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4 questions - accounting




Question;1. The Hasting Company began operations on January 1, 2003 and uses the FIFO method in costing its raw material inventory. An analyst is wondering what net income would have been if the company had consistently followed LIFO (instead of FIFO) from the beginning, 1/1/2003. He has the following information available to him: 12/31/2003 12/31/2004 Final Inventory Final Inventory Under FIFO $240,000 Under FIFO $270,000 Under LIFO $200,000 Under LIFO $210,000 For2003 and 2004 Pretax Income under FIFO $120,000 and $170,000 What would net income have been in 2004 if Hastings had used LIFO since 1/1/2003? $ 110,000 $ 150,000 $ 170,000 $ 230,0002. The major accounting difference between interest incurred during a period and cash dividends declared during the same period is:?Interest decreases retained earnings while dividend declared increases retained earnings*Interest reduces net income while dividends declared do not affect net income*Interest does not affect net income while dividends reduce net income*There is no major difference. Both are treated identically for accounting purposes.3. The following financial ratios are for Average Corp. and Superior Corp., two hardware stores.Which of the following statements is inconsistent with the above ratios??Superior Corp has a higher return on equity primarily because it has a significantly higher net income margin*Average Corp. on a relative basis uses significantly more debt financing than Superior Corp.*Average Corp. utilizes its assets more effectively than Superior Corp.*Superior Corp. generates more income per dollar of sales than Average Corp.4. FRC Inc. acquired Marketing Inc on 1/1/2004. Marketing Inc. has 10,000 shares outstanding. Each share in Marketing Inc. was exchanged for half a share in FRC, Inc. Shares of FRC Inc., were trading at $100 per share at the date of the announcement of the transaction. Marketing Inc, had the following assets and liabilities that were assumed by FRC Inc.The amount of Goodwill recognized by FRC, Inc. on January 1, 2004 is:?$400,000*$360,000*$495,000*$455,000


Paper#39074 | Written in 18-Jul-2015

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