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accounting test




Question;1.Regatta, Inc., has six-year bonds;outstanding that pay a 8.25 percent coupon rate. Investors buying the bond;today can expect to earn a yield to maturity of 6.875 percent. What should the;company?s bonds be priced at today? Assume annual coupon payments. (Round to;the nearest dollar.);$923;$1,066;$1014;$972;2. A cost which remains constant per unit at various levels of activity is a;? manufacturing cost;? mixed cost;? fixed cost;? variable cost;3. External financing needed: Jockey;Company has total assets worth $4,417,665. At year-end it will have net income;of $2,771,342 and pay out 60 percent as dividends. If the firm wants no;external financing, what is the growth rate it can support?;? 25.1%;? 30.3%;? 32.9%;? 27.3%;4. What decision criteria should;managers use in selecting projects when there is not enough capital to invest;in all available positive NPV projects?;? the discounted payback;? the profitability index;? the internal rate of return;? the modified internal rate of return;5. Jayadev Athreya has started his;first job. He will invest $5,000 at the end of each year for the next 45 years;in a fund that will earn a return of 10 percent. How much will Jayadev have at;the end of 45 years?;? $5,233,442;? $3,594,524;? $1,745,600;? $2,667,904;6. In a process cost system, product;costs are summarized;? after each unit is produced.;? when the products are sold.;? on production cost;reports.;? on job cost sheets.;7. Gateway, Corp. has an inventory turnover of 5.6. What is the firm?s days?s;sales in inventory?;? 61.7;? 65.2;? 57.9;? 64.3;8. Which of the following financial;statements is concerned with the company at a point in time?;? balance sheet;? retained earnings statement;? income statement;? statement of cash flows;9. Your firm has an equity multiplier;of 2.47. What is the debt-to-equity ratio?;? 0;? 0.60;? 1.74;? 1.47;10. Jack Robbins is saving for a new;car. He needs to have $21,000 for the car in three years. How much will he have;to invest today in an account paying 8 percent annually to achieve his target?;(Round to nearest dollar);?;$19,444;?;$22,680;? $16,670;? $26,454;11. TuleTime Comics is considering a new show that will generate annual cash;flows of $100,000 into the infinite future. If the initial outlay for such a;production is $1,500,000 and the appropriate discount rate is 6 percent for the;cash flows, then what is the profitability index for the project?;? 0.11;? 1.11;? 1.90;? 0.90;12. Variance reports are;? SEC financial reports;? external financial reports;? internal reports for;management;? all of these;13. The cash conversion cycle?;? shows how long the firm keeps its inventory before selling it.;? begins when the firm invests cash to purchase the raw materials that would be;used to produce the goods that the firm manufactures.;? estimates how long it takes on average for the firm to collect its;outstanding accounts receivables balance.;? begins when the firm;uses its cash to purchase raw materials and ends when the firm collects cash;payments on its credit sales.;14. Internal reports that review the;actual impact of decisions are prepared by;? factory workers;? the controller;? management accountants;? department heads;15. Which of the following presents a;summary of changes in a firm?s balance sheet from the beginning of an;accounting period to the end of that accounting period?;? the statement of;retained earnings;? the statement of working capital;? the statement of net worth;? the statement of cash flows;16. Next year Jenkins Traders will pay;a dividend of $3.00. It expects to increase its dividend by $0.25 in each of;the following three years. If their required rate of return if 14 percent, what;is the present value of their dividends over the next four years?;? $11.63;? $13.50;? $12.50;? $9.72;17. Process costing is used when;? the production process;is continuous.;? costs are to be assigned to specific jobs.;? dissimilar products are involved;? production is aimed at fulfilling a specific customer order.;18. The break-even point is where;? total variable costs equal total fixed costs.;? total sales equal total fixed costs.;? contribution margin;equals total fixed costs.;? total sales equal total variable costs.;19. Horizontal analysis is also known as;? linear analysis;? common size analysis;? vertical analysis;? trend analysis;20. The accumulation of accounting data;on the basis of the individual manager who has the authority to make day-to-day;decisions about activities in an area is called;? flexible accounting;? static reporting;? master budgeting;? responsibility accounting;21. The convention of consistency;refers to consistent use of accounting principles;? among accounting periods;? within industries;? throughout the accounting period;? among firms;22. Which of the following