ACCTCY 4356 - Exam I Question Bank
Assets are recorded in the balance sheet in order of: A) Market Value B) Historic Value C) Liquidity D) Maturity E) None of these are correct.
C) Liquidity
The annual financial statements of Naperville Inc. shows net operating profit margin (NOPM) of 11.4%, net operating asset turnover (NOAT) of 3.83, return on equity of 30.2%, and adjusted return on assets of 17.1%. What is the company's nonoperating return? A) (13.5)% B) 35.3% C) (13.1)% D) 18.8% E) There is not enough information to calculate the ratio.
A) (13.5)%
Page's June 30, year-end financial statements reported the following (in millions): Cash, beginning of year $17,090 Cash, end of year $17,755 Cash from operating activities $38,588 Cash from investing activities $(13,938) What did Page report for cash from financing activities for the year ended June 30? A) $ 23,985 million B) $25,315 million C) $(23,985) million D) $25,315 million E) $24,650 million
A) $ 23,985 million
During the month of Marc, Weimar World, a tax-preparation service, had the following transactions. · Billed $396,800 in revenues on credit · Received $131,200 from customers' accounts receivable · Incurred expenses of $155,200 but only paid $70,160 cash for these expenses · Prepaid $25,776 for computer services to be used next month What was the company's accrual basis net income for the month? A) $ 241,600 B) $ 215,824 C) $ 44,384 D) $326,640 E) None of these are correct.
A) $ 241,600
During the year, Macur Inc. had sales of $10,913,300, total expenses of $10,277,256 and gross profit of $5,108,782. What was the company's cost of sales for the year? ($ in thousands) A) $ 5,804,518 thousand B) $ 5,744,826 thousand C) $10,277,256 thousand D) $ 1,807,888 thousand E) There is not enough information to calculate the cost of sales.
A) $ 5,804,518 thousand
On December 31 Starstruck Corporation reported, on its Form 10-K, the following (in millions): Total assets $21,494.3 Total stockholders' equity 8,836.1 Total current liabilities 6,820.4 What did Starstruck report as total liabilities on December 31? A) $12,658.2 million B) $ 5,837.8 million C) $14,673.9 million D) $23,510.0 million E) None of these are correct.
A) $12,658.2 million
Kelty Company's year-end financial statements reported the following (in millions): Total assets $41,278 Total liabilities 29,465 Total shareholders' equity 11,813 Dividends 205 Net income (loss) 3,160 Retained earnings, Jan. 1 11,425 What did Kelty Company report for retained earnings at December 31? A) $14,380 million B) $14,768 million C) $14,790million D) $14,585 million E) There is not enough information to determine the answer.
A) $14,380 million
Trio Company's December 31, Year 2, financial statements reported the following (in millions). Cash December 31 $1,698 Cash from operating activities $2,256 Cash from investing activities $(1,460) Cash from financing activities $(1,313) What did Trio Company report for cash on its December 31, Year 1 balance sheet? A) $2,215 million B) $3,422 million C) $ 517 million D) $1,181 million E) None of these are correct
A) $2,215 million
Which of the following concepts is not captured by one of the variables in Altman's Z-Score? A) Current level of profitability B) Current level of net operating assets C) Current level of liquidity D) Current level of efficiency
B) Current level of net operating assets
At year-end, ABC Auto had current assets of $10,838 million and current liabilities of $8,296 million. The firm's net working capital is: A) $2,542 million B) $10,838 million C) $(2,542) million D) 19,134 million E) None of these are correct.
A) $2,542 million
On its annual statement of cash flows, Bell Inc. reports the following (in millions): Net cash from operating activities $1,778 Net cash from investing activities (25,005) Cash at the beginning of the year 5,261 Change in cash during the year 2,318 What did Bell report for "Net cash from financing activities" during the year? A) $25,545 million cash inflow B) $25,545 million cash outflow C) $28,488 million cash inflow D) $28,488 million cash outflow E) None of these are correct.
A) $25,545 million cash inflow
ABC Corporation reports the following (in $ millions): net income of $445, retained earnings at the end of the year of $10,018, and retained earnings at the beginning of the year of $9,863. Assume that there were no other retained earnings transactions during the year. What dividends did the firm pay during the year? A) $290 million B) $600 million C) $155 million D) $-0- E) There is not enough information to calculate the amount.
A) $290 million
On September 30, Star Corporation reported, in its annual report, the following (in millions): Year 2 Year 1 Total expenses $27,745.5 $24,605.1 Operating income $6,257.9 $5,401.5 Net earnings $4,228.4 $4,139.0 What amount of revenues did Star Corporation report for the year ended September 30, Year 2 (in millions)? A) $31.973.9 B) $34,003.4 C) $29,775.0 D) $27,834.9 E) None of these are correct.
