FIN 534 Week 5 Midterm Exam Part 1

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·         Question 1

2 out of 2 points

  
 

You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following statements best describes this transaction?

   

 

 

 

 

   

·         Question 2

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 3

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 4

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 5

2 out of 2 points

  
 

Money markets are markets for

   

 

 

 

 

   

·         Question 6

2 out of 2 points

  
 

You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of:

   

 

 

 

 

   

·         Question 7

2 out of 2 points

  
 

Cheers Inc. operates as a partnership. Now the partners have decided to convert the business into a regular corporation. Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 8

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 9

2 out of 2 points

  
 

Which of the following would be most likely to occur in the year after Congress, in an effort to increase tax revenue, passed legislation that forced companies to depreciate equipment over longer lives? Assume that sales, other operating costs, and tax rates are not affected, and assume that the same depreciation method is used for tax and stockholder reporting purposes.

   

 

 

 

 

   

·         Question 10

2 out of 2 points

  
 

Analysts following Armstrong Products recently noted that the company's operating net cash flow increased over the prior year, yet cash as reported on the balance sheet decreased. Which of the following factors could explain this situation?

   

 

 

 

 

   

·         Question 11

2 out of 2 points

  
 

The LeMond Corporation just purchased a new production line. Assume that the firm planned to depreciate the equipment over 5 years on a straight-line basis, but Congress then passed a provision that requires the company to depreciate the equipment on a straight-line basis over 7 years. Other things held constant, which of the following will occur as a result of this Congressional action? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.

   

 

 

 

 

   

·         Question 12

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 13

2 out of 2 points

  
 

Assume that Congress recently passed a provision that will enable Barton's Rare Books (BRB) to double its depreciation expense for the upcoming year but will have no effect on its sales revenue or tax rate. Prior to the new provision, BRB's net income after taxes was forecasted to be $4 million. Which of the following best describes the impact of the new provision on BRB's financial statements versus the statements without the provision? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.

   

 

 

 

 

   

·         Question 14

2 out of 2 points

  
 

For managerial purposes, i.e., making decisions regarding the firm's operations, the standard financial statements as prepared by accountants under Generally Accepted Accounting Principles (GAAP) are often modified and used to create alternative data and metrics that provide a somewhat different picture of a firm's operations. Related to these modifications, which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 15

2 out of 2 points

  
 

Which of the following items is NOT included in current assets?

   

 

 

 

 

   

·         Question 16

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 17

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 18

2 out of 2 points

  
 

You observe that a firm's ROE is above the industry average, but its profit margin and debt ratio are both below the industry average. Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 19

2 out of 2 points

  
 

A firm's new president wants to strengthen the company's financial position. Which of the following actions would make it financially stronger?

   

 

 

 

 

   

·         Question 20

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 21

2 out of 2 points

  
 

Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 22

2 out of 2 points

  
 

Companies Heidee and Leaudy are virtually identical in that they are both profitable, and they have the same total assets (TA), Sales (S), return on assets (ROA), and profit margin (PM). However, Company Heidee has the higher debt ratio. Which of the following statements is CORRECT?

   

 

 

 

 

   

·         Question 23

2 out of 2 points

  
 

The Cavendish Company recently issued new common stock and used the proceeds to pay off some of its short-term notes payable. This action had no effect on the company's total assets or operating income. Which of the following effects would occur as a result of this action?

   

 

 

 

 

   

·         Question 24

2 out of 2 points

  
 

Arshadi Corp.'s sales last year were $52,000, and its total assets were $22,000. What was its total assets turnover ratio (TATO)?

   

 

 

 

 

   

·         Question 25

2 out of 2 points

  
 

Companies A and C each reported the same earnings per share (EPS), but Company A's stock trades at a higher price. Which of the following statements is CORRECT?

   

 

 

 

 

   

 

 

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