Exam 11: Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

Common stock should be purchased if the estimated value of a company exceeds its current market value.

The following items are extraordinary items EXCEPT:

Steadily decreasing cost of goods sold as a percentage of net sales is a sign of:

The statement of management's responsibility for internal control,issued along with a company's financial statements,indicates all of the following EXCEPT that management:

The following earnings per share information is available for a stock you are interested in purchasing as an investment: The investment capitalization rate is 7.5%.How much should an investor pay for a share of stock?

The operating expense section of an income statement would NOT include:

Footnotes about a company's segments provide information about the:

Following U.S.Generally Accepted Accounting Principles,how is a change in accounting estimate handled?

Income tax payable is the amount of tax to be paid to the government based on the income tax return.

Assume it is the first year of operations.When taxable income exceeds pretax accounting income,accountants record a(n):

Gross profit percentage is calculated by dividing cost of goods sold by net sales.

The estimated value of a company is $18 million.The company has 2 million shares outstanding at a market price of $10 per share.You already own 1,000 shares of the stock.Should you buy,sell or hold the stock?

When a U.S.-based company holds a receivable denominated in a foreign currency,the U.S.company wants the foreign currency to _________ against the U.S.dollar so that the foreign currency can be converted into ________.

A sign of decreasing earnings quality is:

Components of increasing earnings quality include all of the following EXCEPT:

1.During 2015,Vanderbilt Corporation had 500,000 shares of $1 par value common stock outstanding and 25,000 shares of 5%,$100 par value preferred stock outstanding.There were no stock transactions during the year.Net income for the year was $540,000.Compute the earnings per share. 2.During 2015,Fusion Valley Corporation had 500,000 shares of $1 par value common stock outstanding and 40,000 shares of 5%,$100 par value preferred stock outstanding.There were no stock transactions during the year.Net income for the year was $740,000.Compute the earnings per share.

The estimated value of a share of a company's stock is less than the current market price per share.The appropriate investment decision should be to:

An extraordinary item is:

On June 15,Blonski Computer Company sold twenty-five computers on account to a company located in Argentina for 3,000,000 pesos.On that date,the peso is worth $0.079.On July 15,when the peso was worth $0.070,payment was received.Blonski Computer Company uses the perpetual inventory system.Ignoring Cost of Goods Sold,the journal entry on June 15 by Blonski Computer Company would be:

Financial statement fraud involving expense recognition involves: