ACC 338 Module 7 Review

ABC Company has net income of $30,000 for the year. It has no preferred shareholders, and common shares outstanding during the year held constant at 100,000 shares. What is ABC Company's basic EPS?

$0.30

ABC Company had a beginning balance in retained earnings of $100,000. Net income for the year was $75,000, and the company's board of directors declared $50,000 in dividends to be paid the following year. What is the ending retained earnings balance for ABC company?

$125,000

ABC Company expects to sell Division X next year. Division X meets the criteria to be a component unit of ABC Company. At the end of this year, ABC Company estimates the fair value of Division X at $300,000, and the net book value of Division X is $280,000. Based on the information, what is ABC Company's pretax gain (loss) on the held-for-sale component?

$20,000

At the end of the year, ABC Company's net assets were $60,000. Net income calculated by using the capital maintenance concept was $20,000. During the year, additional common stock was issued for $14,000 and $8,000 of dividends were paid. The net assets at the beginning of the year were...

$34,000

ABC Company had a beginning balance in AOCI of $50,000 and an after-tax unrealized gain on available-for-sale securities of $5,000 during the period. What is the ending balance in AOCI for the period?

$55,000

ABC Company's operating income is $100,000, and its interest expense is $10,000 for the period. What is ABC Company's earnings-based interest coverage?

10

Which of the following is not required to be disclosed, pursuant to U.S. GAAP?

A description of facts and circumstances leading up to the sale of an ongoing component within the notes of the financial statements

In ________, a company records the economic effects of transactions, events, or circumstances in the periods when they occur rather than in the periods when it receives or pays cash.

Accrual accounting

Which of the following components of income would likely not be reported separately because it is important for assessing some aspect of the company's financial performance and predicting its future income and cash flows?

Advertising expense

Which of the following statements is not true?

After a company writes down a held-for-sale component to fair value, there may be no subsequent changes in fair value

Which of the following is the correct formula for calculating basic earnings per share?

Basic EPS = Net Income Available to Common Shareholders / Weighted Average Number of Common Shares Outstanding

Which of the following is a correct formula regarding comprehensive income?

Beginning AOCI + (-) Other Comprehensive Income = Ending AOCI

Which of the following is not an expense recognition approach recognized by the FASB as an expense recognition principle to properly match expenses against revenues?

Cash payment

The primary purpose of a statement of cash flows is to provide relevant information about a(n)

Company's cash receipts and cash payments during the period

Comprehensive income includes the following changes in equity of a company during a period except...

Distributions to owners

All of the following are purposes of the income statement except...

Evaluating the management of prior period cash flows

Which of the following is the correct order that major components appear on the income statement?

Income from continuing operations, results from discontinued operations, net income, earnings per share

In which of the following sections of the statement of cash flows is buying equipment reported?

Investing activities

The ability of a company to manipulate reported earnings within U.S. GAAP is...

Known as earnings management

If a company has a very high price-earnings ratio relative to the industry average, the company's shares may be viewed as...

Overpriced

Financial statement users evaluate profit margins at various levels, reflecting different aspects of the company's financial performance. All of the following are common margins used to evaluate a company except...

Rate of change margin

Segment reporting provides valuable information for all of the following reasons except...

Results of operations of the business as a whole

Which of the following statements regarding retained earnings is not true?

Retained earnings includes all income for the period as well as all dividends paid during the period

Which of the following statements regarding revenues and expenses is not true?

Revenues and expenses are reported as net amounts because they reflect the effects of ongoing business activities that determine earnings

An operating segment is significant and is a reportable segment if it passes any of these tests except the...

Time lapse test

_____ and _____ follow similar but not identical approaches to measuring and reporting net income. Both require disclosure of revenues, operating expenses, financing costs, tax expense, net income(loss), results of discontinued operations, and earnings per share.

U.S. GAAP; IFRS

Which of the following statements is not true?

Under U.S. GAAP, if a company has revalued its equipment upward, then it must adjust its related depreciation expense accordingly

Which of the following is not part of other comprehensive income?

Unrealized changes in the value of trading securities