A) $31.973.9
Fitz Inc., a pharmaceutical company, reported net income for fiscal 2016 of $5,772 million, retained earnings at the start of the year of $57,594 million and dividends of $5,958 million, and other transactions with shareholders that increased retained earnings during the year by $11 million. If there were no additional transactions during the year that affected retained earnings, what was the balance of retained earnings at the end of the year? A) $57,419 million B) $57,769 million C) $45,875 million D) $57,397 million E) There is not enough information to calculate the amount.
A) $57,419 million
Balance Inc. reports a net loss for the year of $(134) million, retained earnings at the end of the year of $54,754 million, and dividends during the year of $3,604 million. What was the company's retained earnings balance at the start of the year? A) $58,492 million B) $51,284 million C) $51,016 million D) $54,888 million E) There is not enough information to calculate the amount.
A) $58,492 million
The year-end balance sheet of Time Company shows net operating profit margin (NOPM) of 3.1%, net operating asset turnover (NOAT) of 4.41, return on equity of 3.5%, and adjusted return on assets of 2.2%. What is the company's nonoperating return? A) (10.2)% B) 1.3% C) (12.3)% D) (10.6)% E) None of these are correct.
A) (10.2)%
The fiscal year-end financial statements of Reed Enterprises shows average net operating assets (NOA) of $4,805 million, average net nonoperating obligations (NNO) of $605 million, average total liabilities of $6,343 million, and year-end equity of $5,250 million. The company's year-end financial leverage (FLEV) is: A) 0.144 B) 0.126 C) 0.115 D) 0.13 E) There is not enough information to determine the ratio.
A) 0.144
Prestige Company has determined the following information for its recent fiscal year. Days inventory outstanding 85.4 days Days payable outstanding 113.6 days Days sales outstanding 182.6 days Compute Prestige Company's cash conversion cycle. A) 154.4 days B) 16.4 days C) 210.8 days D) 199.0 days E) None of these are correct.
A) 154.4 days
Sales for the year = $341,126, Net Income for the year = $38,441, Income from equity investments = $9,033, and average Equity during the year = $123,650. Return on equity (ROE) for the year is: A) 31.1% B) 11.3% C) 7.3% D) 2.6% E) There is not enough information to answer the question.
A) 31.1%
On December 31, Sleek Corporation reported, on its annual report, the following (in millions): Year 2 Year 1 Operating income $4,255.3 $3,673.0 Net earnings $2,875.3 $2,759.3 Calculate year-over-year increase or (decrease) in net earnings, in percentage terms. A) 4.2% B) 15.9% C) 16.8% D) 4.0% E) None of these are correct.
A) 4.2%
The year-end financial statements of Time Company reveal average shareholders' equity attributable to controlling interest of $669,826 thousand, net operating profit after tax of $48,032 thousand, net income attributable to the company of $29,068 thousand, and average net operating assets of $283,531 thousand. The company's return on equity (ROE) for the year is: A) 4.3% B) 10.3% C) 7.2% D) 16.9% E) There is not enough information to calculate the ratio.
A) 4.3%
On December 31, Harper, Inc., reported, on its year-end financial statements, the following (in millions): Year 2 Year 1 Total assets $11,868 $11,968 Total sales $7,195 $7,194 Net income $692 $902 Calculate return on assets (ROA) for Year 2. A) 5.8% B) 60.6% C) 60.4% D) 6.8% E) None of these are correct.
A) 5.8%
In its 2016 annual report, Malibu Inc. reported the following (in millions) on its year-end balance sheet: Total liabilities $4,086.0 Total shareholders' equity $2,648.6 What proportion of Malibu Inc. is financed by nonowners? A) 60.7% B) 39.3% C) 64.8% D) 78.6% E) None of these are correct.
A) 60.7%
A list of assets, liabilities and equity can be found on which of the following? A) Balance Sheet B) Income Statement C) Statement of Assets and Liabilities D) Statement of Cash Flows E) Statement of Stockholders' Equity
A) Balance Sheet
During the year, Brown Company reported cost of goods sold of $1,213.9 million. Inventory at the start of the year was $437.4 million and at the end of the year was $468.6 million. Which of the following describes the closing entry that the company will make for these accounts? A) Credit Cost of goods sold $1,213.9 million B) Debit Inventory $31.2 million C) Credit Inventory $468.6 million D) Debit Cost of goods sold $745.3 million E) None of these are correct.
