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StudentID: gjan17gl50

Strengths and Improvement Opportunities

Course: Financial Accounting for Decision Making II - OL (GMBA Jan 17 Tri - I) Instructor: Suraj Gupta Questions: 41

70.00%

My Score

(35/50)

 QUESTION POINTS CORRECT INCORRECT PARTIAL CREDIT 1 The stock of Zamona was trading at \$890 per share on April 10. When the company announced that it had recently discovered a new technology for smart retail stores. The stock price immediately went up to \$910 per share. The company had 10,000,000 shares outstanding. Indicate the effects of this discovery on Zamona's financial statements. (1 Mark) 1/1 A: B: C: D: 2 On January 1, 2016 SEA Company issued \$200,000 in bonds payable. The bonds were issued at face value and carried 5-year term to maturity. They had a 8% stated rate of interest that was payable in cash on January 10th of each year beginning January 10, 2017. Based on this information, the amount of total liabilities appearing on the December 31, 2016 balance sheet would be: (1 Mark) 1/1 A: \$200,000 B: \$216,000 C: \$16,000. D: \$232,000. 3 Paya Lebar Company has a line of credit with the East Asia State Bank. Paya Lebar agreed to pay interest at an annual rate equal to 2% above the bank's prime rate. Funds are borrowed or repaid on the first day of each month and interest is paid in cash on the last day of each month. Borrowing is shown as a positive amount, and repayments are shown as negative amounts indicated by parentheses. Activity to date is given as follows: (2 0/2 Marks) The total interest paid for the three months period is: A: 2000 B: 2375 C: 1565 D: 1734 4 You are considering an investment in Wal-Mart stock and wish to assess the firm's long-term debt-paying ability and its use of debt financing. All of the following ratios can be used to assess solvency except: (1 Mark) 1/1 A: Number of times interest is earned. B: Debt to equity ratio. C: Debt to assets ratio. D: Net margin. 5 The following balance sheet information is provided for Hard Rock Company: (1 Mark) Assuming 2015 cost of goods sold is \$120,000, what is the company's inventory turnover for 2015? 1/1 A: 3.15 times B: 3.4 times C: 4.5 times D: 2.75 times 6 Gleneagles Company has cash of \$60,000, accounts receivable of \$80,000, inventory of \$50,000, and equipment of \$200,000. Assuming current liabilities of \$50,000, and long-term liabilities of \$100,000 this company's net working capital is: (1Mark) 1/1 A: 120,000 B: 140,000 C: 190,000 D: 160,000
 7 Jurong Company collected \$10,000 on account. What impact will this transaction have on the firm's current ratio? (1 Mark) 1/1 A: Increase it B: Decrease it C: Requires more information D: No impact 8 The study of an individual financial statement item over several accounting periods is called: (1 Mark) 1/1 A: Horizontal analysis B: Vertical analysis. C: Ratio analysis. D: Time and motion analysis. 9 Financial statement analysis involves forms of comparison including: (1 Mark) 1/1 A: Comparing changes in the same item over a number of periods. B: Comparing key relationships within the same year. C: Comparing key items to industry averages. D: All of these answer choices are correct. 10 Labrador Company has a Debt -Equity Ratio of 1.5. The total liabilities for Labrador were \$300. The company had earned a net income of \$ 25 million for the year 2016. The return on equity (ROE) for the company is: (2 Marks) 0/2 A: 15% B: 12.5% C: 20% D: 10% 11 Common methods of financial statement analysis include all of the following except: (1Mark) 1/1 A: Horizontal analysis B: Vertical analysis C: Ratio analysis D: Incremental analysis 12 Amazon has reported the following Sales and average account receivables for the period 2012 to 2016. (2 Marks) What is the Average days to collect receivables in the year 2015? Use 365 days in a year 0/2 A: 212 B: 150 C: 195 D: 237 13 Planman Consulting wants to have minimum net working capital of \$ 5 million and a minimum current ratio of 1.5. The required amount of current assets and current liabilities of Planman would be: (2 Marks) 2/2 A: B: C: D: 14 Alexandra Company is seeking a short-term loan from its local bank. The banker needs assurance that the company will be able to repay the loan. Which of the following ratios will be more useful to the bank to assess the payment capability of Alexandra. (1 Mark) 1/1 A: Earnings per share B: Dividend Yield C: Times interest earned D: Days to pay the accounts payables 15 Boeing Company reported the following revenue (USD billion) for the period 2012 to 2016. (2 Mark) Which of the following statements is incorrect? 