Exam 3: The Financial System and the Level of Interest Rates

Explain the differences while using FIFO versus LIFO method of valuation in accounting for inventory.

Which of the following is NOT a cash flow from operating activities?

Clarity Music Company has a marginal tax rate of 34 percent and an average tax rate of 32 percent this year. It is planning to construct a new recording studio next year. The appropriate tax rate to be applied on the income generated from the new studio is:

Which of the following statements is NOT a limitation associated with market valuation of balance sheet accounts?

Which of the following does NOT belong to an income statement?

The going concern assumption implies that:

The cost principle assumes that the parties to a transaction are economically rational and are free to act independently of each other.

Identify and explain the five fundamental principles that form the basis of accounting standards in United States.

Making and collecting loans, issuing and paying out on insurance contracts, and buying and selling debt or equity instruments of other firms are examples of financing activities.

Simplex Healthcare had net income of $5,411,623 after paying taxes at 34 percent. The firm had revenues of $20,433,770.Its interest expense for the year was $1,122,376, while depreciation expense was $2,079,112. What was the firm's operating expenses excluding depreciation? Round your intermediate calculations and final answer to the nearest dollar.

On June 23, 2008, Mikhal Cosmetics sold $250,000 worth of its products to Rynex Corporation, with the payment to be made in 90 days on September 20. The goods were shipped to Rynex on July 2. The firm's accountants should recognize the sale on:

Which of the following is a cash flow from investing activities?

During rising prices, a company using the FIFO method will sell its newest, highest-cost inventory first.

The net book value of an asset is the historical cost less the accumulated depreciation.

Accounting standards prescribed by generally accepted accounting principles (GAAP) are important because:

Which of the following sections do annual reports typically contain?

Chandler Sporting Goods produces baseball and football equipment and lines of clothing. This year the company had cash and marketable securities worth $335,485, accounts payables worth $1,159,357, inventory of $1,651,599, accounts receivables of $1,488,121, short-term notes payable worth $313,663, and other current assets of $121,427. What is the company's net working capital?

Which of the following is NOT true about treasury stock?

Trekkers Footwear bought a piece of machinery on January 1, 2006 at a cost of $2.3 million, and the machinery is being depreciated annually at an amount of $230,000 for 10 years. Its market value on December 31, 2008 is $1.75 million. The firm's accountant is preparing its financial statement for the fiscal year end on December 31, 2008. The net value of the asset that should be reported on the balance sheet is:

Tyson Corporation bought raw materials on April 23, 2008 and also on July 2, 2008. Products produced during the months of May were sold in July. The firm uses FIFO to value its inventory. According to the matching principle, the firm's accountant should associate: