Reference no: EM132478218

Question 1 - Steve invests $2,000 in a savings account for 6 years paying 5% interest compounded annually. What is the future value of this account at the end of the 6-year period?

a) $2,680

b) $3,592

c) $12,000

d) $13,604

Question 2 - Which of the following accounting scandals led to the declining credibility of the accounting profession and the ensuing legislation called the Sarbanes-Oxley Act?

a) Enron

b) Tyco

c) WorldCom

d) All of the above

Question 3 - Which of the following is not true regarding the Statement of Cash Flows?

a) Operating activities can be reported using either the direct or indirect method.

b) Paying dividends to owners is considered a financing activity on the Statement of Cash Flows.

c) Cash also includes cash equivalents on the Statement of Cash Flows.

d) Purchasing inventory is considered an investing activity on the Statement of Cash Flows.

Question 4 - Which of the following types of activities on the Statement of Cash Flows can the indirect method be used for?

I. Operating Activities

II. Investing Activities

III. Financing Activities

a) I only

b) III only

c) I and III

d) I, II, and III

Question 5 - What is the purpose of the Statement of Comprehensive Income?

a) It provides investors with a better idea of the firm's operational success.

b) It is required in order to prevent fraudulent activities within companies.

c) It is a more user-friendly version of the Income Statement. It provides investors with the key information that they need to see.

d) It indicates incidental changes in firm wealth that are not due to performance as a business.

Question 6 - Sandra won $5,000,000 in the state lottery, which she has elected to receive at the end of each month over the next 30 years instead of all at once today. She will receive 7% interest on unpaid amounts. To determine the amount of her monthly check, she should use a table for the:

a) Present value of an annuity due of $1

b) Future value of an ordinary annuity of $1

c) Present value of an ordinary annuity of $1

d) Future value of an annuity due of $1

Question 7 - Which of the following is not true regarding an annuity due?

a) Equal payments are made each period.

b) Cash flows are at the end of each period.

c) Cash flows are at the beginning of each period.

d) Equal payments are made each period, AND cash flows are at the beginning of each period.

Question 8 - Which of the following provisions of the Sarbanes-Oxley Act in 2002 caused the most concern to U.S. companies due to higher costs of satisfying this requirement?

a) Conflict of interest related to non-audit services

b) Audit firm partner rotation every five years

c) Corporate executive accountability (e.g., financial statement certification)

d) Section 404 related to enhanced internal controls

Question 9 - Which of the following items would not be reported as other comprehensive income on a company's financial statements?

a) Gain on sale of machinery used for 10 years

b) Gains from post-retirement benefit plans

c) Net unrealized holding gains on investment

d) Gains from foreign currency translations.