Question 1

Which of the following is not one of the GAAP classifications for derivatives?

Accepted Answer

A)  Speculative investment 
B)  Fair value hedge 
C)  Asset-liability hedge 
D)  Cash flow hedge 
A)  Speculative investment 
B)  Fair value hedge 
C)  Asset-liability hedge 
D)  Cash flow hedge C

Question 2

Financial reporting requires that firms recognize product financing arrangements as liabilities if which of the following conditions is met?

Accepted Answer

A)  The arrangement requires the sponsoring firm to purchase the inventory, substantially identical inventory, or processed goods of which the inventory is a component at specified prices. 
B)  The selling or sponsoring firm physically controls the inventory. 
C)  The payments made to the other entity cover all acquisition, holding, and financing costs. 
D)  Both "t he arrangement requires the sponsoring firm to purchase the inventory, substantially identical inventory, or processed goods of which the inventory is a component at specified prices"  and "t he payments made to the other entity cover all acquisition, holding, and financing costs"  are correct. 
A)  The arrangement requires the sponsoring firm to purchase the inventory, substantially identical inventory, or processed goods of which the inventory is a component at specified prices. 
B)  The selling or sponsoring firm physically controls the inventory. 
C)  The payments made to the other entity cover all acquisition, holding, and financing costs. 
D)  Both "t he arrangement requires the sponsoring firm to purchase the inventory, substantially identical inventory, or processed goods of which the inventory is a component at specified prices"  and "t he payments made to the other entity cover all acquisition, holding, and financing costs"  are correct. D

Question 3

Which of the following is the date on which a company determines the owners of the stock that will receive a dividend?

Accepted Answer

A)  date of record 
B)  measurement date 
C)  date of declaration 
D)  date of payment 
A)  date of record 
B)  measurement date 
C)  date of declaration 
D)  date of payment A

Question 4

Which of the following is the typical tradeoff when issuing preferred stock?

Accepted Answer

A)  The tradeoff between different accounting for an initial issuance of preferred stock as compared to a common stock issuance. 
B)  The tradeoff between maintaining corporate control and creating a class of shareholders with preference in all asset distributions. 
C)  The tradeoff of giving common shareholders priority over preferred shareholders in corporate liquidations. 
D)  The tradeoff of a convertibility feature of common shares into preferred shares. 
A)  The tradeoff between different accounting for an initial issuance of preferred stock as compared to a common stock issuance. 
B)  The tradeoff between maintaining corporate control and creating a class of shareholders with preference in all asset distributions. 
C)  The tradeoff of giving common shareholders priority over preferred shareholders in corporate liquidations. 
D)  The tradeoff of a convertibility feature of common shares into preferred shares.

Question 5

Which is the date when employees elect to exchange the option and cash for shares of common stock?

Accepted Answer

A)  vesting date 
B)  grant date 
C)  exercise date 
D)  market date 
A)  vesting date 
B)  grant date 
C)  exercise date 
D)  market date

Question 6

Convertible preferred stock has both the attributes of _____________ and __________________________.

Accepted Answer

The answer of Convertible preferred stock has both the attributes...

Question 7

Which kind of dividend typically pays dividends with investments in other corporations' stock?

Accepted Answer

A)  property dividend 
B)  stock dividend 
C)  liquidating dividend 
D)  scrip dividend 
A)  property dividend 
B)  stock dividend 
C)  liquidating dividend 
D)  scrip dividend

Question 8

The _________________________ is the date a firm gives a stock option to employees.

Accepted Answer

The answer of The _________________________ is the date a firm...

Question 9

Assuming that Santa Corporation was required to capitalize its operating lease, how would the company's fixed asset ratio change under this assumption?

Accepted Answer

A)  increase 
B)  decrease 
C)  no effect 
D)  unable to determine 
A)  increase 
B)  decrease 
C)  no effect 
D)  unable to determine

Question 10

__________ means that a company will buy back those receivables that are not collected by the company they are factored to.

Accepted Answer

The answer of __________ means that a company will buy...

Question 11

All of the following are primary events that typically lead to changes in book value of shareholders' equity except :

Accepted Answer

A)  Investments by shareholders, usually net cash received by the company at equity issue date. 
B)  Profitable operating and investing activities, with net income being a large component of this increase. 
C)  Debtholders requiring firms to enter into debt covenants. 
D)  Distributions to shareholders, usually in the form of periodic cash dividend payments to investors and sometimes in the form of share repurchases. 
A)  Investments by shareholders, usually net cash received by the company at equity issue date. 
B)  Profitable operating and investing activities, with net income being a large component of this increase. 
C)  Debtholders requiring firms to enter into debt covenants. 
D)  Distributions to shareholders, usually in the form of periodic cash dividend payments to investors and sometimes in the form of share repurchases.

Question 12

Under which of the following conditions does the equipment lease qualify for capital lease accounting?

Accepted Answer

A)  The lease contains a bargain purchase option. 
B)  The lease term is equal to or greater than 75% of the asset's economic life. 
C)  A, and B are correct answers. 
D)  The lease transfers ownership to the lessee at the end of the lease term. 
A)  The lease contains a bargain purchase option. 
B)  The lease term is equal to or greater than 75% of the asset's economic life. 
C)  A, and B are correct answers. 
D)  The lease transfers ownership to the lessee at the end of the lease term.

Question 13

Discuss the difference between transferring receivables with and without recourse.