A) Credit Cost of goods sold $1,213.9 million
The variable EBIT divided by Total Assets in the Altman Z-Score measures which of the following concepts? A) Current level of profitability B) Current level of leverage C) Current level of liquidity D) Current level of efficiency
A) Current level of profitability
The variable Market Value of Equity divided by Total Liabilities in the Altman Z-Score measures which of the following concepts? A) Current level of profitability B) Current level of net operating assets C) Current level of leverage D) Current level of efficiency
A) Current level of profitability
The cash conversion cycle is computed as A) Days sales outstanding + Days inventory outstanding - Days payable outstanding B) Days sales outstanding - Days payable outstanding C) Days sales outstanding - Days inventory outstanding D) Days sales outstanding - Days inventory outstanding + Days payable outstanding E) None of these are correct.
A) Days sales outstanding + Days inventory outstanding - Days payable outstanding
A clean audit opinion includes which of the following assertions: (Select as many as apply) A) Financial statements present fairly the company's financial condition B) The auditor certifies the financials to be error free C) The financial statements are management's responsibility D) Management has handled transactions efficiently in all material respects E) All of the above
A) Financial statements present fairly the company's financial condition C) The financial statements are management's responsibility
Fey Company currently has a current ratio of 0.7. The company decides to borrow $5,000,000 from Huntington Bank for a period of nine months. After the borrowing Fey Company's current ratio will be: A) Greater than 0.7 B) 0.7 C) Less than 0.7 D) Unable to determine without more information
A) Greater than 0.7
During its first three months of operations, Cari's Bakery, Inc. purchased supplies such as plates, napkins, bags, and cutlery for $7,200 and recorded this as supplies inventory. Supplies on hand at the end of the first quarter, amount to $4,480. To prepare financial statement for the first quarter, the company must record which of the following accounting adjustments? A) Increase Supplies expense by $2,720 and decrease Supplies inventory by $2,720 B) Increase Supplies expense by $4,480 and decrease Supplies inventory by $4,480 C) Increase Supplies inventory by $4,480 and decrease Supplies expense by $4,480 D) Increase Supplies inventory by $2,720 and decrease Supplies expense by $2,720 E) None of these are correct.
A) Increase Supplies expense by $2,720 and decrease Supplies inventory by $2,720
During the year, Shoe Productions recorded inventory purchases on credit of $270.2 million. The financial statement effect of these purchase transactions would be to: A) Increase liabilities (Accounts payable) by $270.2 million B) Decrease cash by $270.2 million C) Increase expenses (Cost of goods sold) by $270.2 million D) Decrease noncash assets (Inventory) by $270.2 million E) None of these are correct.
A) Increase liabilities (Accounts payable) by $270.2 million
An example of a situation in which company needs credit for investing activities is: A) Mergers and acquisitions B) Seasonal sales patterns C) Start-up operating losses Refinancing of debt
A) Mergers and acquisitions
Which of the following are included in current assets? A) Prepaid rent B) Taxes payable C) Automobiles D) Common stock E) None of these are correct.
A) Prepaid rent
The overarching purpose of credit risk analysis is to: A) Quantify potential credit losses B) Determine a company's optimal capital structure C) Identify credit opportunities D) Provide information to banks about credit losses
A) Quantify potential credit losses
The year-end balance sheet of Macur Corp. reports total assets of $154,955million, operating liabilities of $54,408 million, and total shareholders' equity of $57,598 million. Macur's nonoperating liabilities are: A) $112,006 million B) $ 42,949 million C) $ 54,498 million D) $ 97,357 million E) There is not enough information to calculate the amount.
B) $ 42,949 million
In its year-end financial statements, Naperville, Inc. reported cash of $6,276 million. The statement of cash flows reports the following (in millions): Net cash from operating activities $6,192 Net cash from investing activities (2,068) Net cash from financing activities (5,552) What was the balance in Naperville's cash account at the start of the current year? A) $ 4,848 million B) $ 7,704 million C) $ 1,428 million D) $12,468 million E) None of these are correct.
B) $ 7,704 million
During the year, Sparkle Inc. had Sales of $2,850.6 million, Gross profit of $1,307.7 million and Selling, general, and administrative expenses of $1,022.4 million. What was Sparkle's Cost of sales for the year? A) $1,828.2 million B) $1,542.9 million C) $2,330.1 million D) $ 285.3 million E) There is not enough information to calculate the amount.
B) $1,542.9 million
At year end, Kay Corporation had net working capital of $4,546 million and current liabilities of $5,948 million. The firm's current assets are: A) $1.402 million B) $10,494 million C) $16,442 million D) $5,948 million E) None of these are correct.
B) $10,494 million
Maxwell's annual financial statements show operating profit before interest and tax of $524,425 thousand, net income of $321,202 thousand, provision for income taxes of $91,720 thousand and net nonoperating expense before tax of $110,586 thousand. Assume Maxwell's statutory tax rate for the year is 37%. Maxwell's effective tax rate is: A) 37.0% B) 22.2% C) 17.5% D) 28.6% E) None of these are correct.
