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FINANCE \u2013EXAM 3<\/strong><\/p>\n What would net income have been in 2004 if Hastings had used LIFO since 1\/1\/2003?<\/p>\n <\/p>\n $ 110,000<\/p>\n $ 150,000<\/p>\n $ 170,000<\/p>\n $ 230,000<\/p>\n Should be disclosed in a footnote.<\/p>\n Should be disclosed as a parenthetical comment in the balance sheet.<\/p>\n Need not to be disclosed.<\/p>\n Should be disclosed by an appropriation of retained earnings.<\/p>\n <\/p>\n <\/p>\n Customer places an order.<\/p>\n Luncheon is served.<\/p>\n Billing is mailed.<\/p>\n Customer’s payment is received.<\/p>\n <\/p>\n $80,000<\/p>\n $90,000<\/p>\n $135,000<\/p>\n $160,000<\/p>\n <\/p>\n $80,000<\/p>\n $90,000<\/p>\n $135,000<\/p>\n $160,000<\/p>\n <\/p>\n On January 1, 1997, Phillips, Inc. should record a lease liability of:<\/p>\n $275,000<\/p>\n $359,464<\/p>\n $0<\/p>\n $250,000<\/p>\n The amount of Goodwill recognized by FRC, Inc. on January 1, 2004 is:<\/p>\n $400,000<\/p>\n $360,000<\/p>\n $495,000<\/p>\n $455,000<\/p>\n On the grant date, January 1st, 2005, the stock was quoted on the stock exchange at $63 per share. The fair value of the options on the grant date was estimated at $15 per option. The amounts of compensation expense ABC should recognize with respect to the options during 2005, 2006, and 2007 are:<\/p>\n 1.<\/p>\n 2.<\/p>\n 3.<\/p>\n 4.<\/p>\n <\/p>\n An expense that is recognized in 2005 for income tax purposes and in 2006 for financial statement purposes.<\/p>\n Interest income from municipal bonds that is recognized in 2005 for financial statement purposes but is tax exempt for income tax purposes.<\/p>\n A revenue is recognized in 2005 for income tax purposes and in 2006 for financial statement purposes.<\/p>\n None of the above situations would cause a deferred income tax amount.<\/p>\n <\/p>\n FIFO has a higher inventory balance and a lower net income than LIFO.<\/p>\n FIFO has a higher inventory balance and a higher net income than LIFO.<\/p>\n LIFO has a higher inventory balance and a higher net income than FIFO.<\/p>\n LIFO has a higher inventory balance and a lower net income than FIFO.<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n What amount should be reported as Unearned Service Revenues in Denny’s December 31, 2001 balance sheet?<\/p>\n $900,000<\/p>\n $600,000<\/p>\n $1,500,000<\/p>\n $300,000<\/p>\n <\/p>\n <\/p>\n make no journal entry<\/p>\n record rental expense of $2,500 for the first year’s rental<\/p>\n record the lease asset and a corresponding liability, at its current market value<\/p>\n record the lease asset and a corresponding liability, at the present value of the five equal annual lease payments.<\/p>\n <\/p>\n <\/p>\n <\/p>\n $155,000<\/p>\n $145,000<\/p>\n $135,000<\/p>\n $125,000<\/p>\n <\/p>\n This transaction affects only the income statement, so no change on the balance sheet will occur.<\/p>\n Total assets and total stockholder’s equity will decrease by the same amount.<\/p>\n There will be no change in the total assets, liabilities and stockholders equity accounts.<\/p>\n Total liabilities will increase and total stockholder’s equity will decrease by the same amount.<\/p>\n <\/p>\n Paid-in Capital: $53,000<\/p>\n Retained Earnings: $31,000<\/p>\n During the year ended December 31, 2000, The Hastco Company generated $36,000 in net income, and declared and paid $16,000 in Dividends. The ending balance in the retained earnings account at\u00a0December 31, 1999\u00a0was:<\/p>\n $11,000<\/p>\n $37,000<\/p>\n $5,000<\/p>\n $61,000<\/p>\n The lease term is 80% of the asset’s estimated useful life.<\/p>\n The lease agreement contains a bargain purchase option.<\/p>\n The present value of the lease payments equals 70% of the fair market value of the leased asset.<\/p>\n Title to the leased asset transfers to the lessee at the end of the lease term.<\/p>\n <\/p>\n Title and risks of ownership have been exchanged.<\/p>\n The company is reasonably assured of collecting the receivable.<\/p>\n The customer has, in turn, sold the product to its own customer.<\/p>\n Both title and risks of ownership have been exchanged and the company is reasonably assured of collecting the receivable.<\/p>\n <\/p>\n Downey Company bought a delivery truck for $62,000 on January 1, 2005. They installed a rear hydraulic lift for $8,000 and paid sales tax of $3,000. In addition, Downey paid $2,400 for a one-year insurance policy. They estimate the useful life of the truck to be 10 years and its residual value to be $8,000.