Exam 6: Financing Activities

The assessment of earnings quality is best accomplished through the use of which one of the following?

Which of the following does not describe an extraordinary gain or loss?

Penny Corp. manufactures telecommunication equipment and has been profitable each year for the past ten years. During 2014 the company saw its core market decline sharply when a competitor introduced a significant new product technology. In response to the decline in business Penny Corp. announced a major restructuring of its operations. The restructuring plan which would be implemented in 2010 would involve the following changes (all of the charges are material):

Which one of the following is an example of sustainable earnings?

When evaluating the quality of accounting information the user should consider the ____________________ of the firm's disclosures.

U.S. GAAP requires that changes in estimates be accounted for by recognizing the effect ________________________________________ period(s).

The best measure of a firm's sustainable income is:

The Orbus Company has a 30,000 unrealized gain and a 10,000 unrealized loss. Where would Orbus Company report these transactions?

Accounting information should provide a fair and complete representation about a number of a firm's characteristics. Which of the following is not one of those characteristics?

All of the following are the general principles underlying the valuation of liabilities except :

Many times a financial analyst may decide to make adjustments to the financial statements in order to make the statements more useful. Which of the following would not require an adjustment to the financial statement?

Firm's choices and estimates within U.S. GAAP should be determined by:

Warranties payable and Notes payable are considered which of the following?

All of the following are true regarding a high quality balance sheet except :

An extraordinary gain or loss is unusual in nature, _____________________________________________, and material in amount.

Firms' choices and estimates within U.S. GAAP or IFRS should be determined by all of the following except :

Which of the following items is consistent with earnings not being informative about current performance but are informative about future earnings?

A(n) ____________________ of operations differs from a discontinuation of operations because the firm continues to operate in the business segment.

In bankruptcy prediction analysis, a type ____________________ error is classifying a firm as bankrupt and it ultimately survives.

Banks Corp. reported net income of $595,000 in 2012. During 2012 Banks reported a loss of $87,435 from a peripheral activity. The loss was included as part of income from continuing operations. Assuming that the loss is a one-time event and that Banks has an effective tax rate of 35%, calculate Banks' adjusted net income. Show all of your calculations for credit. In addition, discuss why analysts might make an adjustment of this type.