B) 22.2%
Sales for the year = $997,279, Profit margin =18%, and average Assets during the year = $647,770. Return on Assets (ROA) for the year is: A) 65.0% B) 27.7% C) 11.7% D) There is not enough information to calculate ROA. E) None of these are correct.
B) 27.7%
Which of the following accounts would not appear in a closing entry? A) Interest expense B) Accumulated depreciation C) Cost of goods sold D) Dividends E) Both B and D
B) Accumulated depreciation
As inventory and PPE assets on the balance sheet are consumed, they are reflected: A) As a revenue on the income statement B) As an expense on the income statement C) As a cash flow outflow on the Statement of Cash flows D) Both B and C E) Assets are never consumed.
B) As an expense on the income statement
As inventory and property plant and equipment on the balance sheet are consumed, they are reflected: A) As a revenue on the income statement B) As an expense on the income statement C) As a use of cash on the statement of cash flows D) On the balance sheet because assets are never consumed E) Both B and C because the financial statements articulate
B) As an expense on the income statement
A company records an adjusting journal entry to record $10,000 depreciation expense. Which of the following describes the entry? A) Debit Property Plant and Equipment and Credit Depreciation expense B) Debit Depreciation expense and Credit Property Plant and Equipment C) Debit Property Plant and Equipment and Credit Cash D) Debit Depreciation expense and Credit Cash E) Debit Net Income and Credit Property Plant and Equipment
B) Debit Depreciation expense and Credit Property Plant and Equipment
On January 1, Fey Properties paid $10,080 for a three-year insurance premium, with coverage beginning immediately. Fey Company prepares monthly financial statements. Which of the following describes the required adjusting entry on January 31? A) Debit Cash for $3,360 and Credit Prepaid insurance for $3,360 B) Debit Insurance expense for $280 and Credit Prepaid insurance for $280 C) Debit Prepaid insurance for $280 and Credit Insurance expense for $280 D) Debit Cash for $6,720 and Credit Prepaid insurance for $6,720 E) Debit Insurance expense for $3,360 and Credit Prepaid insurance for $3,360
B) Debit Insurance expense for $280 and Credit Prepaid insurance for $280
In its year-end financial statements, Pillar Inc. reported the following (in millions): Year 2 Year 1 Sales $38,537 $47,011 Cost of goods sold $28,309 $33,546 As a percentage of sales, did Pillar's gross profit increase or decrease during the year? A) Gross profit increased from 25.0% to 28.6% B) Gross profit decreased from 28.6% to 25.0% C) Gross profit increased from 71.4% to 75.0% D) Gross profit decreased from 75.0% to 71.4% E) There is not enough information to answer the question.
B) Gross profit decreased from 28.6% to 25.0%
Cari's Bakery, Inc., began operations in October. The owner contributed cash of $14,400 and a delivery truck with fair value of $19,200 to the company. Which of the following describes how these transactions would affect the company's equity accounts? A) Increase contributed capital by $33,600 B) Increase earned capital by $33,600 C) Increase contributed capital by $14,400 and earned capital by $19,200 D) Increase earned capital by $14,400 and contributed capital by $19,200 E) None of these are correct.
B) Increase earned capital by $33,600
Sales on account would produce what effect on the balance sheet? A) Increase the Revenue account B) Increase noncash assets (Accounts receivable) C) Increase cash assets D) A and B E) A, B and C
B) Increase noncash assets (Accounts receivable)
Commercial paper is issued with maturities that do not exceed 270 days because: A) Companies do not want to pay high interest rates. B) It exempts the borrowing from SEC regulation. C) Usually the collateral consists of short-term assets D) Companies use it to fund working capital needs.
B) It exempts the borrowing from SEC regulation.
A company's return on assets (ROA) can be disaggregated to reveal which of the following (select all that apply): A) Financial leverage B) Profit margin C) Sales growth D) Asset growth E) Asset turnover
B) Profit margin E) Asset turnover
A company's net cash flow will equal its net income ... A) Almost always B) Rarely C) Occasionally D) Only when the company has no investing cash flow for the period E) Only when the company has no investing or financing cash flow for the period
B) Rarely
Which of the following is included as a component of stockholders' equity? A) Buildings B) Retained earnings C) Prepaid property taxes D) Accounts payable E) Dividends
B) Retained earnings
The SEC adopted Regulation FD, to curb public companies' practice of: A) Routinely filing extensions for annual reports (Form 10-K) B) Selectively disclosing information C) Reporting pro forma (non-GAAP) numbers D) Hiring auditors for non-audit services such as consulting engagements E) None of these are correct
B) Selectively disclosing information
When using Altman's Z-Score a Type I error occurs when: A) The company's Z-score indicates the company is healthy, and the company stays healthy. B) The company's Z-score indicates the company is healthy, and the company goes bankrupt. C) The company's Z-score indicates the company will go bankrupt, and the company stays healthy. D) The company's Z-score indicates the company will go bankrupt, and the company stays bankrupt.