2/2 A: The growth in sales from 2012 to 2013 is more than the growth in sales from 2013 to 2014 B: The growth in sales from 2014 to 2015 is the highest during the period C: The growth in sales from 2015 5o 2016 is the least during the period D: The growth in sales from 2013 to 2014 is 8%
 16 On the statement of cash flows, the sum of the three major components (operating activities, investing activities, financing activities) adds up to (1 Mark) 0/1 A: Net income for the period. B: Net change in the cash and cash equivalents C: Closing cash balance for the period D: Income before taxes 17 Which of the following items would be used to compute "Net Cash Flow from Investing Activities" on a Statement of Cash Flows? (1 Mark) One - Issue common stock Two - payment of principal on note payable Three - depreciation expense Four - sale of equipment for cash 1/1 A: One and Four B: One, Two, Three, and Four C: Four only D: Three only 18 On June 1, 2016, the Promenade Company purchased equipment for \$80,000 making a down payment of \$30,000 cash and signing a one-year note payable on the balance. The note carried an interest rate of 10%, and all interest was to be paid on the maturity date. Which of the following correctly shows the combined effect of the purchase as well as the accrual of interest on December 31, 2017? (Note: Ignore depreciation. Direct method is used) (2 Marks) 0/2 A: B: C: D: 19 On October 1, 2016, the Tanah Merah Company purchased equipment for \$50,000 making a down payment of \$25,000 cash and signing a one-year note payable on the balance. The note carried an interest rate of 10%, and all interest was to be paid on the maturity date. Which of the following correctly shows the combined effect of the purchase as well as the accrual of interest on December 31, 2016? (Note: Ignore depreciation; Direct method is used).(2 Marks) 2/2 A: B: C: D: 20 On December 31, 2016, Red Hill Company signed a contract to perform \$55,000 worth of services for the Orchard Company over the next three years. Which of the following indicates the effects of this event on the income statement and statement of cash flows of Red Hill on December 31, 2016. (1 Mark) 0/1 A: B: C: D: 21 On January 1, 2016, the Outram Company purchased equipment for \$60,000 cash. The equipment will be depreciated on a straight-line basis for 10 years without any salvage value. On December 31, 2016, depreciation was recorded. Which of the following correctly shows the combined effect of these two events on the income statement and statement of cash flows? Outram uses the Direct Method. (1 Mark) 1/1 A: B: C: D: 22 During 2016 Resorts World Sentosa Company had the following changes in account balances. Use this information to determine the Cash Flow from financing activities and Cash Flow from Investing Activities (2 Marks) Statement 1) The Accumulated Depreciation account had a beginning balance of \$35,000 and an ending balance of \$45,000. The increase was due to depreciation expense. Statement 2) The Long-Term Notes Payable account had a beginning balance of \$60,000 and an ending balance of \$75,000. The increase was due to issue of debt. Statement 3) The Equipment Account had a beginning balance of \$20,000 and an ending balance of \$80,000. The increase was due to the purchase of equipment. Statement 4) The Long Term Investments Account (Marketable Securities) had a beginning balance of \$15,000 and an ending balance of \$10,000. The decrease was due to the sale of investments at cost. Statement 5) The Dividends Payable account had a beginning balance of \$15,000 and an ending balance of \$10,000. There was \$30,000 of dividends declared during the period. Statement 6) The Interest Payable account had a beginning balance of \$5,250 and an ending balance of \$1,250. The difference was due to the payment of interest. 0/2 A: B: C: D: