Practice MC1_John McInnis

Practice MC1_John - Practice Questions for Midterm I 1 The Balance Sheet i Lists a firm's resources and obligations at a specific point in time ii

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Practice Questions for Midterm I 1) The Balance Sheet: i. Lists a firm’s resources and obligations at a specific point in time ii. Is designed to measure performance over a given period of time iii. Contains all economic assets relevant to the value of the firm Which of the preceding statements is correct? a. All of the above b. None of the above c. i and ii only d. i only 2) How is the Income Statement different from the Statement of Cash Flows? a. The Income Statement is required under GAAP while the Statement of Cash flows is optional b. The Income Statement is related to the Balance Sheet while the Statement of Cash Flows is not c. The Income Statement provides a summary measure of firm performance while the Statement of Cash Flows details the inflows and outflows of cash in a given period d. An idiot could understand the Statement of Cash Flows; analyzing the Income Statement requires more effort 3) ABC Co. began 2005 with $100 in total equity. In 2005, revenue was $200, expenses were $150, and losses totaled $10. The firm paid $25 in dividends and issued $75 in new capital stock. Liabilities of $300 at the beginning of 2005 did not change throughout the year. What was the value of total equity at the end of 2005? a. $115 b. $190 c. $140 d. $215 4) Assuming the same facts as 3), what was the value of total assets at the end of 2005? a. $490 b. $400 c. $110 d. There is not enough information to determine the correct answer 5) The following information is available for XYZ Corp. Use it to answer questions 5 through 7. 2004 2005 Assets 125 $ 175 $ Liabilities 50 $ 75 $ Capital Stock 50 $ ? Retained Earnings 25 $ ?
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Assume $10 of stock was issued and $5 in dividends were paid in 2005. Given this information, what is the ending retained earnings balance in 2005? a. $20 b. $250 c. $100 d. $40 6) How much was net income in 2005? a. $20 b. $250 c. $100 d. $40 7) If total revenues were $100 in 2005, how much were total expenses (assume no gains or losses)? a. $20 b. $120 c. $80 d. Not enough information is given to determine the answer 8) Complete the following statement: Retained Earnings always has a __________ balance. a.
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This note was uploaded on 06/23/2008 for the course BUSINESS 06a taught by Professor Hart during the Spring '06 term at University of Iowa.

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Practice MC1_John - Practice Questions for Midterm I 1 The Balance Sheet i Lists a firm's resources and obligations at a specific point in time ii

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