B) The company's Z-score indicates the company is healthy, and the company goes bankrupt.
Many companies have cyclical operating cash needs due to: A) Mergers and acquisitions B) The seasonality of sales C) Delays in customer payments D) Refinancing of debt
B) The seasonality of sales
United Company's year-end balance sheet reported the following (in millions) Total Assets $100,228 Total Liabilities 78,713 Contributed Capital 8,933 What was United Company's total liabilities and stockholders' equity at December 31? A) $ 87,646 million B) $ 91,295 million C) $ 100,228 million D) $ 21,515 million
C) $ 100,228 million
Weimar World, a tax-preparation service, had a cash balance of $245,000 as of March 1. During the month of March, Weimar World had the following transactions. · Billed $992,000 in revenues on credit · Received $328,000 from customers' accounts receivable · Incurred expenses of $388,000 but only paid $175,400 cash for these expenses · Prepaid $64,400 for computer services to be used next month What was the company's cash balance on March 31? A) $604,000 B) $849,000 C) $ 333,200 D) $397,600 E) None of these are correct.
C) $ 333,200
The year-end balance sheet of Star Inc. shows total assets of $6,617 million, operating assets of $5,253 million, operating liabilities of $2,822 million, and shareholders' equity of $2,950 million. The company's year-end net operating assets are: A) $9,39million B) $5,253 million C) $2,431 million D) $8,075 million E) None of these are correct.
C) $2,431 million
TeleLink reports retained earnings at the end of the current year of $32,598 million and retained earnings at the end of the previous year of $30,091 million. The company reported dividends of $3,940 million and other transactions with shareholders that reduced retained earnings during the current year by $1,806 million. How much net income did the firm report in the current year? A) $2,507 million net income B) $8,253 million net loss C) $8,253 million net income D) $2,507 million net loss E) None of these are correct.
C) $8,253 million net income
The year-end financial statements of Time Company reveal average shareholders' equity attributable to controlling interest of $845,656 thousand, net operating profit after tax of $48,032 thousand, net income attributable to the company of $29,068 thousand, and average net operating assets of $357,958 thousand. The company's return on net operating assets (RNOA) for the year is: A) 8.1% B) 5.3% C) 13.4% D) 42.3% E) There is not enough information to calculate the ratio.
C) 13.4%
Sales for the year = $296,024, Net Income for the year = $22,965, and average Assets during the year = $163,628. Return on Assets (ROA) for the year is: A) 55.3% B) 7.8% C) 14.0% D) There is not enough information to calculate ROA. E) None of these are correct.
C) 14.0%
The Year 2 fiscal year-end financial statements for Walter Co. report revenues of $55,743 million, net operating profit after tax of $9,954 million, net operating assets of $58.720 million. The Year 1 fiscal year-end balance sheet reports net operating assets of $59,197 million. Walter's Year 2 net operating profit margin is: A) 16.8% B) 17.0% C) 17.9% D) 11.7% E) There is not enough information to calculate the ratio.
C) 17.9%
The year-end Year 2 financial statements for Grandier Inc., report net sales of $115,004 million, net operating profit after tax of $4,593 million, net operating assets of $39,502 million. The year-end Year 1 balance sheet reports net operating assets of $41,829 million. The company's year-end Year 2 net operating asset turnover is: A) 11.3% B) 2.91 C) 2.83 D) 11.6% E) There is not enough information to calculate the ratio.
C) 2.83
The year-end balance sheet of Pointe Company shows average Pointe shareholders' equity attributable to controlling interest of $7,997 million, net operating profit after tax of $2,308 million, net income attributable to Pointe of $2,513 million, and common shares issued of 760.035 million. Assume the company has no preferred shares issued. Pointe's return on equity (ROE) for the year is: A) 28.9% B) 30.2% C) 31.4% D) 32.9% E) There is not enough information to calculate the ratio.
C) 31.4%
In its 2016 annual report, Kehl's Corporation reported the following (in millions): Total assets $20,362 Total shareholders' equity $ 7,766 Total liabilities $12,596 What proportion of Kehl's Corporation is financed by nonowners? A) 44.8% B) 38.1% C) 61.9% D) 61.7% E) None of these are correct.
