Advance Accounting

Topics: Generally Accepted Accounting Principles, Revenue, Balance sheet Pages: 8 (2585 words) Published: March 31, 2013
Advanced Accounting Mock Exam 2011-2012 Use these questions to prepare for your exam coming soon. This is not guarantee that the exam will be similar except the fact that the exam will also have multiple choice questions. Question 1: An analyst evaluating financial statements for various firms is most likely to conclude that: a) U.S. GAAP ensures uniformity in accounting practices among different firms. b) Firms account for their debt obligations in the liabilities section of the income statement. c) Notes to the financials should be used to get further detail on financial statement balances. d) Management discussion is more useful than Notes to financial statements Question 2: Which of the following statements regarding the International Accounting Standards Board (IASB) is correct? a) The IASB is an independent standard setting body with the responsibility to advance the process of global harmonization of accounting standards. b) The standards issued by the IASB are called "Statements on Standards for International Financial Reporting." c) The IASB requires member countries to adopt the International Financial Reporting Standards. d) IFRS is rules-based while US GAAP is principles-based Question 3: Upon reviewing a firm's most recent financial statements an analyst is least likely to use the: a) Income statement to calculate and evaluate the firm's profit margins over the past year. b) Balance sheet to compare the book value of the firm's common stock to its market value. c) Income statement to discern the current and prior year status of the firm's debts and holdings. d) Cash Flow Statement to assess profitability next year Question 4: The Rotor Corporation has a pretax profit margin of 20%, an asset turnover of 1.8, and a financial leverage ratio of 2.5. If Rotor's effective income tax rate is 30%, what is its return on equity? a) b) c) d) 27.0% 35.0% 63.0% 32.78%

Question 5: Detroit Tire Company has pre-tax profits of $300. The company's times-interestearned ratio is 7.0. What is the company's interest expense? a) b) c) d) $35 $40 $50 $55

Question 6: Hammond Corporation was formed on December 31, 20X0 with $10.0 million in cash from its shareholders. During 20X1, the following transactions and items were noted:       The company had net income of $12.0 million, which included depreciation and amortization expenses of $6.0 million Hammond declared a $2.0 million cash dividend to be paid in January 20X2. The company purchased new equipment for $8.0 million in cash A new bond was issued resulting in cash proceeds of $15.0 million The company paid down its revolving line of credit by $4.0 million Net working capital items (other than cash) increased by $14.0 million

Hammond's December 31, 20X1 balance sheet will reflect a cash balance of ($ millions): a) b) c) d) $13.0. $15.0. $17.0. $16.5

Question 7: Small Cheese Company has 30,000 cumulative preferred shares and 25,000 noncumulative preferred shares both paying out $10 per share in dividends. No dividends are declared in 20X7. Small Cheese has net income of $2,000,000 and has weighted average common shares outstanding of 1,000,000 on December 31, 20X7. What is the basic earnings per share of Small Cheese for the year ended December 31, 20X7? a) b) c) d) $2.00 $1.45 $1.70 $1.85

Question 8: Under IFRS, when an asset is deemed impaired, a firm should proceed to write down the asset to: a) b) c) d) Its value in use. Its net realizable value. The greater of its net realizable value and its value in use. The greater of recoverable amount and value in use

Question 9: Which of the following statements regarding the liability method of accounting for deferred taxes is most accurate? a) Deferred tax liabilities are reported on the balance sheet when it is expected that income taxes will be paid in the future when temporary differences reverse. b) The current period's income tax expense reported on the income statement is determined by subtracting the...
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