BA 10 - Fall 2003 - Robinson - Module 3

BA 10 - Fall 2003 - Robinson - Module 3 - ugba-10 5 70...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ugba-10 % 5% 70 Principles of Business HAAS SCHOOL OF BUSINESS October 2003 Module 3 Exam: Accounting & Finance David Robinson Make sure your family name comes first! Instructions 0 This is an exam—please do not talk 0 0 Do not open the exam until you are told to -_e' ' 0 Keep the questions when you leave a a o ' : up the next syllabts O 0 While you are waiting toe. n, enter the following on your Scantroni Nanw: LAST, First M. Suhkcn 1234—5678 your Student Identification NUmber TbstNo; {A, B, C, or D} This is the test version—you won’t know this until you open the test Date: (1, 2, etc) This module number Houn Your Section number: (101 m 118) Section Day Time Room instructor 10-101 Mon 1 Ch 125 Earne, Julie 10-102 Mon 2 Ch 330 * Earne, Julie 10-103 Tue 9:30 Ch 125 Corantis, Irene 10-104 Tue 9:30 Ch 135 Granville, Gideon 10-105 Tue 9:30 Ch 210 Belk, Jonathan 10-106 Tue 11 Ch 110 Natsch, Heather 10-107 Tue 2 Ch 325 * Bossut, Nicolas 10-108 Tue 3 Ch 325 * Winslow, Jennifer 10-109 Tue 4 Ch 125 Winslow, Jennifer 10-110 Tue 4 Ch 135 Hall, David 10-111 Tue 5 Ch 135 Hall, David 10112 Tue 5 Ch 125 Jackson, Taylor 10-113 Wed 4 Ch 230 Bossut, Nicolas 10-114 Thu 9:30 Ch 125 Granville, Gideon 10-115 Thu 9:30 Ch 135 Belk, Jonathan 10-116 Thu 9:30 Ch 210 Corantis, Irene . 10-117 Thu 2 Ch 110 Natsch, Heather 10-118 Thu 5 Ch 110 Jackson, Taylor L 2. ’fiflo Wm 4. '50‘70 wmcrj 5. 6 ' ® $120 ugba-1O Module 3 1 What is true of a sunk cost? /a;§ It occurs in the future /b. It is usually not a fixed cost It is not relevant to a “go/no-go” decision d. All of the above are true / You regret having missed the boom in tech stocks over the last two years, but you did not have money available because you invested instead in your uncle’s car wash. The amount of money you could’ve earned from the stock market is: a. A sunk cost b. A fixed cost A varied cost [email protected] An opportunity cost What 15 the best definition of“ per unit contribution”? /,_. Fixed cost— variable cost Selling price — per unit variable cost /c’./ Selling price — fixed cost fl Fixed costs / per unit variable cost What is true about Starbucks fiscal year? The year end date is determined by the IRS for all companies in the coffee /,/’\ busmess [b/ In some years it has had 52 weeks, and occasionally 53 It has 53 weeks every year, so it keeps changing date relative to the calendar The year end is 12/31 just as for individual taxpayers Which of the following would not reduce Gross Sales (or Gross Revenue) to come up with Net Sales (or Net Revenue) on the Income Statement? . Discounts @ Cost of Goods Sold c. Allowances d. Returns We are using accrual accounting and we sell 12 tickets at $10 each for the ABA fashion show that runs next week. We have handed the tickets to the people who bought them. 7 people have paid in cash, 1 by credit card, 2 people paid by check and 2 people have signed “IOUs” (promises to pay ABA at the end of this week, after they get their paychecks.) Under accrual accounting, the Revenue for this week 15: a. $70 b. $80 c $100 2 ugba-1O Module 3 I’m running a t-shirt business and I’m using accrual accounting. On October 3“’ I ordered 20 t-shirts at $10 each from Alliance Graphics. They were all delivered on October 10‘“, and Alliance sent me a bill for $200 that I received on October 15*. The bill is still on my desk and I plan to pay it on November 2ndsBytheendof~ October, I have sold 8 t-shirts and calculate my Income Statement for the month of Mg, my COGS (cost of goods sold) for the month is: a. Nothing, I have written no checks «@ $80 3' $338 EWnsei/y x.» Waco «(A W/ rel: WVM. 8. What 15 most true of Starbucks’ Balance Sheet? /,,/a. They have essentially no Accounts Receivable because customers pay in cash b. They have Accounts Receivable from corporate accounts where they have delivered coffee but it’s not yet been brewed c. They have Accounts Receivable from corporate accounts where they’ve issued the invoice and have already been paid The have Accounts Receivable from corporate accounts where they’ve issued the invoice but have not yet been paid 9. One of the following is not a version of the fundamental accounting equation— @ich one? Assets + Liabilities = Equity w— /b:' Asset — Liabilities = Equity A "5/ L"‘ lit '/ Assets = Liabilities + Equity /oh/ Liability = Assets — Equity 10. We are running a simple t-shirt business with a partner and attempt to balance the books at the end of the month. The Balance Sheet won’t balance. Which of the following could be possible reasons? a. Someone has stolen inventory w, b. Someone gave away a t-shirt without requiring payment c. Someone stole cash from our petty cash box (A) All of the above 11. Assets are divided into Current and “Fixed” (or “Long Term”) Assets according to what time period from the date of a Balance Sheet? a. 1 month b. 3 months (1 quarter) Q 12 months . 