Exam 6: Additional Aspects of Financial Reporting and Financial Analysis

The Philip Company had the following information available for the fiscal year ended December 31, 2010: Net sales \ 1,600,000 Cost of goods sold 1,200,000 Merchandise inventory: January 1,2010 200,000 December 31,2010 400,000 Philip's inventory turnover for 2010 was

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 return on total assets during 2010 was

The information reported about the reportable segments of an enterprise may be disclosed

Tanner Company identified three operating segments by analyzing its types of products produced.Information related to those segments for 2010 is presented below: Revenues Expenses Common Expenses Segment A \ 400,000 \ 300,000 Segment B 250,000 100,000 Segment C 350,000 200,000 Total \1 ,000,000 \6 00,000 \2 00,000 For measurement purposes, Tanner typically allocates common expenses to segments based on the ratio of a segment's profit before common expenses to total profit before common expenses.As this allocation method reasonably allocates common expenses to segments, Segment A's operating profit for segment reporting purposes would be

The following codes are used to compute the ratios below: A $\quad$$=$ Intangible assets B $\quad$$=$ Ac counts receivable C $\quad$$=$ Cash flow from operations D $\quad$$=$ Cost of goods sold E $\quad$$=$ Average common share outstanching F $\quad$$=$ Cash G $\quad$$=$ Current liabilities H $\quad$ $=$ Net income I $\quad$$=$ Inventory, beginning J $\quad$$=$ Property, plant, and equipment K $\quad$$=$ Prepaid insurance L $\quad$$=$ Common dividends M $\quad$$=$ Long-term liabilities N $\quad$$=$ Interest expense O $\quad$$=$ Inventory, ending P $\quad$$=$ Preferred dividends Q $\quad$$=$ Investment in stock of subsidiary T $\quad$$=$ Pretax operating income Required: Use the letters above to indicate how the following ratios would be calculated: a. Debtratio b. Inventary tumover c. Quick ratio d. Earnings per share e. Cash flows from operations to net income

Extensible Business Reporting Language (XBRL)

An auditor issues an audit report that expresses three opinions.Which of the following is not one of those opinions?

Which one of the following statements regarding market efficiency is false?

Cooper Company experienced a permanent loss due to an inventory market decline in June 2010 in the amount of $800, 000.The loss was not recovered by its fiscal year of December 31, 2010.How should this loss have been reflected in Cooper's interim quarterly financial reports? Quarter Ended March 31 June 30 September 30 December 31 I. \ 200,000 \ 200,000 \ 200,000 \ 200,000 II. 0 266,667 266,667 266,667 III. 0 800,000 0 0 IV. 0 0 0 800,000

In the preparation of interim income statements, the treatment of expenses is recognized differently depending on whether or not they are directly related to product sales or services. Required: Discuss the general treatment of expenses in interim statements when they a. are directly related to prochuct sales or services. b. are not directly related to product sales or services.

Ralph Mechanical has just completed a year during which legislative action has changed the tax laws twice.As a result Ralph's estimated tax rate has varied somewhat.The table below shows management's best estimates of the effective tax rate at the end of each quarter along with quarterly income before tax. Tax Rate Income before Estimated for Tax for Current Quarter Quarterly Report Quarter 1 25\% \ 1,500 2 35\% 1,200 3 30\% 1,900 4 30\% 2,500 Required: Using guidelines from current GAAP, calculate the tax expense that would be reported in the a. first quarter financial results b. second quater financial results c. third quater financial results d. fourth cuarter financial results

The following information was obtained from the financial records of the Butler Company: Required: Compute: a. Inventory turnover in days b. Acid-test ratio c. Current ratio d. Times interest earned e. Profit margin f. Price/earnings ratio

Which of the following is an acceptable practice as it relates to interim financial reporting?

In horizontal analysis

Exhibit 6-1 Morgan Company reported the following information for the year ended December 31, 2010: Net income \ 800,000 Preferred dividends declared and paid 100,000 Common dividends declared and paid 160,000 Average common shares outstanding 140,000 Ending market price per share 30 Net sales 7,400,000 - Refer to Exhibit 6-1.Morgan's 2010 dividend yield was

A company's current ratio of 2:1 will decrease if the company

The Latin Company is made up of five operating segments.Information concerning these segments for 2010 is shown below: Sales \ 127,000 \ 16,000 \ 24,000 \ 19,000 \ 15,000 Operating expenses 88,000 15,800 14,900 12,200 13,100 Segment as sets 125,000 25,000 60,000 25,000 20,000 Included in Latin's operating expenses are general corporate expenses of $16, 000. Required: Based on the provisions of current GAAP, prepare a schedule that reflects required disclosures about operating segments from the above information for Latin Company exclusive of any footnotes.

In its first interim period, Deuce had $500 of income before taxes and an estimated annual tax rate of 40%.In its second interim, Deuce had $800 of income before taxes and its estimated annual tax rate changed to 30%.Deuce's tax expense for the second interim period was

The following codes are used to compute the ratios below: A Accounts receivable (beginning) = Net income = Cash = Earnings per share = Common stockholders equity = Marketable securities (short-term) = Total assets = Current liabilities = Net sales, credit = Inventory = Market price per common share = Outstanding common shares = Prepaid insurance = Net sales, cash = Common stock outstanding = Accounts receivable (ending) = Long-term liabilities Required: Use the letters above to indicate how the following ratios would be calculated: a. Price/earnings b. Profit margin c. Acicltest d. Receivablesturnover e. Book value per common share

The financial information to be reported separately for each reportable segment should include