1. Mobile Company has sales of $4,885,340 in sales at 12/31/10, cost of goods sold of $2,542,353 at 12/31/10, inventories of $338,599 at 12/31/10 and $487,505 at 12/31/09 and accounts payable of $296,307 at 12/31/10 and $334,207 at 12/31/09, the company’s accounts payable outstanding at 12/31/0 would be:
2. Which of the following is the date on which a company incurs a legal liability to distribute the dividend to owners of the stock?
Date of record
Commitment date
Date of declaration
Date of payment
3. A company would need to record an impairment loss for its equipment when
the original cost of the equipment exceeds its fair value and is deemed not recoverable.
the carrying amount of the equipment exceeds its fair value and is deemed not recoverable
management determines that the equipment will no longer be used.
the cash flows from the equipment are less than its fair value.
4. Below is selected information from Marker s 2012 financial statements:
As of Dec. 31, 2012 Dec. 31, 2011
Cash and short-term investments$ 958,245$ 745,800
Accounts Receivable (net) 125,850135,400
Inventories 195,650175,840
Prepaid Expenses and other current assets45,30030,860
Total Current Assets $1,325,045 $1,087,900
Plant, Property and Equipment, net1,478,3201,358,700
Intangible Assets 125,600120,400
Total Assets $2,928,965$2,567,000
Short-term borrowings $ 25,190$ 38,108
Current portion of long-term debt 45,00040,000
Accounts payable 285,400325,900
Accrued liabilities 916,722705,891
Income taxes payable 125,400115,600
Total Current Liabilities $1,397,712$1,225,499
Long-term Debt 450,000430,000
Total Liabilities $1,847,712$1,655,499
Shareholders’ Equity $1,081,253$ 911,501
Total Liabilities and Shareholders’ Equity$2,928,965$2,567,000
Selected Income Statement Data – for the year ending December 31, 2012:
Net Sales$3,210,645
Cost of Goods Sold(2,310,210)
Operating Income$ 900,435
Net Income$ 324,850
Selected Statement of Cash Flow Data – for the year ending December 31, 2012:
Cash Flows from Operations$584,750
Interest Expense42,400
Income Tax Expense114,200
Marker s Liabilities to Assets Ratio for 2012 is
5. GAAP stipulates that firms should do what with expenditures that increase the service potential of an asset beyond that originally anticipated?
Capitalize the expenditure and depreciate it over the remaining service life of the asset.
Expense the expenditure immediately.
Capitalize the expenditure, but do not depreciate the asset.
Charge it off to shareholders equity.
6. Below is selected information from Marker s 2012 financial statements:
As of Dec. 31, 2012Dec. 31, 2011
Cash and short-term investments$ 958,245$ 745,800
Accounts Receivable (net) 125,850135,400
Inventories 195,650175,840
Prepaid Expenses and other current assets45,30030,860
Total Current Assets $1,325,045$1,087,900
Plant, Property and Equipment, net1,478,3201,358,700
Intangible Assets 125,600120,400
Total Assets $2,928,965$2,567,000
Short-term borrowings$ 25,190$ 38,108
Current portion of long-term debt45,00040,000
Accounts payable285,400325,900
Accrued liabilities916,722705,891
Income taxes payable 125,400115,600
Total Current Liabilities$1,397,712$1,225,499
Long-term Debt450,000430,000
Total Liabilities$1,847,712$1,655,499
Shareholders’ Equity$1,081,253$ 911,501
Total Liabilities and Shareholders’ Equity$2,928,965$2,567,000
Selected Income Statement Data – for the year ending December 31, 2012:
Net Sales$3,210,645
Cost of Goods Sold(2,310,210)
Operating Income$ 900,435
Net Income$ 324,850
Selected Statement of Cash Flow Data – for the year ending December 31, 2012:
Cash Flows from Operations$584,750
Interest Expense42,400
Income Tax Expense114,200
Marker s 2012 Long-term debt to Shareholder’s Equity ratio is:
7. All of the following statements are true regarding accounting for software development costs except:
Firms must expense as incurred all costs incurred internally in developing computer software until such development achieves the technological feasibility of a product.