5 years 12.’ Which one of the following does not depreciate for accounting purposes? " a. / Land Equipment such as cappuccino machines c. Buildings such as apartments (1. Buildings such as factories l'Yormc.» Q etflof \/V' ugba-1O Module 3 ' 3 13. We buya cappuccino machine for $15,000 at the beginning of 200; and depreciate 1t , 1: ' 5 0“? over five years. For the 2004 Income Statement, this machine will show how much 7 E '7 I on depreciation? fl C157 C9 /\/ W 3 C /E/ $0 (none) 4. 4g 1: ”b . $3,000 CC?) $6, 000 . J o /d./ $15,000 M 6M1 06 g bfor? 2 Val/1w >0 14. You father worls for Wells Fargo and to your horror, you discover that all of his stock investments are in Wells Fargo stock. You urge him to diversify by buying shares in: /a./ At least two other bank stools @ At least 9 stocls in different industries ' At least 500 companies like the S&P 9?; Selling and putting all his money into a checking account 15. Which of the following 15 not a criticism of Mutual Funds, as discussed in lecture? /a.// There are too many to be useful or efficient /b.’: More than half under-perform the relevant index in most years /c‘ They often stray away from their announced goals and Jump on hot stock- picking trends d. They are limited to only investing in NYSE-listed stocls 16. Roughly speaking, which of the following is most likely to be the present value of ,/ 250 received 10 time periods from now, if interest rates are 22.50 percent? M a * $1,038 \ 71,50 /~ $1,250 u, c. $1,484 [117/7357 { , ‘ /d./ $1,531 17. The Clinton Administration made a substantial change in policy and reduced the maturity of long-term government debt to 10 years instead of 30 years. According to lecture this was a good thing because: a. It reduced the amount of money that the government owes on the National Debt (b? It reduced the amount of interest the government has to pay in each year /c,/ It increased the mterest payout to bondholders, most of whom are retirees , who vote Democrat / It had the effect of dramatically increasing tax revenue 4 ugba-1O Module 3 18. What is true about interest rates? a. e/ The Federal government has been lowering short-term rates in the hope of stimulating the economy "' b. / \/ Mortgage interest rates are lower than the)/ve been in 40 years /a' I The Federal government pushed down long-term rates with the result that ‘ short term rates have risen sharply A and B are correct e. B and C are correct 19. PricezEamings ratios for most stocks are very high. Which of the following is not a 3070 ”“023 , lausible explanation, according to lecture? C? It’s a consequence of tax policy \/ Analysts have been stretching credibility, in general believing that stocks are worth more than they have been in the past c. J When interest rates are low, we would expect high PE ratios d. \flnvestors are optimistic about the economy in the near- and medium-term future 716‘ <70 ' 0. If you were a professional investor, which of the following would least likely w (Oar determine the amount you’d be prepared to pay for a stock? /a:/ Price most recently paid, as shown on the ticker )3/ Your estimate of the discounted value of future earnings of the firm (:9? The book value of the firm 7 d. Your estimate of the true value of the firm’s assets if it stopped trading and sold off everything 2,01 c’7D 21. One provision of the Sarbanes-Oxley Act to reform public accounting that wrong surprisingly was not part of previous SEC regulation is: J /a. All firms must now hire independent auditors /b’.' All firms must now designate a CFO (Chief Financial Officer) 9 All CEOs must now sign financial statements submitted to the SEC and swear that they are accurate d. All accounting firms must now stick strictly to accounting and offer no consulting services 22. As a result of the corporate scandals and the new legislation, what is true about auditors, according to lecture? /a/./ There is little need for auditors, as most shareholders have lost faith in them /l§. There is little need for auditors, because firms must do more accounting ?\ work themselves , (5/ There is a great need for auditors because investors are demanding that the audit process must be done properly ‘ /dl There is no need for auditors because it’s clear they can’t catch even simple ' bookkeeping mistakes 23. 24. 25. 26. 