C) 61.9%
Which of the following are not one of the five forces that determine a company's competitive intensity? (Select as many as apply) A) Bargaining power of suppliers B) Threat of substitution C) Ability to obtain financing D) Threat of entry E) Threat of regulatory intervention
C) Ability to obtain financing
Which of the following is not one of Porter's five forces that determine a company's competitive intensity? A) Supplier power B) Threat of substitution C) Ability to obtain financing D) Threat of entry
C) Ability to obtain financing
Expected credit loss is calculated as: A) Chance of default X Total Debt B) Chance of default X Z-Score C) Chance of default X Loss given default D) Chance of default X Market value of Equity
C) Chance of default X Loss given default
Interest expense appears in which financial statement? A) Statement of stockholders' equity B) Balance sheet C) Income statement D) Statement of cash flows E) All of the above
C) Income statement
Cash collected on accounts receivable would produce what effect on the balance sheet? A) Increase liabilities and decrease equity B) Decrease liabilities and increase equity C) Increase assets and decrease assets D) Decrease assets and decrease liabilities E) None of these are correct.
C) Increase assets and decrease assets
How would cash collected on accounts receivable affect the balance sheet? (cash goes up but tech. AR (an asset) goes down A) Increase liabilities and decrease equity B) Decrease liabilities and increase equity C) Increase assets and decrease assets D) Increase assets and increase equity
C) Increase assets and decrease assets
During the year, Decker Corporation reported Net income of $1,448.0 million and paid dividends of $496.4 million. Which of the following describes how these transactions would affect Decker's equity accounts? (in millions) A) Increase contributed capital by $1,448.0 and decrease earned capital by $496.4 B) Decrease contributed capital by $496.4 and increase earned capital by $1,448.0 C) Increase contributed capital by $951.6 D) Increase earned capital by $951.6 E) None of these are correct.
C) Increase contributed capital by $951.6
During the fiscal year, Shoe Productions recorded inventory purchases on credit of $270.2 million. Inventory at the start of the year was $30.6 million and at the end of the year was $42.4 million. Which of the following describes how these transactions would be entered on the financial statement effects template? A) Increase expenses (Cost of goods sold) by $258.4 million B) Increase liabilities (Accounts payable) by $258.4 million C) Increase expenses (Cost of goods sold) by $270.2 million D) Increase noncash assets (Inventory) by $11.8 million E) None of these are correct.
C) Increase expenses (Cost of goods sold) by $270.2 million
An accrual of wages expense would have what effect on the balance sheet? A) Decrease liabilities and increase equity B) Increase assets and increase liabilities C) Increase liabilities and decrease equity D) Decrease assets and decrease liabilities E) None of these are correct.
C) Increase liabilities and decrease equity
The ratio of net income to equity is also known as: A) Total net equity ratio B) Profit margin C) Return on equity D) Net income ratio E) None of these are correct.
C) Return on equity
When considering the results of an Altman Z-Score analysis a score of 3.85 would suggest? A) The company is in financial distress and there is a high probability of bankruptcy in the short term future. B) The company is exposed to some risk of bankruptcy. C) The company is healthy and there is a low bankruptcy potential in the short-term. D) The company is healthy and there is a low bankruptcy potential in both the short and long-term.
C) The company is healthy and there is a low bankruptcy potential in the short-term.
When using Altman's Z-Score a Type II error occurs when: A) The company's Z-score indicates the company is healthy, and the company stays healthy. B) The company's Z-score indicates the company is healthy, and the company goes bankrupt. C) The company's Z-score indicates the company will go bankrupt, and the company stays healthy. D) The company's Z-score indicates the company will go bankrupt, and the company stays bankrupt.
C) The company's Z-score indicates the company will go bankrupt, and the company stays healthy.
Which of the following statements are correct (select all that apply)? A) A balance sheet reports on the cumulative effects of investing and financing activities. B) An income statement reports on financing activities. C) The statement of equity reports on changes in the accounts that make up equity. D) The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time. E) A balance sheet reports on a company's assets and liabilities over a period of time.
C) The statement of equity reports on changes in the accounts that make up equity. D) The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time.
The Tread Company's December 31 financial statements reported the following (in millions) Sales $22,737 Cost of sales $16,458 Other expenses (excluding cost of sales) $ 4,353 What did Tread Company report for net income for the year ending December 31? A) $ 6,279 million B) $12,105 million C) $10,632 million D) $ 1,926 million E) $43,548 million
D) $ 1,926 million
Maxwell's annual financial statements show operating profit before interest and tax of $415,386 thousand, net income of $254,418 thousand, provision for income taxes of $73,016 thousand and net nonoperating expense before tax of $87,593 thousand. Assume Maxwell's statutory tax rate for the year is 37%. Maxwell's tax shield is: A) $ 27,016 thousand B) $236,738 thousand C) $ 73,016 thousand D) $ 32,409 thousand E) None of these are correct.
