ACC 557 Final Exam Part 2
Question 1
3 out of 3 points
The cost method of accounting for long-term investments in stock should be employed when the | ||||
Selected Answer: investor’s influence on the investee is insignificant.Correct Answer: investor’s influence on the investee is insignificant. |
Question 2
0 out of 3 points
The cost of debt investments includes each of the following except | ||||
Selected Answer: commissions.Correct Answer: accrued interest. |
Question 3
3 out of 3 points
Comanic Corp. has common stock of $5,400,000, retained earnings of $2,000,000, unrealized gains on trading securities of $100,000 and unrealized losses on available-for-sale securities of $200,000. What is the total amount of its stockholders’ equity? | ||||
Selected Answer: $7,200,000Correct Answer: $7,200,000 |
Question 4
3 out of 3 points
Corporations invest excess cash for short periods of time in each of the following except | ||||
Selected Answer: equity securities.Correct Answer: equity securities. |
Question 5
3 out of 3 points
Revenue is recognized when cash dividends are received under | ||||
Selected Answer: the cost method.Correct Answer: the cost method. |
Question 6
3 out of 3 points
Pension funds and mutual funds regularly invest in debt and stock securities to | ||||
Selected Answer: generate earnings.Correct Answer: generate earnings. |
Question 7
3 out of 3 points
Unrealized gains and losses related to available-for-sale/non-trading equity investments are reported in other comprehensive income under | ||||
Selected Answer: Both GAAP and IFRS.Correct Answer: Both GAAP and IFRS. |
Question 8
3 out of 3 points
If a parent company has two wholly owned subsidiaries, how many legal and economic entities are there from the viewpoint of the shareholders of the parent company? Legal Economic | ||||
Selected Answer: 3 1Correct Answer: 3 1 |
Question 9
3 out of 3 points
Comparisons of financial data made within a company are called | ||||
Selected Answer: intracompany comparisons.Correct Answer: intracompany comparisons. |
Question 10
3 out of 3 points
Under IFRS, comprehensive income may be displayed (reported) in | ||||
Selected Answer: the one-statement or the two-statement approach.Correct Answer: the one-statement or the two-statement approach. |
Question 11
3 out of 3 points
Each of the following is a factor affecting quality of earnings except | ||||
Selected Answer: extraordinary items.Correct Answer: extraordinary items. |
Question 12
3 out of 3 points
Wrapp Company has income before taxes of $350,000 and an extraordinary loss of $70,000. If the income tax rate is 30% on all items, the income statement should show income before irregular items and an extraordinary loss, respectively, of: | ||||
Selected Answer: $245,000 and ($49,000)Correct Answer: $245,000 and ($49,000) |
Question 13
3 out of 3 points
Vertical analysis is a technique which expresses each item within a financial statement | ||||
Selected Answer: in terms of a percent of a base amount.Correct Answer: in terms of a percent of a base amount. |
Question 14
3 out of 3 points
Swiss Clothing Store had a balance in the Accounts Receivable account of $920,000 at the beginning of the year and a balance of $980,000 at the end of the year. Net credit sales during the year amounted to $6,650,000. The average collection period of the receivables in terms of days was | ||||
Selected Answer: 52.1 days.Correct Answer: 52.1 days. |
Question 15
3 out of 3 points
Under which of the following cases may a percentage change be computed? | ||||
Selected Answer: The trend of the balances is decreasing but all balances are positive.Correct Answer: The trend of the balances is decreasing but all balances are positive. |
Question 16
3 out of 3 points
Which one of the following is not a tool in financial statement analysis? | ||||
Selected Answer: Circular analysisCorrect Answer: Circular analysis |
Question 17
3 out of 3 points
The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.AssetsCash and short-term investments $ 40,500Accounts receivable (net) 30,000Inventory 27,000Property, plant and equipment 215,000 Total Assets $312,500Liabilities and Stockholders’ EquityCurrent liabilities $ 60,000Long-term liabilities 75,000Stockholders’ equity—common 177,500 Total Liabilities and Stockholders’ Equity $312,500Income StatementSales $ 90,000Cost of goods sold 40,000Gross profit 50,000Operating expenses 25,000 Net income $ 25,000Number of shares of common stock 5,000Market price of common stock $22Dividends per share 1.00 What is the return on assets for Rural? | ||||
Selected Answer: 8%Correct Answer: 8% |
Question 18
0 out of 3 points
Which of the following transactions does notaffect cash during a period? | ||||
Selected Answer: Exercise of the call option on bonds payableCorrect Answer: Write-off of an uncollectible account |
Question 19
3 out of 3 points
Jean’s Vegetable Market had the following transactions during 2014:1. Issued $50,000 of par value common stock for cash.2. Repaid a 6 year note payable in the amount of $22,000. 3. Acquired land by issuing common stock of par value $100,000.4. Declared and paid a cash dividend of $2,000. 5. Sold a long-term investment (cost $3,000) for cash of $8,000. 6. Acquired an investment in IBM stock for cash of $15,000. What is the net cash provided (used) by investing activities? | ||||
Selected Answer: ($7,000)Correct Answer: ($7,000) |
Question 20
3 out of 3 points
Which of the following would be added to net income using the indirect method? | ||||
Selected Answer: Depreciation expenseCorrect Answer: Depreciation expense |
Question 21
3 out of 3 points
The order of presentation of activities on the statement of cash flows is | ||||
Selected Answer: operating, investing, and financing.Correct Answer: operating, investing, and financing. |
Question 22
3 out of 3 points
In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment will appear as a(n) | ||||
Selected Answer: addition to net income.Correct Answer: addition to net income. |
Question 23
3 out of 3 points
A company had net income of $210,000. Depreciation expense is $27,000. During the year, Accounts Receivable and Inventory increased $17,000 and $42,000, respectively. Prepaid Expenses and Accounts Payable decreased $5,000 and $6,000, respectively. There was also a loss on the sale of equipment of $2,000. How much cash was provided by operating activities? | ||||
Selected Answer: $179,000Correct Answer: $179,000 |
Question 24
3 out of 3 points
Which of the following activities is excluded from the statement of cash flows under IFRS? | ||||
Selected Answer: Noncash investing and financing activitiesCorrect Answer: Noncash investing and financing activities |
Question 25
3 out of 3 points
Which one of the following affects cash during a period? | ||||
Selected Answer: Payment of an accounts payableCorrect Answer: Payment of an accounts payable |
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