Advance Accounting

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