D) $ 32,409 thousand
At year-end, Rapid Airlines had negative net working capital of $(4,692) million and current assets of $8,996 million. The firm's current liabilities are: A) $4,692 million B) $4,304 million C) $10,472 million D) $13,688 million E) There is not enough information to calculate the amount.
D) $13,688 million
In its 2019 annual report, Snap-Tite Incorporated reported the following (in millions): Current assets $1,884.0 Total shareholders' equity $2,635.2 Total liabilities $2,088.0 What did Snap-Tite report as total assets at year-end? A) $6,607.2 million B) $2,839.2 million C) $3,972.0 million D) $4,723.2 million E) None of these are correct.
D) $4,723.2 million
Tully Corporation reported the following on its annual income statement (in millions) Sales revenue $118,774 Gross profit $72,382 Total expenses $46,634 What did Tully report for cost of goods sold during the year? A) $31.004 million B) $93,026 million C) $25,748 million D) $46,392 million E) None of these are correct.
D) $46,392 million
On its year-end balance sheet, Hasten Inc., reported cash and cash equivalents at the start of the year of $43,315 thousand. By the end of the year, the cash and cash equivalents had decreased to $40,931 thousand. The company's statement of cash flows reported cash from operating activities of $249,540 thousand, cash from financing activities of $(184,163) thousand. What amount did the company report for cash from investing activities? A) $62,993 thousand cash inflow B) $62,993 thousand cash outflow C) $67,761 thousand cash inflow D) $67,761 thousand cash outflow E) None of these are correct.
D) $67,761 thousand cash outflow
The year-end financial statements of Synergy Inc. shows average net operating assets (NOA) of $8,450 million, average net nonoperating obligations (NNO) of $(4,033) million, average total liabilities of $9,032 million, and average equity of $12,508 million. The company's financial leverage (FLEV) is: A) (0.477) B) 0.676 C) 0.722 D) (0.322) E) There is not enough information to determine the ratio.
D) (0.322)
Kreeger's annual financial statements show net operating profit after tax of $2,291 million, net income of$1,979 million, sales of $115,568 million, and average net operating assets of $18,616 million. Kreeger's net operating asset turnover for the year is: A) 16.1% B) 9.4 C) 11.0% D) 6.21 E) There is not enough information to calculate the ratio.
D) 6.21
How would a sale of $320 of inventory on credit affect the balance sheet if the cost of the inventory sold was $128? A) It would increase noncash assets by $320 and increase equity by $320 B) It would decrease noncash assets by $128 and decrease equity by $128 C) It would increase cash by $320 and increase equity by $320 D) Both A and B, above happen simultaneously E) None of these are correct.
D) Both A and B, above happen simultaneously
On January 1, Fey Properties collected $5,760 for six months' rent in advance from a tenant renting an apartment. Fey Company prepares monthly financial statements. Which of the following describes the required adjusting entry on January 31? A) Debit Unearned rent revenue for $4,800 and Credit Cash for $4,800 B) Debit Rent revenue for $960 and Credit Unearned rent revenue for $960 C) Debit Cash for $5,760 and Credit Rent revenue for $5,760 D) Debit Unearned rent revenue for $960 and Credit Rent revenue for $960 E) Debit Cash for $4,800 and Credit Unearned rent revenue for $4,800.
D) Debit Unearned rent revenue for $960 and Credit Rent revenue for $960
A letter of credit: A) Ensures a company that funds will be available when needed B) Is analogous to a credit card that companies can draw on as needed C) Is a representation that a company has a high credit rating D) Provides a guarantee of payment from the buyer, reducing the credit risk to the seller
D) Provides a guarantee of payment from the buyer, reducing the credit risk to the seller
Covenants represent: A) The property that a company pledges to guarantee repayment B) The maximum that a creditor will allow a customer to owe at any point in time C) Promises the company makes to the creditor D) Terms and conditions set forth in a lending agreement to reduce the probability of nonpayment
D) Terms and conditions set forth in a lending agreement to reduce the probability of nonpayment
Generally Accepted Accounting Principles (GAAP) are created by: (select all that apply) A) The Securities and Exchange Commission B) The Generally Accepted Accounting Principles Task Force C) The Sarbanes Oxley Act D) The Financial Accounting Standards Board E) The Public Company Accounting Oversight Board
D) The Financial Accounting Standards Board
The audit report is addressed to: A) The audit committee B) The board of directors C) The shareholders D) The board of directors and the shareholders E) The Securities and Exchange Commission (SEC)
D) The board of directors and the shareholders
Which one of the following is not a current liability? A) Taxes payable B) Accounts payable C) Wages payable D) Wage expense E) None of these are correct.
