Introduction to Financial Accounting

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Introduction to Financial Accounting
ACCT6331 –Prior Year
Suggested Time: 90 minutes

1. When the amount of expenses recognized for the purpose of financial reporting exceeds the expenses recognized for the purpose of tax reporting, a company will have deferred tax assets. Please indicate if the above statement is true or false.

a. true
b. false

2. BJ Services is an oil and gas service firm. The company does not issue any preferred stocks or convertible securities. The company reports the following EPS data in its 2008 annual report (in thousands except per share data).

Net income| $609,365|
Earnings per share:| |
Basic| $2.08|
Diluted| $2.06|
Weighted average shares outstanding:| |
Basic| 293,479|
| |
Assume the net income used to calculate diluted EPS is $609,365, what is the number of weighted average shares outstanding – diluted (the denominator used in calculating diluted earnings per share) in 2008? a. 2,329 thousand

b. 293,479 thousand
c. 295,808 thousand
d. 589,287 thousand
e. None of the above

3. Companies using FIFO are required to disclose what their inventory would have been if the company had used LIFO. Please indicate if the above statement is true of false. a. true
b. false

4. The 2008 financial statements of Walgreen’s reported the following information (in millions). Walgreen’s Co.| 2008| 2007|
Cost of sales| $42,391| $38,518|
Inventories| $ 7,249| $ 6,790|

The 2008 average inventory days outstanding is:
a. 53.2 days
b. 60.4 days
c. 62.4 days
d. 71.6 days
e. none of the above

5. Bartov corporation reports the following beginning inventory and inventory purchases.

Beginning inventory, 2009| 400 units @ $12 per unit| $4,800| Inventory purchased during 2009| 300 units @ $26 per unit| $7,800| Cost of goods available for sale in 2009| 700 units| $12,600|

Assume that Bartov corporation sold 500 units during 2009. Compute the costs of goods sold (COGS) and ending inventory under LIFO (last-in, first-out) inventory costing method.

a. COGS: $10,200; ending inventory: $2,400
b. COGS: $7,400; ending inventory: $5,200
c. COGS: $9,000; ending inventory: $3,600
d. COGS: $12,600; ending inventory: $0

6. Walgreen uses LIFO inventory costing method. The 2008 financial statements of Walgreen’s reported the following information (in millions).

Walgreen’s Co.| 2008| 2007|
LIFO Cost of goods sold| $42,391| $38,518|
LIFO Inventories| $ 7,249| $ 6,790|
LIFO reserve| $ 1,067| $ 969|

If Walgreen’s had used the FIFO method of inventory costing, 2008 cost of goods sold (COGS) would have been: a. $41,324 million
b. $42,293 million
c. $42,489 million
d. $43,458 million
e. none of the above

7. The 2008 financial statements for BNSF Railway report the following information:

Year ended December 31,| 2008| 2007|
(In millions)| | |
Revenues| $17,787 | $15,610 |
Property and equipment, net| 30,838 | 29,560 |
Total assets| $36,125 | $33,528 |

The 2008 property, plant and equipment turnover is (round to third decimal point): a. 0.577
b. 0.589
c. 0.854
d. 1.734
e. none of the above

8. Central Supply purchased a new printer for $60,000. The printer is expected to operate for eight (8) years, after which it will be sold for salvage value (estimated to be $6,000). How much is the second year’s depreciation expense if the company uses the straight-line depreciation method? a. $15,000

b. $11,250
c. $7,500
d. $6,750
e. none of the above

9. Sloan Company owns an executive plane that originally cost $1,000,000. It has recorded straight-line depreciation on the plane for 6 full years, calculated assuming an $80,000 expected salvage value at the end of its estimated 10-year useful life. Sloan Company sold the plane at the end of the 6th year for $600,000. How much is the gain or losses from the disposition of the airplane?...
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