Exam 6: Additional Aspects of Financial Reporting and Financial Analysis

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Based upon the following information, which company has the best collection policy? Company A 30.4 days Company B 29.8 days Company C 12.2 times

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B

Interim summarized financial information for publicly traded companies must contain certain data.Which of the following data does not have to be disclosed?

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C

In the Management Report contained in the audited annual report, management acknowledges its responsibility for all of the following except

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An inventory loss from market value declines of $200, 000 occurred in August 2010.Marco Sales Company recorded this loss in August after its March 31 and June 30 interim reports were issued.None of this loss was recovered by the end of the year.How should this loss be reflected in Marco's quarterly income statements?  Three Months Ended \text { Three Months Ended } 3/31 6/30 9/30 12/31 I. - - \ 200,000 - II. - - 100,000 \ 100,000 III. \ 50,000 \ 50,000 50,000 50,000 IV. -- -- -- 200,000

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For operating segments, which one of the following is not included in the determination of whether a segment is reportable?

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Listed below are a number of ratios, followed by a series of descriptive statements. a. Acichtest ratio f. Price/earnings ratio b. Current ratio g. Profit margin c. Debt ratio h. Receivables tumover d. Dividend yield i. Return on total assets e. Equity ratio j. Times interest earned  Listed below are a number of ratios, followed by a series of descriptive statements.   \begin{array}{llll} \text { a. } & \text { Acichtest ratio } & \text { f. } & \text { Price/earnings ratio } \\ \text { b. } & \text { Current ratio } & \text { g. } & \text { Profit margin } \\ \text { c. } & \text { Debt ratio } & \text { h. } & \text { Receivables tumover } \\ \text { d. } & \text { Dividend yield } & \text { i. } & \text { Return on total assets } \\ \text { e. } & \text { Equity ratio } & \text { j. } & \text { Times interest earned } \end{array}    Required: Match the ratios to their respective descriptive statements by placing the appropriate letter in the space provided. Required: Match the ratios to their respective descriptive statements by placing the appropriate letter in the space provided.

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Exhibit 6-2 Given the following information for the Green Company: Net sales (all on account) \ 5,200,000 Interest expense 240,000 Income tax expense 280,000 Net income 420,000 Income tax rate 40\% Total assets: January 1,2010 \ 1,800,000 December 31,2010 2,400,000 Stockholders' equity: January 1,2010 1,500,000 December 31,2010 1,600,000 Current assets, December 31,2010 700,000 Quick assets, December 31,2010 400,000 Current liabilities, December 31, 2010 300,000 Net accounts receivable: January 1,2010 200,000 December 31,2010 180,000 - Refer to Exhibit 6-2.Green's return on stockholders' equity for 2010 was

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The "scope" paragraph of an unqualified audit opinion states that the auditor

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A difference between the segment disclosures required by IFRS and GAAP is that

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Which of the following statements is not true concerning interim financial reporting and inventories?

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Exhibit 6-1 Morgan Company reported the following information for the year ended December 31, 2010: Net income \ 800,000 Preferred dividends declared and paid 100,000 Common dividends declared and paid 160,000 Average common shares outstanding 140,000 Ending market price per share 30 Net sales 7,400,000 - Refer to Exhibit 6-1.Morgan's 2010 price/earnings ratio was

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In the first quarter of 2010, Hill Caterpillar Sales reported $900 of income before taxes.The estimated effective tax rate was 20%.In the second quarter, the company reported $800 of income before taxes, and the estimated effective tax rate increased to 25%. Required: Compute the second quarter tax expense for Hill Caterpillar Sales.

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Exhibit 6-2 Given the following information for the Green Company: Net sales (all on account) \ 5,200,000 Interest expense 240,000 Income tax expense 280,000 Net income 420,000 Income tax rate 40\% Total assets: January 1,2010 \ 1,800,000 December 31,2010 2,400,000 Stockholders' equity: January 1,2010 1,500,000 December 31,2010 1,600,000 Current assets, December 31,2010 700,000 Quick assets, December 31,2010 400,000 Current liabilities, December 31, 2010 300,000 Net accounts receivable: January 1,2010 200,000 December 31,2010 180,000 - Refer to Exhibit 6-2.Green's current ratio at December 31, 2010, was

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An annual report filed with the SEC is called a

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Disclosures for reportable segments include all of the following except

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The following information was obtained from the Clovis Company: Operating Segment Profit Segment Revenue Assets (Loss ) \ 640 \ 520 \ 88 124 120 32 760 680 40 160 240 (8) 32 64 (4) 80 96 16 480 400 16 ) \2 ,396 \2 ,280 \1 32 Required: a. Using the revenue test, which segments should be separately reported? b. Using the asset test, which segments shou'd be separately reported? c. Using the profit (loss) test, which segments should be separately reported?

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Which one of the following inventory procedures cannot be applied for interim reporting?

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GAAP mandates certain segment information disclosures.Describe the procedure a company would follow in determining whether an operating segment is reportable.

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Which one of the following ratios is an indicator of the long-run safety of a firm?

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