D) Wage expense
Identify which of the following items would be reported in the balance sheet. a. Cash d. Wage expense g. Net income b. Sales e. Wages payable h. Inventory c. Long-term debt f. Retained earnings i. Cost of goods sold Items reported in the balance sheet would include: A) a, b, c, e, and f B) b, e, f, h, and i C) c, d, e, h, and i D) a, c, e, f, and h E) c, e, f, h, and i
D) a, c, e, f, and h
Identify which of the following items would be reported in the income statement. a. Cash d. Wage expense g. Net income b. Sales e. Wages payable h. Inventory c. Long-term debt f. Retained earnings i. Cost of goods sold Items reported in the income statement would include: A) b, e, g, and h B) a, b, d, and i C) b, e, f, and g D) d, f, g, and h E) b, d, g, and i
E) b, d, g, and i
ROE is computed as: A) Net income attributable to controlling interest / Average equity attributable to controlling interest B) Net income attributable to controlling interest / Net sales C) [RNOA + (FLEV × Spread)] x NCI ratio D) A and B E) A and C
E) A and C
Liquidity refers to: A) A company's operating cycle B) A company's ability to generate sales from use of its assets C) A company's ability to meet its debt obligations D) A company's amount of financial leverage E) A company's cash availability
E) A company's cash availability
Which of the following are relevant in an analysis of a company's business environment? (Select as many as apply) A) Financing B) Labor C) Buyers D) Governance E) All of the above
E) All of the above
Which of the following accounts would not be involved in preparing the income statement? A) Depreciation expense B) Accumulated depreciation C) Taxes payable D) Interest income E) B and C
E) B and C
Which of the following accounts would not appear in a closing entry? A) Net income B) Depreciation expense C) Cost of goods sold D) Inventory E) Both A and D
E) Both A and D
During the year, Dixon Inc., reported net income of $3,008 million. The company declared dividends of $818 million. The closing entry for dividends would include which of the following? A) Credit Cash for $818 million B) Credit Dividends for $818 million C) Debit Net income for $818 million D) Credit Retained earnings for $1818 million E) Debit Dividends for $818 million
E) Debit Dividends for $818 million
Which of the following items would not be found on a balance sheet? (Select all that apply) A) Stockholders' Equity B) Property, plant and equipment C) Nonowner financing D) Cash E) Dividends
E) Dividends
Which of the following groups would likely not be interested in the financial statements of a large public company such as Procter & Gamble? A) Shareholders B) Employees C) Competitors D) Taxing agencies E) None of these are correct
E) None of these are correct
How would a purchase of $320 of inventory on credit affect the income statement? A) It would increase cost of goods sold by $320. B) It would decrease liabilities by $320. C) It would decrease noncash assets by $320. D) It would decrease net income by $320. E) None of these are correct.
E) None of these are correct.
How would a purchase of inventory on credit affect the income statement? (bc an expense would be reported) A) It would increase liabilities B) It would decrease retained earnings C) It would increase assets D) Both A and C, above E) None of these are correct.
E) None of these are correct.
During the year, Kale Inc. had Sales of $28,029 million, Cost of merchandise sold of $17,916 million, and Gross profit of $10,112 million. What was net income for the year? A) $ 7,949 million B) $10,112 million C) $17,916 million D) $28,029 million E) There is not enough information to calculate the amount.
E) There is not enough information to calculate the amount.
The year-end balance sheet of Fine Foods Inc. reports operating assets of $4,391 million, operating liabilities of $1,653 million, and total liabilities of $2,494 million. Fine Food's average net operating assets are: A) $1,897million B) B) $4,391 million C) $6,044 million D) $2,738 million E) There is not enough information to calculate the amount.
E) There is not enough information to calculate the amount.
On its year-end balance sheet, Blue Corporation, reported cash of $354 million at year-end. The statement of cash flows reports that cash increased by $92 million during the year and that net cash flow from operating activities was $1,306 million. What was the cash flow from investing activities during the year? A) $ 446 million cash outflow B) $1,044 million cash inflow C) $ 446 million cash inflow D) $1,044 million cash outflow E) There is not enough information to determine the amount.
E) There is not enough information to determine the amount.
Net operating profit after tax (NOPAT) includes operating revenues less expenses such as: A) Cost of goods sold (COGS) B) Taxes on operating income C) Selling, general and administrative expenses (SG&A) D) After-tax earnings from investments and interest expenses E) All of the above F) A, B and C only
F) A, B and C only
