Byfort Company reports the following in its financial statements: \[\begin{array} { | l | c | c | } \hline & \underline { 2005 } & \underline { 2006 } \\ \hline \text { Accounts Receivable, net } & \$ 34,289 \mathrm {~K} & \$ 29,678 \mathrm {~K} \\ \hline \text { Net sales } & \$ 360,007 \mathrm {~K} & \$ 450,000 \mathrm {~K} \\ \hline \end{array}\] *All sales are on credit. -How much did the company collect in cash from debtors during 2006?

A) $445,389K B) $454,611K C) $484,289K D) $488,900K A) $445,389K B) $454,611K C) $484,289K D) $488,900K

Exam 2: Financial Reporting and Analysis

Which of the following would affect the comparison of financial statements across two different firms? I. Different accounting principles II. Different sizes of the companies III. Different reporting periods IV. Different industries

(Multiple Choice)

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Question 21

All of the following are basic approaches to valuation except:

(Multiple Choice)

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Question 22

FASB has recognized the conceptual superiority of the historical value concept and has, in principle, decided to eventually move to a model where all asset and liability values are recorded at fair value.

(True/False)

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Question 23

Under GAAP accounting, a company has the choice of using cash or accrual accounting in preparing its financial statements.

(True/False)

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Question 24

Which of the following statements is incorrect?

(Multiple Choice)

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Question 25

To determine a company's sustainable earning power, an analyst needs to first determine the recurring component of the current period's accounting income by excluding nonrecurring components of accounting income. Such adjusted earnings are often referred to as:

(Multiple Choice)

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Question 26

Accounting income consists of all the following components except:

(Multiple Choice)

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Question 27

Accounting or reported income is same as economic income.

(True/False)

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Question 28

Byfort Company reports the following in its financial statements: Accounts Receivable, net \ 34,289 \ 29,678 Net sales \ 360,007 \ 450,000 *All sales are on credit. -How much did the company collect in cash from debtors during 2006?

(Multiple Choice)

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Question 29

Income smoothing is a form of earnings management.

(True/False)

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Question 30

Primary responsibility for fair and accurate financial statements rests with the auditors.

(True/False)

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Question 31

The fair value of an asset is the hypothetical price at which a business can sell the asset (exit price).

(True/False)

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Question 32

Under cash accounting, a company must recognize revenues in financial statements when the revenues are earned or realized.

(True/False)

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Question 33

Under the fair value model, income is determined by matching costs to recognized revenues, which have to be realized and earned.

(True/False)

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Question 34

Problem Two: Earnings Management Earnings management can be defined as the "purposeful intervention by management in the earnings process, usually to satisfy selfish objectives" (Schipper, 1989). Earnings management techniques can be separated into those that are "cosmetic" (without cash flow consequences) and those that are "real" (with cash flow consequences). The management of a company wishes to increase earnings this period. List three "cosmetic" and three "real" techniques that can be used to achieve this objective and explain why they will achieve the objective.

(Essay)

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Question 35

Financial accounting data has some inherent limitations. Which of the following are limitations? I. Not all economic events are easily quantifiable. II. Many accounting entries rely heavily on estimates. III. Historical cost can distort statements. IV. Inflation can distort accounting data.

(Multiple Choice)

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Question 36

Economic income measures change in:

(Multiple Choice)

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Question 37

Audit risk represents a danger to users of audited financial statements. The following are attributes pointing to potential areas of vulnerability except

(Multiple Choice)

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Question 38

Which of the following is a change in an accounting estimate? I. A change from straight line depreciation to an accelerated depreciation method. II. A change in estimated salvage value of depreciable asset. III. A change in estimated useful life of an asset. IV. Recording depreciation for the first time on machinery purchased five years ago.

(Multiple Choice)

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Question 39

If a company changes auditors, it is required to file the following with the SEC:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 74

Which of the following would affect the comparison of financial statements across two different firms? I. Different accounting principles II. Different sizes of the companies III. Different reporting periods IV. Different industries

All of the following are basic approaches to valuation except:

FASB has recognized the conceptual superiority of the historical value concept and has, in principle, decided to eventually move to a model where all asset and liability values are recorded at fair value.

Under GAAP accounting, a company has the choice of using cash or accrual accounting in preparing its financial statements.

Which of the following statements is incorrect?

To determine a company's sustainable earning power, an analyst needs to first determine the recurring component of the current period's accounting income by excluding nonrecurring components of accounting income. Such adjusted earnings are often referred to as:

Accounting income consists of all the following components except:

Accounting or reported income is same as economic income.

Byfort Company reports the following in its financial statements: Accounts Receivable, net \ 34,289 \ 29,678 Net sales \ 360,007 \ 450,000 *All sales are on credit. -How much did the company collect in cash from debtors during 2006?

Income smoothing is a form of earnings management.

Primary responsibility for fair and accurate financial statements rests with the auditors.

The fair value of an asset is the hypothetical price at which a business can sell the asset (exit price).

Under cash accounting, a company must recognize revenues in financial statements when the revenues are earned or realized.

Under the fair value model, income is determined by matching costs to recognized revenues, which have to be realized and earned.

Financial accounting data has some inherent limitations. Which of the following are limitations? I. Not all economic events are easily quantifiable. II. Many accounting entries rely heavily on estimates. III. Historical cost can distort statements. IV. Inflation can distort accounting data.

Economic income measures change in:

Audit risk represents a danger to users of audited financial statements. The following are attributes pointing to potential areas of vulnerability except

If a company changes auditors, it is required to file the following with the SEC:

Overview of Financial Statement Analysis

Analyzing Financing Activities

Analyzing Investing Activities

Analyzing Investing Activities: Intercorporate Investments

Analyzing Operating Activities

Cash Flow Analysis

Return on Invested Capital and Profitability Analysis

Prospective Analysis

Credit Analysis

Equity Analysis and Valuation

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