Exam 1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation

___________________________________ financial statements are helpful in highlighting the relative magnitude of changes in financial statement data from year to year.

During 2011,Waggoner Company performed services for which customers paid or promised to pay $587,000.Of this amount,$552,000 had been collected by year end.Waggoner paid $340,000 in cash for employee wages and owed the employees $15,000 at the end of the year for work that had been done but had not paid for.Waggoner paid interest expense of $3,000 and $195,000 for other service expenses.The income tax rate was 35%,and income taxes had not yet been paid at the end of the year.Waggoner declared and paid dividends of $20,000.There were no other events that affected cash. Required: 1.What was the amount of the increase or decrease in cash during the year? 2.Prepare an income statement for Waggoner for the year (December 31 year-end).

Which of the following is not considered to be a liability?

Which SEC form may be the best place to start learning about the economics of an industry and the particular strategy a firm has selected for competing in the industry?

Many market participants argue that financial markets are efficient and that financial statement users cannot routinely analyze financial statements to find mispriced securities.This view would lead some to suggest that there is little value to financial statement analysis. Required: Provide a discussion of the role of financial statement analysis in an efficient capital market and reasons why financial statement analysis is still valuable.

When identifying the strategies that a particular firm pursues to gain a competitive advantage it is important to determine if its products are designed to meet the needs of a specific market segment or are they intended for a _____________________________________________.

What are three activities reported in the statement of cash flows and what information does each activity provide?

Which two organizations are working together to harmonize financial reporting worldwide?

Accounts receivable represent:

Which of the following is not an expense of a business?

___________________________________ equals net income for a period plus or minus the changes in shareholders' equity accounts other than from net income and transactions with owners.

Why is the operating activities section of the statement of cash flows often believed to be the most important part of the statement?

What is an industry's value chain?

Which forces typically represent vertical competition in a value chain?

Tremble Company manufactures outdoors wear for women.During 2009,the company reported the following items that affected cash. Required: Indicate whether each of these items is a cash flow from operating activities (O),investing activities (I),or financing activities (F). _____A.Paid cash for supplies _____B.Purchased equipment by paying cash _____C.Collected cash on account from customers _____D.Paid dividends to stockholders _____E.Paid suppliers for fabric _____F.Borrowed money from a bank on a long-term note _____G.Paid interest to bank on the note _____H.Paid wages to employees _____I.Sold shares of common stock to new stockholders

Opinions on the effectiveness of the internal control system and the fairness of the amounts reported in the financial statements are known as:

Which of the following economic characteristics is consistent with a commercial bank?

What three financial statements are prepared by business firms and what information does each provide?

The threat of new entrants is measured by whether there are entry barriers,such as capital investment,________________________________________,patents,or regulation that inhibit new entrants.

Which of the following is an independent entity comprising 15 members and a full-time professional staff that specifies acceptable accounting principles known as the IFRS?