Balance Sheet quiz

 

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Balance Sheet

30 questions in 30 minutes

Pass Score 70%

The questions change when you repeat the exam

1 / 30

A segment of a common-size balance sheet for Olsen Company in its most recent year shows the following data :

1% Common stock
19% Additional paid-in capital
15% Preferred stock

How should an analyst most appropriately interpret these data ?

2 / 30

An analyst has gathered the following information about a company :

Balance Sheet
Assets :
100 Cash
750 Accounts Receivable
300 Marketable Securities
850 Inventory
900 Property, Plant & Equip
-150 Accumulated Depreciation
2750 Total Assets 
Liabilities and Equity :
300 Accounts Payable
130 Short-Term Debt
700 Long-Term Debt
1000 Common Stock
620 Retained Earnings
2750 Total Liab. and Stockholder's equity


Income Statement
1500 Sales
1100 COGS
400 Gross Profit
150 SG&A
250 Operating Profit
25 Interest Expense
75 Taxes
150 Net Income 

What is the quick ratio ?

3 / 30

Liabilities are best described as :

4 / 30

How should the proceeds received from the advance sale of tickets to a sporting event be treated by the seller, assuming the tickets are nonrefundable ?

5 / 30

Miller Corporation has 160,000 shares of common stock authorized. There are 92,000 shares issued and 84,000 shares outstanding. How many shares of treasury stock does Miller own ?

6 / 30

Which of the following is most likely an essential characteristic of an asset ?

7 / 30

Which of the following transactions is most likely to be recognized on a firm's statement of changes in equity?

8 / 30

The balance sheet is most likely to provide an analyst with information about a firm's :

9 / 30

GTO Corporation purchased all of the common stock of Charger Company for $4 million. At the time, Charger reported total assets of $3 million and total liabilities of $1 million. At the acquisition date, the fair value of Charger's assets was $3.5 million and the fair value of Charger's liabilities was $1.3 million. What amount of goodwill should GTO report as a result of the acquisition and is it necessary for GTO to amortize the goodwill ?

10 / 30

Duster Company reported the following financial information at the end of 2022 :

in millions
240 Unearned revenue
30 Common stock at par
440 Capital in excess of par
1,150 Accounts payable
2,000 Treasury stock
5,160 Retained earnings
830 Accrued expenses
210 Accumulated other comprehensive loss
1,570 Long-term debt

Calculate Duster's liabilities and stockholders' equity as of December 31, 2022.

11 / 30

Which of the following ratios are used to measure a firm’s liquidity and solvency ?

12 / 30

A vertical common-size balance sheet expresses each category of the balance sheet as a percentage of:

13 / 30

A U.S. GAAP reporting company invests $50 million in a bond portfolio yielding 4% with an average maturity of seven years. After one year, interest rates have fallen by 50 basis points. The company will report the highest retained earnings if the securities in the portfolio are classified as:

14 / 30

Earlier this year, Slayton Corporation repurchased 5% of its total shares outstanding. At the time, the book value of Slayton shares exceeded their market value. The shares are expected to be reissued in the future when the market price of Slayton's stock increases. Do Slayton's repurchased shares continue to have voting rights and to pay cash dividends ?

15 / 30

Balance sheet data for two comparable firms are presented below :

Brevis, Inc Amplus, Inc
500 3,800 Cash and equivalents
700 2,400 Accounts receivable
1,100 5,800 Inventories
2,300 12,000 Current assets
100 400 Land
6,400 24,600 Property, plant and equipment
6,500 25,000 Noncurrent assets
8,800 37,000 Total assets 
400 1,800 Accounts payable
100 600 Unearned revenue
500 2,400 Current liabilities
3,300 9,600 Long-term borrowing
3,800 12,000 Total liabilities
300 1,500 Common stock
4,700 23,500 Retained earnings
5,000 25,000 Total equity
8,800 37,000 Total liabilities and equity 

Based on common-size analysis of the two firms' balance sheets, Amplus Company:

16 / 30

Which of the following characteristics are required for recognition of a balance sheet asset ?

Characteristic #1: Future economic benefits to the firm are probable.

Characteristic #2: The asset is tangible and is obtained at a cost.

17 / 30

What is the appropriate measurement basis for equipment used in the manufacturing process ?

18 / 30

The statement of changes in equity is least likely to provide information on the firm's :

19 / 30

Which of the following firms is most likely to present a liquidity-based balance sheet rather than a classified balance sheet ?

20 / 30

According to International Financial Reporting Standards, how do cash dividends received from trading securities and financial securities measured at fair value through OCI affect net income?

21 / 30

Carpenter Corporation reported the following statement of shareholders' equity as of December 31, 2022 :

$600,000 Common stock at par
900,000 Additional paid-in-capital
- 200,000 Treasury stock
10,500,000 Retained earnings
450,000 Accumulated other comprehensive income
$12,250,000

During 2023, Carpenter:

1- earned net income of $1,700,000.

2- declared dividends of $300,000. $75,000 of the dividends remain unpaid.

3- purchased held-to-maturity securities for $100,000. The securities have a fair value of $110,000 at year-end.

4- purchased available-for-sale securities for $250,000. The securities have a fair value of $225,000 at year-end.

5- translated the financial statements of a foreign subsidiary and calculated a $90,000 unrealized gain.

6- purchased treasury stock for $75,000. The stock was valued at $60,000 when issued.

Calculate Carpenter's accumulated other comprehensive income as of December 31, 2023.

22 / 30

Under IFRS, firms may report an investment in the equity securities of other companies at fair value through :

23 / 30

A key limitation of balance sheets in financial analysis is that :

24 / 30

At the beginning of the year, Alpha Corporation, which reports under U.S. GAAP, purchased 10,000 shares of Beta Corporation for $20 per share. During the year, Beta paid a $2,000 cash dividend to Alpha. At the end of the year, Beta's stock was selling for $22 per share. What amount should Alpha recognize in its year-end income statement if the investment is treated as an available-for-sale security and what amount should be recognized in the income statement if the investment is treated as a trading security ?

25 / 30

At the beginning of the year, Company P purchased $80,000 face value of Company S corporate bonds for $77,000. Company P intends to hold these bonds for several years but sell them before they mature. At the end of the year, the market value of the bonds was $75,000. What amount should Company P report on its balance sheet at year-end for the investment in Company S bonds ?

26 / 30

Earlier this year, Ponca Corporation purchased non-dividend paying equity securities which it classified as trading securities. Information related to the securities follows :

Fair value at year-end Cost Security
$435,000 $400,000 
$545,000 $550,000 

What amounts should Ponca report in its year-end income statement and balance sheet as a result of its investment in securities X and Y ?

27 / 30

One of a firm's assets is 270-day commercial paper that the firm intends to hold to maturity. One of its liabilities is a short position in a common stock, which the firm holds for trading purposes. How should this asset and this liability be classified on the firm's balance sheet ?

28 / 30

Ascot Corporation has 4 million shares of common stock authorized, 2.4 million shares of common stock issued, and 1.8 million shares of common stock outstanding. How many shares of treasury stock does Ascot own and is the treasury stock reported as an asset in Ascot's balance sheet ?

29 / 30

Consider the following:

Statement #1 – Copyrights and patents are tangible assets that can be separately identified.

Statement #2 – Purchased copyrights and patents are amortized on a straight line basis over 30 years.

With respect to the statements about copyrights and patents acquired from an independent third party:

30 / 30

Common size balance sheets express all balance sheet items as a percentage of:

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