Question 1

Under the fair value method of accounting for stock options,firms must value stock options on the date of ____________________.

Accepted Answer

The answer of Under the fair value method of accounting...

Question 2

All of the following are typically recognized as accounting liabilities except:

Accepted Answer

A)  Obligations with Fixed Payment Dates and Amounts 
B)  Obligations under Mutually Unexecuted Contracts 
C)  Obligations Arising from Advances from Customers on Unexecuted Contracts and Agreements 
D)  Obligations with Fixed Payment Amounts but Estimated Payment Dates 
A)  Obligations with Fixed Payment Dates and Amounts 
B)  Obligations under Mutually Unexecuted Contracts 
C)  Obligations Arising from Advances from Customers on Unexecuted Contracts and Agreements 
D)  Obligations with Fixed Payment Amounts but Estimated Payment Dates

Question 3

The first date at which employees can exercise their stock options is termed the _________________________.

Accepted Answer

The answer of The first date at which employees can...

Question 4

Liabilities requiring the future delivery of goods or services appear on the balance sheet at the ______________________________ of those goods and services.

Accepted Answer

The answer of Liabilities requiring the future delivery of goods...

Question 5

In the chart below,assign the directional effect (I = increase,D = decrease,or NE = no effect)of each of the following four transactions on the components of the book value of common shareholders' equity..Treasury stock acquired (company uses the cost method).
b.Treasury stock in transaction a.reissued at an amount greater than original acquisition
price.
c.Treasury stock in transaction a.reissued at an amount less than the original acquisition
price.
d.Restricted stock issued (grant date).
 $$\begin{array} { | c | c | c | c | l | l | l | } 
\hline \text { Item } & \begin{array} { c } 
\text { Common } \
\text { Stock }
\end{array} & \begin{array} { c } 
\text { Additional } \
\text { Paid-In } \
\text { Capital }
\end{array} & \begin{array} { c } 
\text { Deferred } \
\text { Compensation }
\end{array} & \begin{array} { c } 
\text { Retained } \
\text { Earnings }
\end{array} & \begin{array} { c } 
\text { Treasury } \
\text { Stock at } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Total Common } \
\text { Shareholders? } \
\text { Equity }
\end{array} \
\hline \text { a. } & & & & & & \
\hline \text { b. } & & & & & & \
\hline \text { c. } & & & & & & \
\hline \text { d. } & & & & & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | c | c | c | c | c |

Question 6

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 7

Which kind of dividends have an interest-bearing promise to pay dividends?

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

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

Accepted Answer

A)  Liabilities requiring future cash payments appear at the present value of the required future cash flows discounted at an interest rate that reflects the uncertainty that the firm will be able to make the cash payments. 
B)  The fair value of a liability cannot differ from the amount appearing on the balance sheet, particularly for long-term debt. 
C)  Liabilities representing cash advances from customers appear at the amount of the cash advance. 
D)  Liabilities requiring the future delivery of goods or services appear at the estimated cost of those goods and services. 
A)  Liabilities requiring future cash payments appear at the present value of the required future cash flows discounted at an interest rate that reflects the uncertainty that the firm will be able to make the cash payments. 
B)  The fair value of a liability cannot differ from the amount appearing on the balance sheet, particularly for long-term debt. 
C)  Liabilities representing cash advances from customers appear at the amount of the cash advance. 
D)  Liabilities requiring the future delivery of goods or services appear at the estimated cost of those goods and services.

Question 9

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 10

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 A and C 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 A and C are correct.

Question 11

There are three dates that are important to a corporation when they issue new shares of stock.Identify the three dates and explain the significance of each?
Date of declaration- The board of directors declare a cash dividend and the dividend now becomes a legal liability of the corporation
Date of record- On the date of record the corporation makes a list of the shareholders that are elgible for the cash dividend
Payment date- On the payment date the company pays the shareholders on record their cash dividend.

Accepted Answer

The three important dates for a corporat

Question 12

Porter Corporation
NOTE: The following multiple choice questions require present value information.
On January 1, 2012, Porter Corporation signed a five-year noncancelable lease for certain machinery. The terms of the lease called for:
 1) Price to make annual payments of \$60,000 at the end of each year (starting an Dec. 31, 2012) far Five years. Parter must return the equipment to the lessar end of this period.
2) The machinery has an estimated useful life of 6 years and no expected salvage value. 
3) Parter uses the straight-line method af depreciation far all af its fixed a55ets. 
 4) Parter's incremental barrowing rate is $8 \%$
5) The fair value of the as5et at January 1,2012 is $\$ 275,000$.
-What accounting method should Porter use to account for the equipment lease?