Accepted Answer

When a company transfers receivables to

Question 14

At January 1, 2012, Porter should record an asset and liability with respect to the equipment lease equal to:

Accepted Answer

A)  $258,726 
B)  $239,562 
C)  $275,000 
D)  $0 
A)  $258,726 
B)  $239,562 
C)  $275,000 
D)  $0

Question 15

Under the fair value method of accounting for stock options, firms must value stock options on the:

Accepted Answer

A)  grant date 
B)  intrinsic date 
C)  measurement date 
D)  fair value date 
A)  grant date 
B)  intrinsic date 
C)  measurement date 
D)  fair value date

Question 16

Gains and losses on cash flow hedges affect earnings ____________________ than those on fair value hedges.

Accepted Answer

The answer of Gains and losses on cash flow hedges...

Question 17

Using the information provided by Santa Corporation, calculate the company's 2012 fixed asset ratio.

Accepted Answer

A)  3.0 
B)  3.65 
C)  3.23 
D)  5.21 
A)  3.0 
B)  3.65 
C)  3.23 
D)  5.21

Question 18

In some countries the account Reserve for Contingencies may be most comparable to which of the following accounts for a company reporting under U.S. GAAP?

Accepted Answer

A)  Contingency Expense 
B)  Retained Earnings Appropriated for Contingencies 
C)  Unearned Contingency Fees 
D)  Contingency Losses 
A)  Contingency Expense 
B)  Retained Earnings Appropriated for Contingencies 
C)  Unearned Contingency Fees 
D)  Contingency Losses

Question 19

Which of the following does not represent an acceptable method of transferring receivables to increase cash flow?

Accepted Answer

A)  With recourse 
B)  Without recourse 
C)  Factoring 
D)  Tax deferred Method 
A)  With recourse 
B)  Without recourse 
C)  Factoring 
D)  Tax deferred Method

Question 20

Derivative instruments acquired to hedge exposure may be classified as either a fair value hedge or a cash flow hedge. Distinguish between the two types of hedges.

Accepted Answer

Recommended Answer from the text:
Deriva

Which of the following is not one of the GAAP classifications for derivatives?

Financial reporting requires that firms recognize product financing arrangements as liabilities if which of the following conditions is met?

Which of the following is the date on which a company determines the owners of the stock that will receive a dividend?

Which of the following is the typical tradeoff when issuing preferred stock?

Which is the date when employees elect to exchange the option and cash for shares of common stock?

Convertible preferred stock has both the attributes of _ and ______________.

Which kind of dividend typically pays dividends with investments in other corporations' stock?

The _________________________ is the date a firm gives a stock option to employees.

Assuming that Santa Corporation was required to capitalize its operating lease, how would the company's fixed asset ratio change under this assumption?

__________ means that a company will buy back those receivables that are not collected by the company they are factored to.

All of the following are primary events that typically lead to changes in book value of shareholders' equity except :

Under which of the following conditions does the equipment lease qualify for capital lease accounting?

Discuss the difference between transferring receivables with and without recourse.

At January 1, 2012, Porter should record an asset and liability with respect to the equipment lease equal to:

Under the fair value method of accounting for stock options, firms must value stock options on the:

Gains and losses on cash flow hedges affect earnings ____________________ than those on fair value hedges.

Using the information provided by Santa Corporation, calculate the company's 2012 fixed asset ratio.

In some countries the account Reserve for Contingencies may be most comparable to which of the following accounts for a company reporting under U.S. GAAP?

Which of the following does not represent an acceptable method of transferring receivables to increase cash flow?

Derivative instruments acquired to hedge exposure may be classified as either a fair value hedge or a cash flow hedge. Distinguish between the two types of hedges.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Financing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Exam 7: Investing Activities

Which of the following is not one of the GAAP classifications for derivatives?

Financial reporting requires that firms recognize product financing arrangements as liabilities if which of the following conditions is met?

Which of the following is the date on which a company determines the owners of the stock that will receive a dividend?

Which of the following is the typical tradeoff when issuing preferred stock?

Which is the date when employees elect to exchange the option and cash for shares of common stock?

Convertible preferred stock has both the attributes of _____________ and __________________________.

Which kind of dividend typically pays dividends with investments in other corporations' stock?

The _________________________ is the date a firm gives a stock option to employees.

Assuming that Santa Corporation was required to capitalize its operating lease, how would the company's fixed asset ratio change under this assumption?

__________ means that a company will buy back those receivables that are not collected by the company they are factored to.

All of the following are primary events that typically lead to changes in book value of shareholders' equity except :

Under which of the following conditions does the equipment lease qualify for capital lease accounting?

Discuss the difference between transferring receivables with and without recourse.

At January 1, 2012, Porter should record an asset and liability with respect to the equipment lease equal to:

Under the fair value method of accounting for stock options, firms must value stock options on the:

Gains and losses on cash flow hedges affect earnings ____________________ than those on fair value hedges.

Using the information provided by Santa Corporation, calculate the company's 2012 fixed asset ratio.

In some countries the account Reserve for Contingencies may be most comparable to which of the following accounts for a company reporting under U.S. GAAP?

Which of the following does not represent an acceptable method of transferring receivables to increase cash flow?

Derivative instruments acquired to hedge exposure may be classified as either a fair value hedge or a cash flow hedge. Distinguish between the two types of hedges.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Financing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Convertible preferred stock has both the attributes of _ and ______________.