ExamII_F2002_Questions

ExamII_F2002_Questions - NAME: STUDENT No.: RECITATION...

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1 NAME: STUDENT No.: RECITATION SECTION: ACCOUNTING 101, EXAMINATION 2 Fall Semester, 2002 INSTRUCTIONS: 1. There are 18 numbered pages in this booklet. There is a second booklet with financial information (7 pages total). Make sure you have all of the pages. 2. Please print your name and student number in the space provided on top of this page AND on all subsequent pages . 3. This is a 100 point exam. You have 120 minutes to complete it. Budget your time to achieve maximum points. 4. Answer the problems in the space provided within this booklet. Present your work in an orderly fashion to facilitate the awarding of partial credit. For partial credit, you must show your work. Partial credit can only be given for work that is presented in a clear, legible and logical manner. 5. In the interest of fairness to all students, NO questions will be answered during the exam. If you think a question is ambiguous, state an appropriate assumption explicitly and continue. 6. The exam is closed book. You are allowed only ONE 8.5 x 11 inch double-sided page of paper for notes. Part Points Allocated Points Scored I 8 II 12 III 20 IV 20 V 20 VI 20 Total
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2 PART I – 8 points The following is an extract from the 2001 annual report for General Electric: FOOTNOTE - INVENTORIES December 31 (In millions) 2001 2000 ------- ------- GE Raw materials and work in process $ 4,708 $ 4,134 Finished goods 4,221 4,280 Unbilled shipments 312 243 ------- ------- 9,241 8,657 LIFO reserve (676) (845) ------- ------- 8,565 7,812 ------- ------- ================================================================================ The LIFO reserve decreased $169 million in 2001, compared with decreases of $82 million in 2000 and $84 million in 1999. Included in these changes were decreases of $8 million, $6 million and $4 million in 2001, 2000 and 1999, respectively, that resulted from lower LIFO inventory levels (LIFO liquidations). There were net cost decreases in each of the last three years. As of December 31, 2001, GE is obligated to acquire certain raw materials at market prices through the year 2016 under various take-or-pay or similar arrangements. Annual minimum commitments under these arrangements are insignificant. Reported net sales for the fiscal year ended December 31, 2001 are $52,677 million and reported cost of goods sold for the same period totalled $18,722 million. Earnings before income taxes equalled $19,701 million and after tax earnings were equal to $13,684 million. Using the above information answer the following questions: 1. What was the tax rate for 2001? (4 points)
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2. What is the effect on reported income from the LIFO liquidation during the fiscal year ended December 31, 2001 (both before AND after tax)? (4 points)
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This note was uploaded on 05/20/2010 for the course ACCT 101 taught by Professor Briancadman during the Spring '10 term at Penn College.

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ExamII_F2002_Questions - NAME: STUDENT No.: RECITATION...

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