Exam 6: Additional Aspects of Financial Reporting and Financial Analysis

An auditor's report contains all of the following paragraphs except

Falconhead Supply had three operating segments during 2010.In determining whether these segments are considered reportable segments, Falconhead has gathered the following information: Segment Revenues \ 60,000 \ 80,000 \ 160,000 Expenses 30,000 50,000 85,000 Assets 200,000 180,000 420,000 In addition, Falconhead has incurred $100, 000 of common expenses that can be reasonably allocated to the three segments.Since most of the common costs relate to the physical operating capability of Falconhead, a reasonable allocation method is to allocate the common costs to each segment based on the ratio of a segment's assets to total assets of the three segments. Required: Compute the profit (loss)for each operating segment under current GAAP provisions.

Given the following information: Inventory \ 500 Short-term marketable securities 100 Cash 200 Prepaid insurance 300 Accounts receivable 400 Currentliabilities 400 What is the quick ratio?

The financial statements for the Ozzie Company are presented below. The common stock was outstanding the entire year and is selling for $28 per share at year-end.The company has declared and paid dividends of $4.00 per share for the year.The income tax rate is 40%.Assume a business year of 360 days.Balances for certain items at December 31, 2010, were: Inventory \ 48,000 Total assets 260,000 Total stockholders' equity 157,200 Required: Based on the data provided for Ozzie Company, compute the following ratios for 2011: a. price/e arrings b. dividend yield c. profit margin d. return on total as sets e. current f. inventory turnover g. debt

Which one of the following ratios is a test of a company's short-term debt-paying ability?

One test of a company's liquidity is the

On January 17, 2010, THX Company received rent of $90, 000 from a tenant.The rent is for the period January through September 2010.What amount of revenue should THX recognize in the quarterly income statement for the three months ended March 31, 2010, as a result of this cash receipt?

Which of the following should be included in disclosures about the assets of a reportable segment?

Which one of the following ratios helps to indicate a company's effectiveness in meeting the stockholder profitability objectives?

Hodges Company has a current ratio of 1.6 to 1.Salaries payable accrued last quarter are paid this quarter.What is the effect of this payment on the current ratio this quarter?

A comparison of a company's performance with that of competitors is known as

The following information was obtained from the accounting records of the Guerra Corporation for 2010: Cost of goods sold \3 ,600,000 Merchandise inventory: January 1 400,000 December 31 460,000 Assuming a business year consisting of 365 days, what was Guerra's number of days' sales in inventories for 2010?

Which of the following auditor opinions would be appropriate when the auditor is unable to determine if a company's statements were prepared in conformity with GAAP?

Disclosures required for reportable segments include all of the following except

Fritz Sales Company spent $180, 000 to advertise in a national sales booklet on April 7, 2010.The booklet is distributed exclusively at the national sales convention during the week beginning on May 14, 2010.Assuming Fritz has a fiscal year ending on December 31, what amount of expense should be included in Fritz's quarterly income statement for the three months ended June 30, 2010, as a result of this advertising expenditure?

Monroe Company reported the following information for the year ended December 31, 2010: Net income \ 600,000 Preferred dividends declared and paid 60,000 Common dividends declared and paid 80,000 Average common shares outstanding 90,000 Ending market price per share 40 Net sales 4,100,000 Monroe's earnings per share for 2010 was

On January 3, 2010, Emanuel Co.paid $60, 000 for insurance on its buildings for the calendar year 2010.In the first week of April 2010, the company made unanticipated major repairs to its equipment at a cost of $240, 000.These repairs benefited operations for the remainder of 2010.How should these expenses be reflected in Emanuel Co.'s quarterly income statements? $\text { Three Months Ended }$ 3/31 6/30 9/30 12/31 I. \ 15,000 \ 95,000 \ 95,000 \ 95,000 II. 60,000 240,000 - - III. 75,000 75,000 75,000 75,000 IV. 15,000 255,000 15,000 15,000

Which one of the following is considered a liquidity ratio?

Following the audit standards set by the PCAOB, the independent CPA conducts audits of public companies.The auditor then issues the audit report. Required: Describe the three opinions that the auditor expresses in the audit report.

An operating segment is a reportable segment if it