Firms must capitalize as incurred all costs incurred internally in developing computer software.
Researchers have found a significant association between costs and future earnings which support capitalizing and amortizing product development costs permitted by U.S. GAAP and IFRS.
The interpretation of the meaning of technological feasibility has created diversity in the practice of accounting for software development costs.
8. All of the following are typically recognized as accounting liabilities except: (Points : 5)
Bonds payable
Loan Guarantees
Rental fees received in advance
Taxes Payable
9. Below is selected information from Marker s 2012 financial statements:
As of Dec. 31, 2012 Dec. 31, 2011
Cash and short-term investments$ 958,245$ 745,800
Accounts Receivable (net) 125,850135,400
Inventories 195,650175,840
Prepaid Expenses and other current assets45,30030,860
Total Current Assets $1,325,045$1,087,900
Plant, Property and Equipment, net1,478,3201,358,700
Intangible Assets 125,600 120,400
Total Assets $2,928,965 $2,567,000
Short-term borrowings$ 25,190$ 38,108
Current portion of long-term debt45,00040,000
Accounts payable285,400325,900
Accrued liabilities916,722705,891
Income taxes payable 125,400115,600
Total Current Liabilities$1,397,712$1,225,499
Long-term Debt 450,000 430,000
Total Liabilities $1,847,712$1,655,499
Shareholders’ Equity$1,081,253$ 911,501
Total Liabilities and Shareholders’ Equity$2,928,965$2,567,000
Selected Income Statement Data – for the year ending December 31, 2012:
Net Sales$3,210,645
Cost of Goods Sold(2,310,210)
Operating Income$ 900,435
Net Income$ 324,850
Selected Statement of Cash Flow Data – for the year ending December 31, 2012:
Cash Flows from Operations$584,750
Interest Expense42,400
Income Tax Expense114,200
Marker s Long-term debt to long-term capital for 2012 is
10. Which kind of dividend is a return of the original investment by shareholders?
Cash dividend
Stock dividend
Liquidating dividend
Scrip dividend
11. All of the following conditions signal that revenue recognition may have been recorded
too early except:
large and volatile amounts of uncollectible accounts receivable.
unusually large amounts of returned goods.
excessive warranty expenditures.
a decrease in the number of days accounts receivable are outstanding.
12. If the portions of the firm s foreign operations in higher-tax-rate countries grew more rapidly than foreign operations in lower-tax-rate countries, the company may seek out more tax effective ways of operating abroad through all of the following means except:
Assess whether transfer prices or cost allocations can be adjusted to shift income
from high-tax-rate to low-tax-rate jurisdictions.
Shift from domestic to foreign borrowing to increase deductions for interest against
foreign-source income.
Shift from debt to equity financing of foreign operations to increase interest deductions
against foreign-source income.
Shift some operations, like marketing, to the United States where the average tax rate is lower.
13. Under current U.S. GAAP unrealized gains and losses from four balance sheet items are reported in accumulated other comprehensive income or loss. Which of the following is not one of the balance sheet items?
Derivatives held as cash flow hedges.
Deferred tax assets related to net operating loss carry-forwards.
Minimum pension obligations.
Investment securities classified as available for sale.
14. All of the following are benefits of leasing except:
They have the ability to shift the tax benefits from depreciation and other deductions from a lessee that has little or no taxable income to a lessor that has substantial taxable income.
They provide flexibility to change capacity as needed without having to purchase or sell assets.
They have the ability to reduce the risk of technological obsolescence, relative to outright ownership, by maintaining the flexibility to shift to technologically more advanced assets
In an operating lease, the lessee recognizes the signing of the lease as the simultaneous acquisition of a long-term asset and the incurring of a long-term liability for lease payments.
15.
