €20 each. In 2016, it purchased 50,000 units at €12 each and sold 45,000 units at €22 each. Its 2016 Cost of Goods Sold was closest to: a) €490,000 b) €530,000 c) €540,000

Stansfield Corp. started business in 2016 and uses the LIFO method. During 2016, it purchased 45,000 units of inventory at $10 each and sold 35,000 units for $20 each. In 2017, it purchased 50,000 units at $12 each and sold 45,000 units at $22 each. Its 2017 Cost of Goods Sold was closest to: a) $520,000 b) $525,000 c) $540,000

The first step in cash flow statement analysis should be to: a) Evaluate the consistency of cash flows b) Determine operating cash flow drivers c) Identify the major sources and uses of cash

What type of audit opinion is preferred when analyzing financial statements? a) qualified b) adverse c) unqualified

Which of the following items would most likely be classified as an operating activity? a) Issuance of debt b) Acquisition of a competitor c) Sale of automobiles by an automobile dealer

Your firm acquires an asset and places it into service on 1 January 2016. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. The first year's depreciation using the sum-of-years digits method is closest to: a) $1,600 b) $5,000 c) $9,000

Your firm acquires an asset and places it into service on 1 January 2017. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. The first year's depreciation using the sum-of-years digits method is closest to: a) $1,600 b) $5,000 c) $9,000

Your firm acquires an asset and places it into service on 1 January 2018. The cost is $55,000, the expected salvage value is $5,000 and the expected life is 10 years. The first year's depreciation using the sum-of-years digits method is closest to: a) $1,600 b) $5,000 c) $9,000

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