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ACCT 504 Accounting and Finance, Managerial Use and Analysis

Final Exam Set 3

Page 1

1. Question: (TCO A) Which one of the following is an advantage of corporations relative to partnerships and sole proprietorships? (Points : 5)

2. Question: (TCO A) When a corporation distributes a dividend, _____. (Points : 5)

3. Question: (TCOs A, B) Below is a partial list of account balances for Cerner Company: (Points : 5)

4. Question: (TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5)

5. Question: (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)

6. Question: (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)

7. Question: (TCOs D, G) Joyce Corporation issues 1,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 102. The journal entry to record the issuance will show a _____. (Points : 5)

8. Question: (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)

9. Question: (TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)

10. Question: (TCO F) Comparisons of data within a company are an example of the following comparative basis. (Points : 5)

11. Question: (TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis? (Points : 5)

12. Question: (TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)

13. Question: (TCO F) Long-term creditors are usually most interested in evaluating _____. (Points : 5)

14. Question: (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5)

Page 2

1. Question: (TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report:…………… Required:1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.

2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection Period, Return on Assets Ratio, Debt to Total Assets and Return on common stockholders’ equity ratio. (Make sure to show all your work) (Points : 36)

2. Question: (TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:………….. Required:Using the information provided above: 1. Prepare a multiple-step income statement2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results. (Points : 36)

3. Question: (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:…………. Required: 1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and explain the major reasons for the increase or decrease for each of these sections. 2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio. (Points : 36)

4. Question: (TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”

5. Question: (TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below……………. Required:1) Please explain the meaning of each of the Pfizer ratios above. 2) Please state which company performed better for each ratio. (Points : 36)

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