# Market Analysis of Big Bazar

Pages: 25 (1702 words) Published: April 15, 2014
﻿MCQ -1

– Financial Accounting
Under the FIFO cost flow assumption during a period of inflation, which of the following is false? WHICH OF THE FOLLOWING IS NOT TRUE. (Hint: One way to answer this is to look at examples of lifo and fifo). Choose one answer.

a. Income tax expense will be higher than under LIFO.

b. Gross margin will be higher than under LIFO.

c. Ending inventory will be lower than under LIFO.

d. Cost of goods sold will be lower than under LIFO.

e. All of the above are true.

2
Marks: 1
Yoakum Company reported the following information related to inventory and sales
Units
Unit Cost
Beginning inventory
1,000
\$20
Purchase No. 1
7,000
22
Purchase No. 2
2,000
23
Sales — 7,000 units at \$38 per unit.
Compute the following amounts assuming a periodic inventory
Inventory Costing Method
Revenue
Cost of Goods Sold
Gross Margin
Balance Sheet Inventory
FIFO
7000 X 38

LIFO

3
Marks: 1
Inventory Costing Method
Revenue
Cost of Goods Sold
Gross Margin
Balance Sheet Inventory
FIFO

(1000 X 20) + (6000 X 22)

LIFO

4
Marks: 1
Inventory Costing Method
Revenue
Cost of Goods Sold
Gross Margin
Balance Sheet Inventory
FIFO

266000 - 152000

LIFO

5
Marks: 1
Inventory Costing Method
Revenue
Cost of Goods Sold
Gross Margin
Balance Sheet Inventory
FIFO

(1000 X 22) + (2000 X 23)
LIFO

6
Marks: 1
Inventory Costing Method
Revenue
Cost of Goods Sold
Gross Margin
Balance Sheet Inventory
FIFO

LIFO
7000 X 38

7
Marks: 1
Inventory Costing Method
Revenue
Cost of Goods Sold
Gross Margin
Balance Sheet Inventory
FIFO

LIFO

(2000 X 23) + (5000 X 22)

8
Marks: 1
Inventory Costing Method
Revenue
Cost of Goods Sold
Gross Margin
Balance Sheet Inventory
FIFO

LIFO

266000 - 156000

9
Marks: 1
Inventory Costing Method
Revenue
Cost of Goods Sold
Gross Margin
Balance Sheet Inventory
FIFO

LIFO

(2000 X 22) + (1000 x 20)

10
Marks: 1
If an expenditure is treated as a capital expenditure, instead of as an operating expense, which of the following statements is true? Choose one answer.

a. The current year's net income will be lower and future depreciation expense will be higher.

b. The current year's net income will be higher and future depreciation expense will be lower.

c. The current year's net income will be higher and future depreciation expense will be higher.

d. The current year's net income will be lower and future depreciation expense will be lower.

11
Marks: 1
A machine, acquired for a cash cost of \$6,000, is being depreciated on a straight-line basis of \$900 per year. The residual value was estimated to be 10% of cost. The estimated useful life is Choose one answer.

a. 3 years.

b. 4 years.

c. 5 years.

d. 6 years.

e. None of the above is correct.

12
Marks: 1
Toys “R” Us' current ratio for 2001 was 1.24 and in 2000 it was 1.01. Which is the most likely cause of the increase from 2000 to 2001? Choose one answer.

a. Short-term borrowings increased sharply.

b. Inventories increased significantly.

c. Toys “R” Us paid suppliers thereby reducing accounts payable

d. Only B and C are causes of the increase.

e. All of the above caused the increase.

13
Marks: 1
Philips Corporation issued (sold) \$50,000,000 of its 10% bonds at par (at fact value of \$100) on January 1, 20D. On December 31, 20D the bonds were trading on the bond exchange at 102½. Since the issue date, the market rate of interest on similar risk bonds has Choose one answer.

a. Increased.

b. Decreased.

c. Toys “R” Us paid suppliers thereby reducing...