Financial & Managerial Accting MBA-560 Module 5 Test 5: M/C


1.The purpose of common size financial statements is to: (Points : 2) compare the amount of common stock to other types of stock. make comparisons between firms of different sizes. make comparisons between different time periods for one company. either B or C.2.Common methods of financial statement analysis include all of the following except:(Points : 2) horizontal analysis. incremental analysis. vertical analysis. ratio analysis.3.The accounting concept or principle that is perhaps the greatest single cause in distorting the results of financial statement analysis is the: (Points : 2) matching principle. historical cost concept. conservatism principle. time value of money concept.4.Sliefert Company provided the following information from its financial records:Net income$200,000Total stockholders equity$800,000Preferred dividends$10,000Common shares outstanding, 12/31120,000Preferred rights$150,000What is the companys book value per share? (Points : 2) $1.67 $6.67 $5.42 $1.585.Lauer Company reported net income of $66,800 on sales of $300,000. The company has total assets of $500,000 and total liabilities of $100,000. What is the companys return on equity ratio? (Points : 2) 10.0% 12.5% 16.7% 50.0%6.The Haas Company paid total cash dividends of $44,000 on 25,000 outstanding common shares. On the most recent trading day, the common shares sold at $80. What is this companys dividend yield? (Points : 2) 2.2% 3.2% 5% 14.1%7.DeHoag Corporation provided the following information from its financial records: Net income$200,000Number of common shares outstanding 1/1200,000Common stock dividends$10,000Number of common shares outstanding 12/31300,000Sales$800,000 What is the amount of the companys earnings per share? (Points : 2) $0.72 $0.76 $0.80 $3.208.The Huntzicker Company reported gross sales of $850,000, sales returns and allowances of $5,000 and sales discounts of $5,000. The company has average total assets of $500,000, of which $250,000 is property, plant, and equipment. What is the companys asset turnover ratio? (Points : 2) 1.68 times 1.72 times 0.59 times 1.8 times9.Select the incorrectstatement regarding the return on equity (ROE) measure. (Points : 2) ROE is used to measure the profitability of the firm in relation to the amount invested by stockholders. A company s ROE is lower than its return on investment because ROE does not consider that part of the business that is financed by debt. ROE is affected by a company s use of leverage. ROE equals net income divided by average total stockholders equity.10.Otteman Company reported net income of $16,700 on gross sales of $80,000. The company has average total assets of $115,200, of which $100,000 is property, plant, and equipment. What is the companys return on investment? (Points : 2) 69.4% 18.0% 14.5% 12.5%11.Costs such as transportation-out, sales commissions, uncollectible accounts receivable, and packaging are sometimes called: (Points : 2) upstream costs. indirect costs. direct costs. downstream costs.12.Select the incorrect statement regarding upstream and downstream costs. (Points : 2) Profitability analysis should consider only manufacturing and downstream costs. Companies must recover the total cost of developing, producing, and delivering products. Pricing decisions must consider both upstream and downstream costs. The total cost per unit includes upstream, manufacturing, and downstream costs.13.All of the following are upstream costs except: (Points : 2) research and development. selling costs. design costs. costs to build a prototype product.14.Which of the following statements is true with regard to product costs versus general, selling, and administrative costs? (Points : 2) Product costs associated with unsold units appear on the income statement as general expenses. General, selling, and administrative costs appear on the balance sheet. Product costs associated with units sold appear on the Income Statement as cost of good sold expense. All of the above.15.Which of following practices is considered an effective means of re-engineering business systems? (Points : 2) Identifying the best practices used by world-class competitors Improving the accuracy of cost allocations Eliminating non-value added activities All of the above16.During her first year with the company, Ann mistakenly accumulated some of the companys period costs in ending inventory. Which of the following indicates how this error affects the companys financial statements assuming number of units produced exceeded number of units sold during the period? (Points : 2) Cash flows from operations are understated. Gross margin is understated. Net income is understated. Inventory is overstated.17.Which of the following transactions would cause net income for the period to be lower? (Points : 2) Paid $1,600 cash for raw material cost Paid administrative salaries of $2,500 Depreciated production equipment for $3,000 Purchased $5,000 of merchandise inventory18.As a Certified Management Accountant, Zandra is bound by the standards of ethical conduct issued by the Institute of Management Accountants. During the course of business, Zandra learned that her company has decided to discontinue a major product line. If she mentions this fact to her brother, who is a stockbroker, Zandra could be in violation of the: (Points : 2) competence standard. confidentiality standard. integrity standard. objectivity standard.19.Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants? (Points : 2) Competence Confidentiality Integrity Education20.Susan Mason is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in? (Points : 2) Information that is local, relevant, and timely Information that is global and pertains to the business as a whole Information that meets cost/benefit criteria Both A and C
1. Either B or C 2. incremantal analysis 3. Historical cost concept 4. Book value per share = 800000/120000 = $6.67 5. Return on equity= Total net income / (Total assets Total liabilities) = 66800/(500000-100000)=16.7% 6. Dividend yield = Diviend per share / recent share price = (44000/25000) / 80 = 2.2% 7. Earnings per share= Total earnings / Average number of shares = 200000/(200000+300000)/2 = $0.8 8. Asset turnover ratio= Total sales/ Average Total assets = (850000-5000-5000)/500000 = 1.68 9.A company s ROE is lower than its return on investment because ROE does not consider that part of the business that is

inanced by debt 10. =16700/115200 = 14.5% 11. downstream costs 12.Profitability analysis should consider only manufacturing and downstream costs 13. selling costs 14.Product costs associated with units sold appear on the Income Statement as cost of good sold expense 15. All of the above 16. Inventory is overstated 17.Paid administrative salaries of $2,500 18.confidentiality standard 19. Education 20. Both A and C




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