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ACCT+2101+Quiz+1+Solution+Spr+09

ACCT+2101+Quiz+1+Solution+Spr+09 - ACCT 2101 Quiz#1...

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Unformatted text preview: ACCT 2101 Quiz #1 SOLUTION Spring Semester, 2009 Name i 36:) (please print clearly) Pledge: On my honor, I have neither given nor received any unauthorized help on this quiz. (signed) Instructions: 1. You may use your ACCT 2101 Course Binder during the quiz, but all papers must be secured in the binder rings. No other help is authorized. You must write legibly or your answers will not be graded. Do NOT pull this quiz apart under any circumstances. Make sure you have 5 numbered pages including the cover sheet. Good luck! 9‘99?) Point Allocation: Problem 1: 6 items @ 0.3 each = 1.8 Problem 2': 8 items @ 0.8 each = 6.4 Problem 3: 2 items @ 0.4 each = 0.8 Problem 4: 10 items @ 0.1 each = l_.Q TOTAL POINTS = M points ACCTZIOI Quiz [Solution 10f5 PROBLEM I. Questions from the Course Syllabus. Please use complete sentences in your answers. a. What is the procedure to request a re—grade of a quiz or other graded item? . g ”,3, (l) Jot a note on the front of the item to be reviewed identifying what you would like to have re— graded. ‘ l m» (2) Attach a copy of the solution to the item you would like reviewed. was (3) Submit the item to the instructor within two weeks of receiving it returned to you. , l b. After the first week of classes, how many class exercises will be dropped in computing your class exercise average? 95 ”My Two class exercises will be dropped in computing your class exercise average. (The class ' exercises during the first week of classes are treated as a bonus.) c. What is the course policy regarding makeup quizzes? Why is your lowest quiz grade dropped in computing your quiz average? ‘ 2,, WW; There are NO makeup quizzes allowed except for absences REQUIRED by Georgia Tech. The lowest quiz grade is dropped to cover the unforeseen circumstance that might cause a \ M9 student to miss a quiz. d. Identify three violations of classroom etiquette that will require that you to leave the classroom. Several behaviors require that a student leave the classroom (choose three): (1) Talking among students. (2) Reading or working on something other than ACCT 2101. any Mare 42. (3) Putting your head down or sleeping. (4) Allowing your cell phone to ring during class. ’ ‘ 8"“; k e. What is the (1) day, (2) date, and (3) time of your final exam? The final exam is (l) Surribday, (2) April 26, 2009, and (3) 3:00 pm. ’I‘ ’t ‘1 ti 0‘ f. If you miss class, how do you obtain hard copies of the handouts that were distributed in your absence? The Handouts Box is located next to the bins in the Undergraduate Student Commons. If“ ‘3 ACCT2101 Quiz [Solution 2 0f5 ,‘i PROBLEM 2. a. What is a fiscal year? Why would Wal—Mart choose to end their fiscal year on January 31“? w.) The fiscal year is the accounting or financial reporting period for a company. Wal‘Mart probably chose January 31 as the end of their fiscal year since January is one of their slowest periods in the business cycle and would result in the lowest level of inventory to be counted. NK 73% “m“w\\// 06L . (l b. What is commercial paper? Why does Wal«Mart list commercial paper under current liabilities? "r”? Commercial paper is the unsecured, short—term borrowing on the part of corporations. Often commercial paper is purchased and held as a cash equivalent Wal-Mart lists commercial paper under current liabilities because they have issued this type Man?» of debt instrument. That is, they have used commercial paper to meet their short—term borrowing needs. c. What is the profit of Wal-Mart for the most recent year reported? What is the cash flow from operations for the most recent year reported? Identify one reason that these two numbers might be different? a” - 3 Wal-Mart’s profit for the year ended January 31, 2008, is $12,731 million. Wal—Mart’s cash flow from operations for the year ended January 31, 2008, is $20,354 <1" W - 3 million. Two reasons that we discussed in class that would explain the difference between profit and cash flow from operations (choose one): (1) Timing of cash receipts and cash payments differs from the recognition of revenues and gk 0 expenses. (2) The existence of unearned income (also called unearned revenue or deferred income or deferred revenue). ACCT 2101 Quiz JSolution 3 of 5 Problem 2 — continued. d. Wal—Mart lists an account “Prepaid expenses and other.” Identify two accounts that might be included in that category. Some possible accounts that could fall in the “Prepaid expenses and other” category would include (choose two): (1) Prepaid rent \ . (2) Prepaid insurance pig/“341,00 rraasmabla items WM (3) Supplies Li 9”an (4) Other prepaid assets ‘ be, “(1?de e. Define liquidity. What are the two most liquid assets that Wal—Mart owns? ti W7 Liquidity represents how close an asset is to cash. That is, liquidity is the ability of a firm ' to meet its cash needs. Since the current assets are listed in liquidity order, Wal—Mart’s two most liquid assets are (1) Cash and cash equivalents, and (2) Receivables. ’K“ ‘7\ . 2. . 2. f. Identify at least three types of property and equipment that Wal—Mart owns‘ Wal—Mart lists the following types of assets under property and equipment (choose three): (1) Land (2) Buildings and improvements , WW , r: O ‘3 (3) Fixtures and equipment WE) “H’W‘i’i > hint o . (4) Transportation equipment g. What is the definition of net book value related to property, plant & equipment? What is the net book value of Wal-Mart’s property and equipment (not under capital lease)? ,2. 2. m Net book value of PP&E is defined as the WSzE less accumulated depreciation. Wal—Mart reports its property and equipment, net, as $93,875 million. “(arm— , ‘i h. How much goodwill does Wal-Mart own? Where did this amount come from? Wal-Mart reports Goodwill in the amount of $16,071 million. 4r“ . q Goodwill only results from the acquisition of other companies so Wal—Mart must have purchased at least one company at some point. ’t . ht ACCT 2101 Quiz 1501mm 4 of 5 PROBLEM 3. Other Short Answer Questions. Please use complete sentences. a. Identify two methods by which management can manipulate earnings. Six methods by which management can manipulate earnings were identified in your course notes (choose two): (1) Estimates (2) Timing of transactions (3) Judgmental decisions on timing of revenue and expense recognition. (4) Over/understatement of assets and liabilities. My)" (5) Changes in accounting policies and estimates. (6) Fraudulent financial reporting. b. Identify two items that are included in the notes to the financial statements. Many different items have been identified as appearing in the notes to the financial statements (choose two). Just refer to your Intel financial statements for examples. PROBLEM 4. Fill in the blanks. (This is from the UFS book, pages 32-33, and was distributed in class for you to practice.) Four components of the annual report include: A. Financial statements. B. Notes to the financial statements. C. Auditor’s report. D. Management’s discussion and analysis. Of the four components listed above, where would you find the following information? _Q_~ 1. An attestation to the fairness of financial statements. __B;_ 2. Summary of significant accounting policies. ___A,_ 3. Cash flow from operating, financing, and investing activities. fl; 4. A qualified opinion. L 5. Information about principal, interest, and maturity of longeterm debt. “L 6. Financial position on a particular date. __~D__ 7. Discussion of the company’s results of operations. L 8. Description of pension plans. D 9. Anticipated commitments for capital expenditures. A or B 10. Reconciliation of beginning and ending balances of equity accounts. ACCT 2101 Quiz ISolution 5 0f5 ...
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