<\/p>\n If Downey uses the straight-line method of depreciation, what is the depreciation expense for 2006 and book value at the end of\u00a02006?<\/p>\n $7,300 and $58,400<\/p>\n $6,500 and $60,000<\/p>\n $6,790 and $62,320<\/p>\n $6,500 and $66,500<\/p>\n <\/p>\n <\/p>\n If Downey uses the double declining-balance method, how much is the truck’s depreciation expense for2006?<\/p>\n $11,680<\/p>\n $12,144<\/p>\n $10,400<\/p>\n $11,760<\/p>\n <\/p>\n is recorded whenever a company achieves a level of net income that exceeds the industry average.<\/p>\n is recorded when a company purchases another business.<\/p>\n is expensed in the period it is recorded because benefits from goodwill are difficult to identify.<\/p>\n is never recorded<\/p>\n <\/p>\n be written off as soon as possible against retained earnings.<\/p>\n absent impairment, not be written off because it has an indefinite life.<\/p>\n written off as soon as possible as an expense.<\/p>\n amortized over a maximum of forty years.<\/p>\n <\/p>\n <\/p>\n <\/p>\n $3,000 asset.<\/p>\n $3,000 liability<\/p>\n $ 900 asset.<\/p>\n $ 900 liability.<\/p>\n <\/p>\n <\/p>\n The total amount of owners’ equity that should be reported on the balance sheet dated December 31, 2005, after all the closing entries, is<\/p>\n $ 338,000.<\/p>\n $128,000.<\/p>\n $300,000.<\/p>\n $304,000.<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n Interest decreases retained earnings while dividend declared increases retained earnings<\/p>\n Interest reduces net income while dividends declared do not affect net income<\/p>\n Interest does not affect net income while dividends reduce net income<\/p>\n There is no major difference. Both are treated identically for accounting purposes.<\/p>\n <\/p>\n <\/p>\n Debit Accounts receivable ($500); Credit Cash ($490); credit allowance for discounts ($10).<\/p>\n Debit Cash ($500); Credit Accounts receivable ($500).<\/p>\n Debit Cash ($490); Debit Allowance for sales discounts ($10); Credit Accounts receivable ($500)<\/p>\n None of the above<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n What is the company’s December EBITDA to total interest coverage ratio?<\/p>\n 6.5x<\/p>\n 18.5x<\/p>\n 14.5x<\/p>\n 20.2x<\/p>\n <\/p>\n <\/p>\n <\/p>\n Which of the following statements is inconsistent with the above ratios?<\/p>\n Superior Corp has a higher return on equity primarily because it has a significantly higher net income margin<\/p>\n Average Corp. on a relative basis uses significantly more debt financing than Superior Corp.<\/p>\n Average Corp. utilizes its assets more effectively than Superior Corp.<\/p>\n Superior Corp. generates more income per dollar of sales than Average Corp.<\/p>\n <\/p>\n <\/p>\n <\/p>\n 28.On June 30, 2000, Microsoft Corporation was holding $4.8 billion of cash that it had collected from customers in advance for future software licenses and the future delivery of other products and services. In its financial statements, Microsoft classified and recorded this amount as:<\/p>\n part of revenue on its income statement.<\/p>\n the asset Accounts Receivable on its balance sheet.<\/p>\n the liability Unearned Revenue on its balance sheet.<\/p>\n an expense on its income statement.<\/p>\n <\/p>\n An unrealized gain or loss on hold-to-maturity marketable securities is recognized in income.<\/p>\n An unrealized gain or loss on trading securities is recognized in income.<\/p>\n An unrealized gain or loss on a company’s common stock held by the owners’ of the company is not recognized by the company.<\/p>\n An unrealized gain or loss on available-for-sale marketable securities is not recognized in income.<\/p>\n <\/p>\n <\/p>\n Assets would decrease, liabilities would remain constant and retained earning would decrease.<\/p>\n Assets would remain constant; liabilities would increase and retained earnings would decrease.<\/p>\n No change would be made in total assets, liabilities or shareholder’s equity.<\/p>\n Assets would decrease, liabilities would decrease and retained earnings would remain constant.<\/p>\n The post FINANCE \u2013 EXAM 3 appeared first on Coursefortune.<\/p>\n \n [maxbutton id=”1″] FINANCE \u2013EXAM 3 The Hasting Company began operations on January 1, 2003 and uses the FIFO method in costing its raw material inventory. An analyst is wondering what net income would have been if the company had consistently followed LIFO (instead of FIFO) from the beginning, 1\/1\/2003. He has the following information available […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_joinchat":[]},"categories":[14],"tags":[],"yoast_head":"\n\n
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