is;considered a hybrid organizational form?;sole proprietorship;partnership;corporation;limited;liability partnership;23. The process of evaluating financial;data that change under alternative courses of action is called;contribution margin analysis;double entry analysis;incremental;analysis;cost-benefit analysis;24. Turnbull Corp. had an EBIT of $247;million in the last fiscal year. Its depreciation and amortization expenses;amounted to $84 million. The firm has 135 million shares outstanding and a;share price of $12.80. A competing firm that is very similar to Turnbull has an;enterprise value/EBITDA multiple of 5.40.;What is the enterprise value of;Turnbull Corp.? Round to the nearest million dollars.;$1,787;million;$453.6 million;$1,315 million;$1,344 million;25. Which of the following is an;advantage of corporations relative to partnerships and sole proprietorships?;reduced;legal liability for investors;harder to transfer ownership;most common form of organization;lower taxes;26. Teakap, Inc. has current assets of $1,456,312;and total assets of $4,812,369 for the year ending September 30, 2006. It also;has current liabilities of $1,041,012, common equity of $1,500,000 and retained;earnings of $1,468,347. How much long-term debt does the firm have?;$2,303,010;$1,844,022;$803,010;$2,123,612;27. Horizontal analysis is a technique;for evaluating a series of financial statement data over a period of time;to;determine the amount and/or percentage increase or decrease that has taken;place.;to determine which items are in error.;that has been arranged from the lowest;number to the highest number.;that has been arranged from the highest;number to the lowest number.;28. M&M Proposition 1: Dynamo Corp.;produces annual cash flows of $150 and is expected to exist forever. The;company is currently financed with 75 percent equity and 25 percent debt. Your;analysis tells you that the appropriate discount rates are 10 percent for the;cash flows, and 7 percent for the debt. You currently own 10 percent of the;stock.;If Dynamo wishes to change its capital;structure from 75 percent equity to 60 percent equity and use the debt proceeds;to pay a special dividend to shareholders, how much debt should they use?;$225;$321;$375;$600;29. An activity that has a direct;cause-effect relationship with the resources consumed is a(n);product activity;cost;driver;overhead rate;cost pool;30. The group of users of accounting;information charged with achieving the goals of the business is its;investors;auditors;creditors;managers;31. The major element in budgetary;control is;the valuation of inventories;the;comparison of actual results with planned objectives.;the preparation of long-term plans;the approval of the budget by the;stockholders;32. The most important information;needed to determine if companies can pay their current obligations is the;relationship between short-term and;long-term liabilities;net income for this year;relationship;between current assets and current liabilities;projected net income for next year;33. An unrealistic budget is more;likely to result when it;has been developed by all levels of;management.;is developed with performance appraisal;usages in mind.;has been developed in a bottom up;fashion.;has;been developed in a top down fashion.;34. When a company assigns the costs of;direct materials, direct labor, and both variable and fixed manufacturing;overhead to products, that company is using;absorption;costing;operations costing;variable costing;product costing;35. Firms that achieve higher growth;rates without seeking external financing;have;less equity and/or are able to generate high net income leading to a high ROE.;are highly leveraged;Have a low plowback ratio;None of these;36. Ajax Corp. is expecting the;following cash flows - $79,000, $112,000, $164,000, $84,000, and $242,000 ?;over the next five years. If the company?s opportunity cost is 15 percent, what;is the present value of these cash flows? (Round to the nearest dollar.);$429,560;$477,235;$480,906;$414,322;37. Serox stock was selling for $20 two;years ago. The stock sold for $25 one year ago, and it is currently selling for;$28. Serox pays a $1.10 dividend per year. What was the rate of return for;owning Serox in the most recent year? (Round to the nearest percent.);16%;32%;12%;40%;38. If a company?s weighted average;cost of capital is less than the required return on equity, then the firm;has;debt in its capital structure;is perceived to be safe;is financed with more than 50% debt;partnership;39. How firms estimate their cost of;capital: The WACC for a firm is 13.00 percent. You know that the firm?s cost of;debt capital is 10 percent and the cost of equity capital is 20% What;proportion of the firm is financed with debt?;30%;70%;33%;50%


Paper#42935 | Written in 18-Jul-2015

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