limited liability for investors the difficulty of transferring ownership higher taxes it is difficult to raise capital
Question 2. 2. (TCO A) Preferred stock _____. (Points : 5) provides voting rights is an asset account is very common provides preferred shareholders with a priority claim on assets versus common stockholders
Question 3. 3. (TCOs A, B) Below is a partial list of account balances for LBJ Company:
Cash
$15,000
Prepaid insurance
1,000
Accounts receivable
3,500
Accounts payable
3,000
Notes payable
6,000
Common stock
100,000
Dividends
1,500
Revenues
75,000
Expenses
45,500
What did LBJ Company show as total credits? (Points : 5) $185,500 $250,500 $66,000 $184,000
Question 4. 4. (TCOs B, E) Which of the following statements is incorrect with regard to accrual accounting? (Points : 5) Accrual accounting is consistent with the matching principle. Accrual accounting does not record expenses until they are paid. Accrual accounting is more complex than cash basis accounting. Accrual accounting is required by GAAP.
Question 5. 5. (TCO D) Which inventory method will result in the lowest income taxes when prices are decreasing? (Points : 5) The average cost method LIFO FIFO Income tax expense will be the same.
Question 6. 6. (TCOs A, E) Equipment was purchased for $85,000. Freight charges amounted to $2,550 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $5,000 salvage value at the end of its 6-year useful life. Depreciation expense each year using the straight-line method will be _____. (Points : 5) $13,333 $16,258 $15,425 $13,578
Question 7. 7. (TCOs D, G) When the market rate of interest is equal to the stated rate of interest on the bond, the bond will require _____. (Points : 5) a debit to Discount on Bonds Payable a credit to Discount on Bonds Payable a credit to Bonds Payable a debit to Bonds Payable
Question 8. 8. (TCO C) Accounts receivable arising from sales to customers amounted to $90,000 and $80,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $200,000. Based on these transactions, the cash flows from operating activities to be reported on the statement of cash flows would be _____. (Points : 5) $280,000 $250,000 $210,000 $190,000
Question 9. 9. (TCO F) Horizontal analysis is also known as _____. (Points : 5) ratio analysis vertical analysis common-size analysis trend analysis
Question 10. 10. (TCO F) When performing a common-size Income Statement, the 100% figure is _____. (Points : 5) net sales total liabilities plus stockholders equity net income total assets
Question 11. 11. (TCO F) Which one of the following is typically analyzed via financial statement ratio analysis? (Points : 5) The design of a new product The internal control failure rate The leverage of the firm The effectiveness of a marketing campaign
Question 12. 12. (TCO F) A common ratio to measure liquidity is the _____. (Points : 5) rate of return on stockholders equity debt ratio quick (acid-test) ratio times-interest-earned ratio
Question 13. 13. (TCO F) Shareholders are usually most interested in evaluating _____. (Points : 5) profitability leverage turnover the ability to pay debts as they come due
Question 14. 14. (TCO G) To calculate the market value of a bond, we need to _____. (Points : 5) multiply the stated rate times the bonds face value calculate the present value of the principal only calculate the present value of both the principal and the interest calculate the present value of the interest only Page 2 Question 1. 1.
(TCO A) Below you will find selected information (in millions) from Coca-Cola Co.s 2012 Annual Report:
Income Taxes Payable
$471
Short-term Investments and Marketable Securities
8,109
Cash
8,442
Other non-current Liabilities
10,449
Common Stock
1,760
Receivables
4,812
Other Current Assets
2,973
Long-term Investments
10,448
Other Non-current Assets
3,585
Property, Plant and Equipment
23,486
Trademarks
6,527
Other Intangible Assets
20,810
Allowance for Doubtful Accounts
53
Accumulated Depreciation
9,010
Accounts Payable
8,680
Short Term Notes Payable
17,874
Prepaid Expenses
2,781
Other Current Liabilities
796
Long-Term Liabilities
14,736
Paid-in-Capital in Excess of Par Value
11,379
Retained Earnings
55,038
Inventories
3,264
Treasury Stock
35,009
Other information taken from the Annual Report:
Sales Revenue for 2012
$48,017
Cost of Goods Sold for 2012
19,053
Net Income for 2012
9,019
Inventory Balance on 12/31/11
3,092
Net Accounts Receivable Balance on 12/31/11
4,920
Total Assets on 12/31/11
79,974
Equity Balance on 12/31/11
31,921
Required: 1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each. 2. Using the Balance Sheet from your answer above, calculate the Current Ratio and Return on common stockholders equi (Points : 36)