Midterm Answers - 1. Liquidity of a company is generally...

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1. Liquidity of a company is generally defined as a measure of: A. the ability of a company to pay its employees in a timely manner. B. the ability to pay interest and principal on all debt. C. the ability to pay dividends. D. the ability to pay current liabilities. 2. Following is some financial information for Dell Inc. Revenues $41,444 Net Income $2,645 Total Assets $19,311 Shareholder Equity $6,280 Cash flow from operations $3,670 Basic Earnings per Share $1.03 Book Value Per Share $2.46 Closing Stock Price $23.86 What is Dell's profit margin for 2005? A. 6.27% B. 6.18% C. 6.38% D. 6.86% 3. The two primary qualities of accounting information to make it useful for decision making are: A. reliability and comparability. B. relevance and reliability. C. materiality and comparability. D. full disclosure and relevance. 4. Byfort Company reports the following in its financial statements: 2010 2011 A/R net $34.289K $29,678K Net Sales $360,007K $450,000K All sales are on credit
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How much sales would have been reported by the company in 2006 if Byfort would have been using cash accounting and not accrual accounting? A. $445,389K B. $454,611K C. $484,289K D. $488,900K 5. Which of the following would not be found listed as a liability on a company's balance sheet? A. Operating lease obligations B. Capital lease obligations C. Bonds payable D. Taxes payable 6. On January 1, a company entered into a capital lease resulting in an obligation of $20,000 being recorded on the balance sheet. The lessor's implicit interest was 10 percent. At the end of the first year of the lease, the cash flow from financing activities section of the lessee's statement of cash flows showed a use of cash of $2,200 applicable to the lease. How much did the company pay the lessor in the first year of the lease? A. $2,000 B. $2,200 C. $4,200 D. $20,000
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7. One advantage of LIFO over FIFO under normal conditions is that: A. it reports higher retained earnings. B. it results in higher cash flows. C. it results in higher current ratios. D. it results in higher gross margins. 8. Target Inc. has 30M shares outstanding and trades at $50 per share. Target has net identifiable assets with a book value of $1,000M and a fair value of $1,200M. Acquirer Corporation purchases all of Target Inc. stock for $60 per share. How much will Acquirer record as goodwill upon acquiring Target? A. 300M B. 500M C. 600M D. 800M 9. Agwen Corporation owns 25% of the shares of Bronwo Corporation, which traded on the New York Stock Exchange. Which method is Agwen most likely to use to account for this investment? A.
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Midterm Answers - 1. Liquidity of a company is generally...

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