Accepted Answer

A)  Operating Lease method 
B)  Capital Lease method 
C)  Equipment Lease method 
D)  Lessee Accounting method 
A)  Operating Lease method 
B)  Capital Lease method 
C)  Equipment Lease method 
D)  Lessee Accounting method

Question 13

Discuss the difference between transferring receivables with and without recourse.
When a company transfers receivables to the factor without recourse the factor pays the company a percentage of the total receivables and in effect it is a sale of the receivables to the factor.
The factor takes the receivables with recourse if any uncollected receivables can be returned to the company for a refund.
PROBLEM

Accepted Answer

Transferring receivables with and withou

Question 14

Assume that you are currently negotiating a lease transaction in the role of the lessee.Discuss whether you would rather structure the lease as an operating lease or a capital lease and why.In addition,provide the conditions that would require that the lease be accounted for as a capital lease.

Accepted Answer

Normally most managers would probably wa

Question 15

According to U.S.GAAP,which of the following provides the most reliable measure for fair value measurement?

Accepted Answer

A)  Observable market data serving as inputs into estimates into present value-based measurements such as foreign exchange rates. 
B)  Quoted market prices of identical assets or liabilities in inactive markets 
C)  Observable quoted market prices in active markets for identical assets or liabilities 
D)  Unobservable inputs used by the reporting entity when modeling how the market would determine the fair value of the asset or liability in question 
A)  Observable market data serving as inputs into estimates into present value-based measurements such as foreign exchange rates. 
B)  Quoted market prices of identical assets or liabilities in inactive markets 
C)  Observable quoted market prices in active markets for identical assets or liabilities 
D)  Unobservable inputs used by the reporting entity when modeling how the market would determine the fair value of the asset or liability in question

Question 16

Santa Corporation
NOTE: These multiple choice questions require present value information.
Santa Corporation manufactures Christmas decorations and supplies throughout the world. The company owns property, plant, and equipment and also enters into operating leases for certain facilities. Assume that Santa's incremental borrowing rate is 8%. The company's tax rate is 40%. Listed below is selected financial data for Santa and a portion of the company's operating lease footnote.

-Using the information provided by Santa Corporation calculate the present value of the operating leases.

Accepted Answer

A)  $2,155,843 
B)  $2,024,945 
C)  $1,482,390 
D)  $2,854,452 
A)  $2,155,843 
B)  $2,024,945 
C)  $1,482,390 
D)  $2,854,452

Question 17

Which kind of dividends typically pay 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 18

NOTE: This problem requires present value information.
Charter Corp.manufactures office equipment and supplies throughout the U.S.The company owns property,plant,and equipment and also enters into operating leases for certain facilities.The company's tax rate is 35%.Listed below is selected financial data for Charter and the company's operating lease disclosure.

As an analyst you wish to restate Charter's operating leases into capital leases.
Required:a.Using the information in the operating lease disclosure,and assuming that Charter has an incremental borrowing rate for secured debt of 8%,restate the operating leases into capital leases.
b.Estimate the average life of the operating leases.
c.Calculate Charter's fixed asset turnover ratio as reported.
d.Would Charter's fixed asset turnover ratio increase or decrease,assuming that the operating leases were capitalized?

Accepted Answer

a.Calculate the present value of the ope

Question 19

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 20

One criteria that must be satisfied for a firm to recognize an obligation is that the transaction or event giving rise to the obligation has already ____________________.

Accepted Answer

The answer of One criteria that must be satisfied for...

Under the fair value method of accounting for stock options,firms must value stock options on the date of ____________________.

All of the following are typically recognized as accounting liabilities except:

The first date at which employees can exercise their stock options is termed the _________________________.

Liabilities requiring the future delivery of goods or services appear on the balance sheet at the ______________________________ of those goods and services.

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

Which kind of dividends have an interest-bearing promise to pay dividends?

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

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

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

Assume that you are currently negotiating a lease transaction in the role of the lessee.Discuss whether you would rather structure the lease as an operating lease or a capital lease and why.In addition,provide the conditions that would require that the lease be accounted for as a capital lease.

According to U.S.GAAP,which of the following provides the most reliable measure for fair value measurement?

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

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?

One criteria that must be satisfied for a firm to recognize an obligation is that the transaction or event giving rise to the obligation has already ____________________.

Overview of Financial Reporting, financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

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

Profitability Analysis

Risk Analysis

Accounting Quality

Investing Activities

Operating Activities

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: Financing Activities

Under the fair value method of accounting for stock options,firms must value stock options on the date of ____________________.

All of the following are typically recognized as accounting liabilities except:

The first date at which employees can exercise their stock options is termed the _________________________.

Liabilities requiring the future delivery of goods or services appear on the balance sheet at the ______________________________ of those goods and services.

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

Which kind of dividends have an interest-bearing promise to pay dividends?

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

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

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

Assume that you are currently negotiating a lease transaction in the role of the lessee.Discuss whether you would rather structure the lease as an operating lease or a capital lease and why.In addition,provide the conditions that would require that the lease be accounted for as a capital lease.

According to U.S.GAAP,which of the following provides the most reliable measure for fair value measurement?

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

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?

One criteria that must be satisfied for a firm to recognize an obligation is that the transaction or event giving rise to the obligation has already ____________________.

Overview of Financial Reporting, financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

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

Profitability Analysis

Risk Analysis

Accounting Quality

Investing Activities

Operating Activities

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