Current AssetsAs of Dec. 31, 2010Dec. 31, 2009
Cash and short-term investments$1,267,038$ 616,604
Accounts Receivable (net)490,816665,828
Inventories338,599487,505
Prepaid Expenses and other current assets292,511291,915
Total Current Assets$2,388,964$2,061,852
Current Liabilities
Short-term borrowings$ 25,190$ 38,108
Current portion of long-term debt182,295210,090
Accounts payable296,307334,247
Accrued liabilities941,912743,999
Income taxes payable203,049239,793
Total Current Liabilities1,648,7531,566,237
Selected Income Statement Data – for the year ending December 31, 2010:
Net Sales$4,885,340
Cost of Goods Sold2,542,353
Operating Income733,541
Net Income230,101
Selected Statement of Cash Flow Data – for the year ending December 31, 2010:
Cash Flows from Operations$1,156,084
Mobile’s current ratio in 2010 was:
16. If Mobile has accounts receivable of $490,816 at 12/31/10 and $665,828 at 12/31/09, inventories of $338,599 at 12/31/10 and $487,505 at 12//31/09, and sales of $4,885,340 and cost of goods sold of $2,542,353 in 2010, Mobile’s days receivables at the end of 2010 would be:
17. Below is selected information from Marker s 2012 financial statements:
As of Dec. 31, 2012Dec. 31, 2011
Cash and short-term investments$ 958,245$ 745,800
Accounts Receivable (net)125,850135,400
Inventories 195,650175,840
Prepaid Expenses and other current assets45,30030,860
Total Current Assets$1,325,045$1,087,900
Plant, Property and Equipment, net1,478,3201,358,700
Intangible Assets125,600120,400
Total Assets$2,928,965$2,567,000
Short-term borrowings$ 25,190$ 38,108
Current portion of long-term debt45,00040,000
Accounts payable285,400325,900
Accrued liabilities916,722705,891
Income taxes payable125,400115,600
Total Current Liabilities$1,397,712$1,225,499
Long-term Debt450,000430,000
Total Liabilities$1,847,712$1,655,499
Shareholders’ Equity$1,081,253$ 911,501
Total Liabilities and Shareholders’ Equity$2,928,965$2,567,000
Selected Income Statement Data – for the year ending December 31, 2012:
Net Sales$3,210,645
Cost of Goods Sold(2,310,210)
Operating Income$ 900,435
Net Income$ 324,850
Selected Statement of Cash Flow Data – for the year ending December 31, 2012:
Cash Flows from Operations$584,750
Interest Expense42,400
Income Tax Expense114,200
Marker s 2012 Liabilities to Shareholders Equity ratio is:
18. For U.S. GAAP, software development costs are capitalized as intangible assets (Points : 5)
once the technological feasibility of the product is established.
after a copyright is obtained.
from the beginning of development.
once the product is introduced into the marketplace.
19. Below is selected information from Marker s 2012 financial statements:
As of Dec. 31, 2012Dec. 31, 2011
Cash and short-term investments$ 958,245$ 745,800
Accounts Receivable (net)125,850135,400
Inventories 195,650175,840
Prepaid Expenses and other current assets45,30030,860
Total Current Assets$1,325,045$1,087,900
Plant, Property and Equipment, net1,478,3201,358,700
Intangible Assets125,600120,400
Total Assets$2,928,965$2,567,000
Short-term borrowings$ 25,190$ 38,108
Current portion of long-term debt45,00040,000
Accounts payable285,400325,900
Accrued liabilities916,722705,891
Income taxes payable125,400115,600
Total Current Liabilities$1,397,712$1,225,499
Long-term Debt450,000430,000
Total Liabilities$1,847,712$1,655,499
Shareholders’ Equity$1,081,253$ 911,501
Total Liabilities and Shareholders’ Equity$2,928,965$2,567,000
Selected Income Statement Data – for the year ending December 31, 2012:
Net Sales$3,210,645
Cost of Goods Sold(2,310,210)
Operating Income$ 900,435
Net Income$ 324,850
Selected Statement of Cash Flow Data – for the year ending December 31, 2012:
Cash Flows from Operations$584,750
Interest Expense42,400
Income Tax Expense114,200
Marker s interest coverage ratio for 2012 is:
20. All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:
The transaction or event that gave rise to the obligation has already occurred.
The firm has a present obligation and little or no discretion to avoid the transfer.
The firm must know the precise amount of the obligation before recording it.
The obligation involves a probable future sacrifice of economic benefits a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares at a specified or determinable date. The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation.