单选题
{{B}}Based on the following information to answer
questions：{{/B}} BWT, Inc. shows the following data in its
financial statements at the end of the year. Assume all securities were
outstanding at the beginning of the year: 6.125% convertible
bonds, convertible into 33 shares of common stock. Issue price $1000100 bonds
outstanding. 6.25% convertible preferred stock, $100 par, 2315
shares outstanding. Convertible into 3.3 shares of common stock, Issue price
$100. 8% convertible preferred stock, $100 par, 2572 shares outstanding.
Convertible into 5 common shares, Issue price $ 80. 9986
warrants are outstanding with an exercise price of $ 38. Each warrant is
convertible into 1 share of common. Average market price of common is $ 52.00
per share. Common shares outstanding at the beginning of the year were
40045. Net income for the period was $ 200000 while the tax
rate was 40%.
单选题
What were the preferred dividends paid this whole year?
单选题
How many new shares had to be issued to facilitate warrant conversion?
A. 13665.
B. 9986.
C. 2689.
【正确答案】
C
【答案解析】9986×$ 38 = $ 379468
$ 379468/$ 52 = 7297 common shares
9986 -7297 = 2689 new common shares
单选题
What were the Basic and Diluted EPS for the year?
Basic EPS Diluted
EPS ①A. $4.12
$2.95 ②B. $4.12
$3.06 ③C. $3.97
$3.06
A. ①
B. ②
C.③
【正确答案】
B
【答案解析】Basic EPS = Net income preferred dividends/Wt Average shares of common = ($ 200000 $ 35045)/40045 = 164955/40405 = $ 4.12
Diluted EPS :
(100 bonds)(33 common shares/bond) =3300 common shares
(2315 preferred shares) (3.3) = 7640
(2572 preferred shares) (5) = 12860
7640 + 12860 = 20500 common shares from preferred
[($200000- $35045 ) + $35045 + $ 3675 ] / (40045 + 3300 + 20500 + 2689)
=$203675/66534 shares = $3.06
单选题
An analyst gathered the following data about a company:
The company had 500000 shares of common stock outstanding for the entire
year. The company' s beginning stock price was $40, its ending
price was $ 60, and its average price is $ 50. The company has
120000 warrants outstanding for the entire year. Each warrant
allowed the holder to buy one share of common stock at $ 45 per share.
How many shares of common stock should the company use in computing its
diluted earnings per share ?
A. 488000.
B. 500000.
C. 512000.
【正确答案】
C
【答案解析】Dilution occurs since the exercise price for the warrants ($ 45) is less than the average market price for the shares($ 50). The incremental number of shares outstanding is found from : Number of shares to use in diluted EPS calculation = 500000 + 12000 = 512000.
[*]
单选题
A company has the following changes in its balance sheet accounts:
Net Sales
$500
An increase in accounts receivale
20
A decrease in accounts payable
40
An increase in inventory
30
Sale of common stock
100
Repayment of debt
10
Depreciation
2
Net Income
100
Interest expense on debt
5
The company' s
cash flow from financing is:
A. $100.
B. $90.
C. $110.
【正确答案】
B
【答案解析】
Sale of common stock
$100
Repayment of debt
{{U}}(10){{/U}}
Financing cash flows
{{U}}$90{{/U}}
单选题
A company' s financial statements show the following data for the
latest year: Net sales
$1250 Cost of goods sold
650
Increase in inventory
100 Decrease in MR
25 Increase in A/P
50 Cash interest paid
45
Dividends paid
25 Cash
interest received
20 Sale of common stock
275 Retirement of long-term debt
125 Purchase of
equipment
120 Income tax oaid
50 The company' s cash flow from operations (CFO) and cash flow
from financing (CFF) are closest to : CFO
CFF A. $500 $425 B.
$500 $125 ③ $650 -$425
A. ①
B. ②
C. ③
【正确答案】
B
【答案解析】Use the direct method, which starts at the top of the income statement with sales and then works
with the individual components of net income directly related to cash flows.
Net sales + 1250
Accounts receivable (down) + 25
--------------------------------------------------
Cash collected trom customers + 1275
Cost of goods sold 650
Inventory (up) 100
Accounts payable (up) + 50
----------------------------------------------------
Cash payments for inputs 700
Cash interet paid 45
Cash interest received + 20
Income tax paid 50
Cash flow from operations + $ 500
Paid dividend -25
Issued stock + 275
Retired debt {{U}}-125{{/U}}
Financing cash flow + 125
单选题
The Beeline Company has the following balance sheet and income
statement.
Beeline Company Balance Sheet
As of December 31,2004
2003
2004
2003
2004
Cash
$50
$60
Accounts payable
$100
$150
Accounts receivable
100
110
Long-term debt
400
300
Inventory
{{U}}200{{/U}}
{{U}}180{{/U}}
Common stock
50
50
Retained earnings
{{U}}400{{/U}}
{{U}}500{{/U}}
Fixed assets (gross)
800
900
Total liabilities and equity
$950
$1000
Less : Accumulated depreciation
{{U}}200{{/U}}
{{U}}250{{/U}}
Fixed assets (net)
{{U}}600{{/U}}
{{U}}650{{/U}}
Total assets
$950
$1000
Beeline Company Income Statement
For year ended December 31,2004
Sales
$1000
Less :
COGS
600
Selling, general, and administrative expenses
50
Interest expense
160
Income before taxes
{{U}}23{{/U}}
Less tax
{{U}}67{{/U}}
Net income
$100
The cash
flow from operations for 2004 is:
A. $ 260.
B. $100.
C. $ 210.
【正确答案】
C
【答案解析】Cash flow from operations (CFO) calculated using the indirect method is: net income (100) + depreciation (50) increase in accounts receivable (10) + decrease in inventory (20) + increase in accounts payable (50) = $ 210.
单选题
The primary difference between basic EPS and diluted EPS is that:
A. proprietors and partners report basic EPS but corporations report diluted
EPS.
B. small firms report basic EPS but large firms(over $100 million in sales)
must report diluted EPS.
C. diluted EPS includes the potential effects of convertible securities
while basic EPS does not.
【正确答案】
C
【答案解析】The primary difference between basic EPS and diluted EPS is that diluted EPS includes the potential effects of convertible securities while basic EPS does not.
单选题
In the computation of diluted earnings per share(EPS) , common shares
issued when convertible preferred stock is converted are added to the
denominator of the equation, and the basic EPS numerator is adjusted by:
A. adding back convertible preferred stock dividends.
B. adding back non-convertible preferred stock dividends.
C. adding back non-convertible bond interest.
【正确答案】
A
【答案解析】If convertible preferred stock is dilutive, the preferred dividends that would not have been paid if the preferred stock is converted must be added back to the numerator. Note that any nonconvertible preferred stock dividends are still subtracted from income from continuing operations in the numerator.
单选题
Which of the following is NOT a cash flow in the calculation of cash
flow from operations?
A. Dividends received.
B. Dividends paid.
C. Interest income.
【正确答案】
B
【答案解析】According to SFAS 95, dividends paid are treated as cash flow from financing.
单选题
Securities that improve basic per share earnings, or reduce per share
losses, if they are exercised or converted to common stock are called:
A. dilutive securities.
B. antidilutive securities.
C. contingent securities.
【正确答案】
B
【答案解析】Antidilutive securities, upon exercise, increase basic EPS or decrease per share losses.
单选题
Units
Unit Price
Beginning Inventory
559
$1.00
Purchases
785
$5.00
Sales
848
$15.00
SGA Expenses
$ 3191 per annum
What is the Cost
of Goods Sold using the Weighted Average Method?
A. $ 2004.00.
B. $ 2829.19.
C. $ 3988.00.
【正确答案】
B
【答案解析】Weighted average = cost of goods available/total units available. COGS = Units sold × wt. ave = 848 ×3.33631 = $2829.19.
单选题
Are the following essential characteristics of an asset?
Characteristic 1 : The asset provides future economic benefits as a
result of past transactions. Characteristic 2: The asset is
tangible and is obtained at a cost.
Characteristic 1
Characteristic 2 ①A.
Yes
Yes ②B.
Yes
No ③C.
No
No
A. ①
B. ②
C.③
【正确答案】
B
【答案解析】An asset provides future economic benefits as a result of past transactions. Assets can be tangible or intangible. In some cases, assets are acquired without cost, but will be reported to the extent that they will provide future economic benefit, and thus have value.
单选题
The following sequence' of events involves a company' s stock.
The company: Had 100000 shares of common' stock Outstanding at the beginning of
the year. Issued 20000 shares of common Stock on June 1. Issued a 10% stock
dividend on July 1. Issued 1000,10% bonds convertible into 21 shares of stock
each, on September 1. Assuming the convertible bonds are
dilutive, what is the weighted average number of shares that the company will
use to compute its basic and diluted earnings per share?
Basic Diluted
①A. 132000 129833 ②B. 122833
129833 ③C. 132000
146000
A. ①
B. ②
C.③
【正确答案】
B
【答案解析】Beginning shares 100000×12 = 1200000
New shares 20000×7 = 140000
Stock dividends (beginning shares) 10000×12 = 120000
Stock dividends ( new shares) 2000×7 = 14000
Total = 1474000/12 = 122833
Convertible bonds 1000 × 21 × 4/12 = 84000/12 =7000
Diluted number of shares 122833 + 7000 = 129833
单选题
When using the indirect method for computing cash flow from operating
activities, a change in accounts payable will require which of the following?
A. A negative (positive) adjustment to net income when accounts payable
increases (decreases ).
B. A positive (negative) adjustment to net income when accounts payable
increases (decreases ).
C. A positive adjustment to net income regardless of whether accounts
payable increases or decreases.
【正确答案】
B
【答案解析】A decrease in accounts payable represents an outflow. Hence, a negative adjustment will be required. Conversely, an increase represents an inflow and a positive adjustment.
单选题
Favor, Ine. ' s capital and related transactions during 2005 were as
follows: On January 1, $1000000 of 5-year 10 percent annual
interest bonds were issued to Cover In-dustries in exchange for old equipment
owned by Cover. On June 30, $ 50000 of interest was paid to
Cover On July 1, the bonds were returned to Favor in exchange
for $1500000 par value six percent preferred stock. On December
31, preferred stock dividends of $ 45000 were paid to Cover.
Favor, Inc. 's cash flow from financing (CFF) for 2005 (assume U. S. GAAP) is:
A. $95000.
B. $1045000.
C. $45000.
【正确答案】
C
【答案解析】Issuing bonds in exchange for equipment does not affect cash flow. Interest paid is an operating cash flow. Exchanging bonds for stock does not affect cash, but should still be disclosed in a footnote to the Statement of Cash Flows. Dividends paid are considered financing activities. In this case, only the preferred stock dividends paid would be considered CFF.
单选题
Which of the following statements about the analysis of cash flows is
least accurate?
A. Interest payments on debt are not a financing cash flow under U. S.
GAAP.
B. Dividends received are an operating cash flow under U. S. GAAP.
C. Both the direct and indirect methods involve adding back noncash items
such as depreciation and amortization.
【正确答案】
C
【答案解析】When using the direct method of calculating operating cash flows, depreciation and amortization are not "added back" (to net income) because we don' t begin with net income under the direct method. Depreciation and amortization are noncash changes and are not used under the direct method. The other statements are tree. Interest payments on debt affect cash flow from operations.
单选题
Which of the following statements about revenue recognition methods is
most accurate?
A. The completed contract method recognizes revenue at the time of the
sale.
B. The cost recovery method recognizes profit as cash is received.
C. The percentage of completion method recognizes profit corresponding to
the costs incurred as a proportion of estimated total costs.
