Reference no: EM132744495
Questions -
Q1. Assume you are a debt-holder of The Improvement Store. What would be the primary purpose for reviewing Home Improvement's financial information?
a. To assess the financial risk of non-payment of interest or principal
b. To determine if the company will pay dividends during the year
c. To determine the company's return for the year
d. To determine the type of judgement management exercises in preparing its financial statements
Q2. Energy Electric reported net income totaling $106,000. Depreciation expense for the year was $22,000. Accounts receivable decreased by $2,300, inventory increased by $4,500, dividends paid totaled $10,000, accounts payable decreased by $5,000, long term debt increased by $15,000, and taxes payable increased by $7,000.
How much is the company's cash flow from operations?
a. $113,800
b. $132,200
c. $127,800
d. $137,800
Q3. Generally, revenue should be recognized on the Income Statement when:
a. Revenue is earned and collectability of cash is reasonably assured
b. Revenue is earned regardless of the collectability of any uncollected cash
c. Cash is received
d. Revenue is earned even if the full sales price is uncertain
Q4. How do shareholders earn a return on their investment?
a. Through companies selling shares in the public capital market
b. Through interest payments and the repayment of the initial capital investment
c. Through profits earned by a company that are distributed to investors
d. Through dividend payments and the appreciation of a company's share price
Q5. If a company has beginning and ending balances in retained earnings are $34,000 and $18,000, respectively, and paid dividends of $40,000 during the year, what is the company's net income.
a. There is insufficient information to determine net income.
b. $34,000
c. $24,000
d. $44,000
Q6. New Doors Co. provided the following income statement information:
Sales $1,575,000
Cost of goods sold 825,000
Restructuring charges 160,000
Depreciation 24,000
Interest expense 10,750
Other operating expenses 490,000
Income before taxes 65,250
Income taxes expense 22,800
Net income $42,450
How much is the company's EBITDA?
a. $ 76,000
b. $100,000
c. $ 65,250
d. $ 42,450
Q7. Presented below are select financial data from Major Drug'sannual report:
Year 1 Year 2
Balance Sheet Items:
Accounts receivable, net $9,367 $13,765
Inventory 6,860 6,239
Income Statement Items:
Net sales $52,716 $61,498
Cost of goods sold 7,541 8,525
How many days, on average, did it take Major Drug to collect an outstanding receivable during Year 2?
a. 37.7 days
b. 81.7 days
c. 7.2 days
d. 4.5 days.
Q8. Sprint PCS reported the following account balances (in thousands):
Sales revenues $660,000
Warranty expenses 6,000
Accounts receivable 140,000
Dividends declared but not paid 80,000
Sales commissions 4,000
Cost of goods sold 425,000
Deferred revenue 50,000
Admin expenses 100,000
How much is net income for Sprint?
a. $125,000
b. $ 75,000
c. $131,000
d. $45,000
Q9. The sale of stock and the purchase of equipment, respectively, are examples of what type of business activities?
a. Investing and Capital Expenditures
b. Common Stock and Capital Assets
c. Financing and Operating
d. Financing and Investing
Q10. What does 'depreciating an asset' mean?
a. To expense a portion of the cost of an asset over time
b. To adjust the asset to its market value as it is being used
c. To accumulate the costs of using the asset throughout its estimated life
d. To recognize the cost of equipment or buildings as an asset on the balance sheet
Q11. When should expenses be recognized on a company's income statement?
a. In the period in which the expenses are consumed in generating revenues
b. In the period in which the expense becomes an obligation owed to the supplier
c. In the period when a company places an order with its supplier
d. In the period in which a company pays its supplier for the expenses.
Q12. Winslow Sports Equipment's statement of cash flow appears below:
Operating activities
Net income $30,400
Depreciation expense 7,500
Accounts receivable 2,200
Inventory (4,100)
Accounts payable 1,000
Cash flow from operations 37,000
Investing activities
Equipment (6,500)
Cash flow from investing (6,500)
Financing activities
Common stock issued 10,200
Long-term note payable (16,600)
Dividends paid (13,200)
Cash flow from financing (19,600)
Net increase in cash 10,900
Cash, beginning of year 16,500
Cash, end of year $27,400
How much is Winslow's free cash flow for the period?
a. $20,500
b. $30,500
c. ($2,800)
d. $6,600