Exhibit 6-2 Given the following information for the Green Company: $\begin{array}{ll} \text { Net sales (all on account) } & \$ 5,200,000 \\ \text { Interest expense } & 240,000 \\ \text { Income tax expense } & 280,000 \\ \text { Net income } & 420,000 \\ \text { Income tax rate } & 40 \%\\\text { Total assets: }\\ &\text { January } 1,2010 & \$ 1,800,000 \\ &\text { December } 31,2010 & 2,400,000\\\text { Stockholders' equity: }\\ &\text { January } 1,2010 & 1,500,000 \\ &\text { December } 31,2010 & 1,600,000\\\text { Current assets, December } 31,2010 & 700,000 \\ \text { Quick assets, December } 31,2010 & 400,000 \\ \text { Current liabilities, December 31, 2010 } & 300,000\\ \text { Net accounts receivable: }\\&\text { January } 1,2010 & 200,000 \\ &\text { December } 31,2010 & 180,000 \end{array}$ - Refer to Exhibit 6-2.Green's accounts receivable turnover for 2010 was

A) 2.2 times B) 26.0 times C) 27.4 times D) 28.9 times A) 2.2 times B) 26.0 times C) 27.4 times D) 28.9 times

Given the following information: $\begin{array}{lr} \text { Preferred dividends}&\$50\\ \text {Income taxes }&\$200\\ \text { Average number of sharess outstanding}&250\text { shares}\\ \text {Market price per common share }&\$10\\ \text { Net income}&\$600\\ \end{array}$ What is the price/earnings ratio?

A) 3.3 times B) 2.9 times C) 3.8 times D) 4.5 times A) 3.3 times B) 2.9 times C) 3.8 times D) 4.5 times

The following information was obtained from the records of Trophy Company for 2010: $\begin{array}{ll} \text { Net sales } & \$ 2,600,000 \\ \text { Interest expense } & 80,000 \\ \text { Income tax expense } & 40,000 \\ \text { Net income } & 100,000 \end{array}$ How many times was interest earned in 2010?

A) 1.25 times B) 1.75 times C) 2.75 times D) 32.5 times A) 1.25 times B) 1.75 times C) 2.75 times D) 32.5 times

Given the following information regarding accounts receivable: $\begin{array}{ll} \text { Accounts receivable, December } 31 & \$ 7,000 \\ \text { Total current assets, Jamuary 1 } & 30,000 \\ \text { Sales (25\% cash sales) } & 40,000 \\ \text { Total current assets, December } 31 & 25,000 \\ \text { Accountsreceivable, J anuary 1 } & 3,000 \end{array}$ What is the accounts receivable turnover?

A) 4 times B) 6 times C) 8 times D) 10 times A) 4 times B) 6 times C) 8 times D) 10 times

Given the following segment information: $\begin{array}{rrr}\text { Operating } & &\text { Operating }&\text { Segment } \\ \text { Segment } & \text { Revenuess } & \text { Expenses }&\text { Asssets }\\ V&\$ 500 & \$ 400 & \$ 4,000 \\ W&400 & 290 & 3,000 \\ X&300 & 180 & 2,000 \\ Y&100 & 70 & 1,000 \\ Z&100 & 90 & 2,000 \end{array}$ Which of the above operating segments are considered reportable segments?

A) V, W, and X B) V, W, X, and Y C) V, W, X, Y, and Z D) V, W, X, and Z A) V, W, and X B) V, W, X, and Y C) V, W, X, Y, and Z D) V, W, X, and Z

Exam 6: Additional Aspects of Financial Reporting and Financial Analysis

Listed below are the cash flow ratios, followed by a series of descriptive statements. a. Cash flow from operations to sales b. Cash flow from operations to net income c. Cash flow from operations per share d. Cash flow from operations to maturing debt Required: Match the cash flow ratios to the appropriate descriptive statement by placing the appropriate letter in the space provided.

(Essay)

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Question 41

Bistro Company incurred a permanent inventory loss of $80, 000 in April 2010 after the March 31, 2010 quarterly financial statements were issued.What amount of this loss should be reflected in the quarterly income statement for the three months ended June 30, 2010?

(Multiple Choice)

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Question 42

The PCAOB and FASB are involved in establishing standards used in preparing a company's annual report. Required: a. Which standards are established by the PCAOB? Why are these types of standards established? b. Which standards are established by the FASB? Why are these types of standards est athishe of?

(Essay)

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Question 43

Segment reporting results in disaggregated financial data.This can be important to the readers of financial statements because it defines the

(Multiple Choice)

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Question 44

Minimum disclosures are not required as part of interim reporting for

(Multiple Choice)

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Question 45

Exhibit 6-2 Given the following information for the Green Company: Net sales (all on account) \ 5,200,000 Interest expense 240,000 Income tax expense 280,000 Net income 420,000 Income tax rate 40\% Total assets: January 1,2010 \ 1,800,000 December 31,2010 2,400,000 Stockholders' equity: January 1,2010 1,500,000 December 31,2010 1,600,000 Current assets, December 31,2010 700,000 Quick assets, December 31,2010 400,000 Current liabilities, December 31, 2010 300,000 Net accounts receivable: January 1,2010 200,000 December 31,2010 180,000 - Refer to Exhibit 6-2.Green's accounts receivable turnover for 2010 was

(Multiple Choice)

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Question 46

Given the following information: Preferred dividends \5 0 Income taxes \2 00 Average number of sharess outstanding 250 shares Market price per common share \1 0 Net income \6 00 What is the price/earnings ratio?

(Multiple Choice)

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Question 47

The following information was obtained from the records of Trophy Company for 2010: Net sales \ 2,600,000 Interest expense 80,000 Income tax expense 40,000 Net income 100,000 How many times was interest earned in 2010?

(Multiple Choice)

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Question 48

Your firm recently completed a set of interim financial statements for one of your clients.Your client has just asked you if there are any differences in the procedures used in the preparation of interim reports as compared to annual reports. Required: Write an explanation of how the interim accounting procedures differ from those performed at year-end.

(Essay)

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Question 49

Pratt, Inc.paid its executives a $320, 000 bonus based on profit results for the fiscal year ended December 31, 2010.Based on its master budgets for 2011, Pratt estimates its bonuses for the fiscal year ended December 31, 2011, will be $300, 000.What amount, if any, should Pratt recognize as an expense for bonuses in its quarterly income statement for the three months ended March 31, 2011?

(Multiple Choice)

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Question 50

According to GAAP, the conceptual view of interim reporting is that interim reporting

(Multiple Choice)

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Question 51

Discuss how intracompany and intercompany comparisons help fulfill the qualitative characteristics of consistency and comparability.

(Essay)

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Question 52

Full disclosure is desirable for all of the following reasons except

(Multiple Choice)

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Question 53

A difficulty can arise in preparing an interim report because

(Multiple Choice)

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Question 54

Which of the following statements is true concerning interim financial reporting?

(Multiple Choice)

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Question 55

Given the following information regarding accounts receivable: Accounts receivable, December 31 \ 7,000 Total current assets, Jamuary 1 30,000 Sales (25\% cash sales) 40,000 Total current assets, December 31 25,000 Accountsreceivable, J anuary 1 3,000 What is the accounts receivable turnover?

(Multiple Choice)

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Question 56

A comparison of a company's performance with that of its own past results is known as

(Multiple Choice)

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Question 57

An operating segment is a component of a company

(Multiple Choice)

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Question 58

Given the following segment information: Operating Operating Segment Segment Revenuess Expenses Asssets V \ 500 \ 400 \ 4,000 W 400 290 3,000 X 300 180 2,000 Y 100 70 1,000 Z 100 90 2,000 Which of the above operating segments are considered reportable segments?

(Multiple Choice)

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Question 59

The group that has oversight over the financial reporting process of a company is called the

(Multiple Choice)

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Question 60

Bistro Company incurred a permanent inventory loss of $80, 000 in April 2010 after the March 31, 2010 quarterly financial statements were issued.What amount of this loss should be reflected in the quarterly income statement for the three months ended June 30, 2010?

Segment reporting results in disaggregated financial data.This can be important to the readers of financial statements because it defines the

Minimum disclosures are not required as part of interim reporting for

Given the following information: Preferred dividends \5 0 Income taxes \2 00 Average number of sharess outstanding 250 shares Market price per common share \1 0 Net income \6 00 What is the price/earnings ratio?

The following information was obtained from the records of Trophy Company for 2010: Net sales \ 2,600,000 Interest expense 80,000 Income tax expense 40,000 Net income 100,000 How many times was interest earned in 2010?

According to GAAP, the conceptual view of interim reporting is that interim reporting

Discuss how intracompany and intercompany comparisons help fulfill the qualitative characteristics of consistency and comparability.

Full disclosure is desirable for all of the following reasons except

A difficulty can arise in preparing an interim report because

Which of the following statements is true concerning interim financial reporting?

Given the following information regarding accounts receivable: Accounts receivable, December 31 \ 7,000 Total current assets, Jamuary 1 30,000 Sales (25\% cash sales) 40,000 Total current assets, December 31 25,000 Accountsreceivable, J anuary 1 3,000 What is the accounts receivable turnover?

A comparison of a company's performance with that of its own past results is known as

An operating segment is a component of a company

Given the following segment information: Operating Operating Segment Segment Revenuess Expenses Asssets V \ 500 \ 400 \ 4,000 W 400 290 3,000 X 300 180 2,000 Y 100 70 1,000 Z 100 90 2,000 Which of the above operating segments are considered reportable segments?

The group that has oversight over the financial reporting process of a company is called the

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Intangibles

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Income Recognition and Measurement of Net Assets

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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