【正确答案】
C
【答案解析】The completed contract method recognizes revenue only when the project is complete. The cost recovery method recognizes profit when cash collected exceeds costs incurred. The installment method recognizes profit as cash is collected.
单选题
For the year ended December 31,2007, Challenger Company reported the
following financial information :
Revenue
$100000
Cost of goods sold
(40000)
Cash operating expenses
(20000)
Depreciation expense
(5000)
Tax expense
(3000)
Net income
$32000
Increase in accounts receivable
$7500
Decrease in inventory
$2500
Increase in short-term notes payable
$3000
Decrease in accounts payable
$1000
Calculate
cash flow from operating activities using the direct method and the indirect
method. Direct method
Indirect method ①A. $ 31000
$ 34000 ②B. $ 34000
$ 34000 ③C. $ 31000
$ 31000
A. ①
B. ②
C.③
【正确答案】
C
【答案解析】CFO is the same under both methods, the only difference is presentation. Direct method: $ 92500 cash collections ( $100000 revenue $ 7500 increase in receivables) $ 38500 cash paid to suppliers ( $ 40000 COGS + $ 2500 decrease in inventory $1000 decrease in payables) $ 20000 cash operating expenses $ 3000 tax expense = $ 31000. Indirect method: $ 32000 net income + $ 5000 depreciation expense $ 7500 increase in receivables + $2500 decrease in inventory$1000 decrease in payables = $31000. The increase in short-term notes payable is a financing activity.
单选题
In calculating the numerator for diluted Earnings Per Share, the
dividends on convertible preferred stock are:
A. subtracted from earnings available to common shareholders without an
adjustment for taxes.
B. added to earnings available to common shareholders with an adjustment for
taxes.
C. added to earnings available to common shareholders without an adjustment
for taxes.
【正确答案】
C
【答案解析】Formula = Diluted EPS = [(Net income Preferred dividends) + Convertible preferred dividends + (Convertible debt interest) (1-t)] / [(Weighted average shares)+(Shares from conversion of conv. pfd shares) + (Shares from conversion of cony. debt) + (Shares issuable from stock options)].
单选题
Cash collection is a critical event for income recognition under
the: Cost-Recovery Method Installment
Method ①A. No
Yes ②B.
No
No ③C. Yes
Yes
A.①
B.②
C.③
【正确答案】
C
【答案解析】Recognition of income depends on cash collected under both methods.
单选题
The Fischer Company had net income of $1500000. Fischer paid preferred
dividends of $ 5 on each of the 100000 preferred shares. There are 1 million
Fischer common shares outstanding. In addition to the common and preferred
stock, Fischer has $ 25 million of 4 percent bonds outstanding. The face value
of each bond is $1000. Each bond is convertible into 40 common shares. If
Fischer' s tax rate is 40 percent, determine its basic and diluted earnings per
share? Basic EPS
Diluted EPS ①A. $1.00
$1.25
②B. $1.50
$1.25 ③C. $1.00
$0.80
A. ①
B. ②
C.③
【正确答案】
C
【答案解析】[*]
[*]
单选题
Which of the following statements about the appropriate revenue
recognition method to use, given the status of completion of the earning process
and assurance of payment, is least likely correct? Use the:
A. completed contract method when the firm cannot reliably estimate the
outcome of the project.
B. cost recovery method when future cash collection is highly
uncertain.
C. installment method when collectability of payments for a sale can be
reasonably estimated.
【正确答案】
C
【答案解析】The installment method should be used when future cash collection cannot be reasonably estimated.
单选题
If Jackson Ski Company issues common stock, and uses the proceeds to
purchase fixed assets such as equipment:
A. cash flow from financing would decrease and cash flow from investing
would increase.
B. both cash flow from operations and cash flow from financing would
decrease.
C. cash flow from financing would increase and cash flow from investing
would decrease.
【正确答案】
C
【答案解析】Cash flow from financing increases when stock is issued, while cash flow from investing decreases when spending for purchases of fixed assets.