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HA121_FINAL_EXAM__Practice_Exam_KEY_Solutions

# HA121_FINAL_EXAM__Practice_Exam_KEY_Solutions - David A...

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David A. Dittman, Financial Accounting Question Sheet HA121 Final Examination FINAL EXAMINATION – Practice Exam ANSWER KEY TRUE/FALSE AND MULTIPLE-CHOICE QUESTIONS Directions: Answer Question 1 through 60 on the attached answer sheet. Each True/False Question is worth 1 point. Each Multiple Choice Question is worth 2 points T 1. The present value of \$1,000 to be received in six years discounted at 10% is less than the present value of \$1,000 to be received in six years discounted at 8%. F 2. A callable bond grants the option to the bondholder of electing to turn the bond in for early retirement. T 3. A bond liability usually should be reclassified as a current liability when the maturity date of a bond issue is within one year of the current balance sheet date, or within the operating cycle (whichever is longer). 4. In 2001, The Walt Disney Co. had total liabilities of \$20,645 million and total assets of \$43,699 million. In 2000, they had total liabilities of \$20,918 million and total assets of \$45,027 million. Calculate their debt to equity ratio for 2001 and 2000 respectively. A) 1.12 and 1.15 B) .90 and .87 C) .47 and .46 D) .52 and .54 5. On July 1, 20B, WildWorld, Inc., sold (issued) 300, \$1,000, ten-year, 7% bonds at 101. The bonds were dated July 1, 20B, and semi-annual interest will be paid each December 31 and June 30. WildWorld uses straight-line amortization. The bond liability that would be reported on the balance sheet at December 31, 20B, is

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David A. Dittman, Financial Accounting Question Sheet HA121 Final Examination FINAL EXAMINATION – Practice Exam T 6. Stockholders have limited liability, which means that they are not held liable for the corporation's debts beyond their investments. F 7. Martine Company has 2 million shares issued and 100,000 treasury shares. They report net income of \$5,200,000 in 20D. Earnings per share equals \$2.60. F 8. Unrealized losses on long-term investments in available-for-sale securities reduce the income of the investor. T 9. When trading securities are sold, the gain or loss is computed by comparing cash received to the investment in trading securities account net of the allowance to value at market account. 10. In 2001, The Walt Disney Company reported the following items in their statement of cash flows. Equity in the income of investees \$300 million, net proceeds from the sale of investments \$235 million, and purchases of investments \$88 million. How much will be reported as cash inflow or outflow from investing activities?
David A. Dittman, Financial Accounting Question Sheet HA121 Final Examination FINAL EXAMINATION – Practice Exam

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