27. ugba-1O Module 3 5 In April of 2001, that is, before the crisis which began 9/ 11/01, the New York Times reported that the Federal Reserve and the US Treasury were discussing the policy implications of what never-before-seen financial phenomenon? The possibility that many people in the world would prefer to use dollars ' over their local currency b The possibility that continued budget surpluses would eliminate the need for Treasury bills, notes, and bonds c. The discovery that most of the Treasury bonds in circulation were counterfeit d. The possibility that financial markets would refuse to buy new Treasury Issues Some firms issué'preferred stock that promises to pay a constant dividend each year, but— unlike a bond— has no maturity date. According to a chapter on the time value of money, a preferred stock of this type should be considered: a. A mortgage b. A debenture An amortization c. ® A perpetuity Andy Kessler is a local venture capitalist who showed remarkable foresight in identifying many of the creative accounting techniques that led to the recent : corporate scandals. He pointed out that several intemet retailers were hiding their true “Cost of Goods Sold” by hiding some expenses as: a. Shipping (>9 Marketing expenses c. Startup costs d. Dividends paid Before the Sarbanes-Oxley act, who supervised the Accounting Profession? /a/ The Federal Reserve Board regularly sent in inspectors The profession regulated itself with a Board whose members were accountants c. The profession had zero oversight d. Volunteer members of NYSE firms “audited the auditors” Your aunt works as a CPA and she has invested $20,000 in an apartment building as a liniz‘az’ finer. One of the washers on the third floor over-flowed, and caused $1.5 mTlli' 'on dollars in damage to art-work in a studio on the ground floor. The studio owner is suing the building. Auntie says, it turns out, the building carried no insurance: /a/ But it’s OK, I can’t lose a thing, I’m a limited partner ’ (13/ And I may have to sell my accounting firm, if theywin a judgment for the whole $1.5 million 67" But, at worst, I’ll lose my $20,000 investment So I wish I was the General Partner— then I’d be protected from this suit 6 ugba-1O Module 3 28. Microsoft has more than $49 Mien in cash 85 cash equivalents on its balance sheet. Sophisticated professional investors consider this not a good thing because: a. It is an unproductive use of capital b. -‘/ It give Microsoft the temptation to overpay for acquisitions It is heavily taxed each year so that cash gradually goes to zero A and B are true ‘ e. B and C are true 29. Accounting has a very long history— back to the Medici in Florence. Until recently, most accounting was done with just two financial statements. Which one has most- recently become required? , Balance Sheet @ Statement of Cash Flows c. Income Statement d. None of the above 30. Which one of the following is not one of the three major categories on the Statement of Cash Flows? a. Cash from Investing b. Cash from Operations c. Cash from Financing Cash from Creditors 31. Financial analysts use financial ratios to compare a firm to (best answer) a. J Itself in previous periods b. Companies in other industries c. J Companies in the same industry. d. A and B are correct (e) A and C are correct 32. We own a coffee shop and buya cappuccino maker for $15,000 that will last five Z/LOZO'V‘JflWVj ars. In this fiscal year, the $15,000 will show up: ‘ As a use of cash for PPE (Property, Plant and Equipment) on the Statement _, of Cash flows /b./ As an increase in cash on the Balance Sheet / As an expense on the Income Statement d As a decrease in PPE on the Balance Sheet 33. Your grandma is looking for a good return on her investments to provide her with retirement income; you have some money that you know you are going to use for tuition for next semester. Both of you likely demand: a. A lower return for longer periods of investment b. _, A higher return for taking on less risk /6/ Uncertainty of payoffs »' Security of principal ugba-1O Module 3 34. The Total Return of stock is: Price appreciation J Interest received Dividends received \/ A plus B A plus C ow 35. If your bank goes bankrupt, Who will give you your money back? . The Federal Reserve System '0 The FDIC c. The US Treasury d. Tough luck, you’re an unsecured creditor 36. A break-even analysis is a calculation of: How many units need to be sold at a planned price to cover all the fixed 7. costs and begin to make a profit , /b./ What price gives the greatest per-unit profit ,tX‘ The variable costs of each unit produced /cl. The sum of the variable costs of each unit produced 37. This is version C; bubble in -G for this question and write “C” in the identification section of your Scantron. If you do not answer this question, I lose tbepoml; No exceptions ...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern