MGMT 200 ACTUAL 2026 EXAM QUESTIONS AND
SOLUTIONS RATED A+
Unamortized Bond Premium is subtracted from
Bonds Payable on the balance sheet.
A. True
B. False - ✔✔B. ¯\_(ツ)_/¯
Unamortized bond premium is ADDED to bonds payable on the balance sheet. This is
why the premium greater than the face value
(for example, the face value of a bond is $100,000 but the bond is issued at $105,000.
The amount of premium on the bond is $5000. This premium is ADDED to the bonds
payable (originally $100,000) in the balance sheet)
The interest expense each period is calculated
as the carrying value times the market interest
rate
A. True
B. False - ✔✔A. Yessir
Interest expense is calculated by multiplying the market interest rate with the carrying
value. Then in order to calculate the current oustanding loan balance (carrying value)
you ADD the previous carrying value to (interest expense less payment)
Bonds payable should be reported as a long‐term
liability in the balance sheet at:
A. Current bond market price
B. Carrying value
C. Face value
D. Face value less accrued interest since the last
interest payment date - ✔✔B. Carrying value
Bonds payable should be reported as a long‐term
liability in the balance sheet at:
A. Current bond market price
B. Carrying value
C. Face value
D. Face value less accrued interest since the last
interest payment date - ✔✔C. analyst conference presentation information
Common‐size financial statement enable a financial analyst to
do?
A. Analyze and evaluate financial statements of companies
within a given industry that are the same size.
,B. Determine which companies in the same industry are at
approximately the same stage of development.
C. Evaluate companies of similar size in different industries.
D. Compare the mix of assets, liabilities, capital, revenue,
and expenses within a company over time or between
companies within a given industry without respect to
relative size. - ✔✔D. Compare the mix of assets, liabilities, capital, revenue,
and expenses within a company over time or between
companies within a given industry without respect to
relative size.
(This allows for both vertical and horizontal analysis)
In a common‐size financial statement, a designation of
25 percent could not be given to
A. net revenues.
B. total current assets.
C. total long‐term debt.
D. net earnings. - ✔✔A. net revenues
Net revenues are the base percentage for everything else so this will always be 100%.
In other words, every other item is a percentage of net revenues.
When using vertical analysis, we express balance sheet
accounts as a percentage of
A. stockholders' equity.
B. cash.
C. total assets.
D. current assets. - ✔✔C. total assets
For common size FINANCIAL statements, the base amount is *net revenues*. For
common size BALANCE SHEET'S (vertical analysis) the base amount is *total assets*.
In other words, under vertical analysis, everything on a balance sheet is represented as
a percentage of total assets.
San Marcos, Inc. reports accounts receivable of $100,000 in
2017 and $250,000 in 2018. Using horizontal analysis, what
would be the percentage increase or decrease in accounts
receivable?
A. 60% decrease
B. 60% increase
C. 150% decrease
D. 150% increase - ✔✔D. 150% increase
% increase (or decrease) is calculated as such:
, (Current-year amount less prior-year amount) / (prior-year amount)
So (250-100)/(100)*100 = 150%
Horizontal analysis will reveal, for example, the
percentage of net sales consumed by salaries
expense.
A. True
B. False - ✔✔B. Incorrectamundo
Expenses are not that specific on an income statement or balance sheet.
On an income statement expenses are separated by operating expenses and other
expenses, while on a balance sheet they're separated sorted into different liabilities.
Liquidity is the ability to earn a satisfactory net income.
A. True
B. False - ✔✔B.
Liquidity is the conversion of all a companies assets to cash, aka what the company is
worth as a dollar amount in real time
What is the effect of the collection of accounts receivable on the
current ratio and net working capital, respectively?
Current Ratio Net Working Capital
a. Increase - Increase
b. No effect - Increase
c. No effect - No effect
d. Increase - No effect - ✔✔C. No effect - no effect
Current ratio is calculated as such
(current assets)/(current liabilities)
Net working capital is calculated as such
(current liabilities less current assets)
SO since current assets do not change in either case (+/- an asset) then neither of them
change.
Allegheny Corporation's 2017 gross margin ratio on
the following schedule is:
Allegheny Corporation
2017
- Accounts receivable $30,000
SOLUTIONS RATED A+
Unamortized Bond Premium is subtracted from
Bonds Payable on the balance sheet.
A. True
B. False - ✔✔B. ¯\_(ツ)_/¯
Unamortized bond premium is ADDED to bonds payable on the balance sheet. This is
why the premium greater than the face value
(for example, the face value of a bond is $100,000 but the bond is issued at $105,000.
The amount of premium on the bond is $5000. This premium is ADDED to the bonds
payable (originally $100,000) in the balance sheet)
The interest expense each period is calculated
as the carrying value times the market interest
rate
A. True
B. False - ✔✔A. Yessir
Interest expense is calculated by multiplying the market interest rate with the carrying
value. Then in order to calculate the current oustanding loan balance (carrying value)
you ADD the previous carrying value to (interest expense less payment)
Bonds payable should be reported as a long‐term
liability in the balance sheet at:
A. Current bond market price
B. Carrying value
C. Face value
D. Face value less accrued interest since the last
interest payment date - ✔✔B. Carrying value
Bonds payable should be reported as a long‐term
liability in the balance sheet at:
A. Current bond market price
B. Carrying value
C. Face value
D. Face value less accrued interest since the last
interest payment date - ✔✔C. analyst conference presentation information
Common‐size financial statement enable a financial analyst to
do?
A. Analyze and evaluate financial statements of companies
within a given industry that are the same size.
,B. Determine which companies in the same industry are at
approximately the same stage of development.
C. Evaluate companies of similar size in different industries.
D. Compare the mix of assets, liabilities, capital, revenue,
and expenses within a company over time or between
companies within a given industry without respect to
relative size. - ✔✔D. Compare the mix of assets, liabilities, capital, revenue,
and expenses within a company over time or between
companies within a given industry without respect to
relative size.
(This allows for both vertical and horizontal analysis)
In a common‐size financial statement, a designation of
25 percent could not be given to
A. net revenues.
B. total current assets.
C. total long‐term debt.
D. net earnings. - ✔✔A. net revenues
Net revenues are the base percentage for everything else so this will always be 100%.
In other words, every other item is a percentage of net revenues.
When using vertical analysis, we express balance sheet
accounts as a percentage of
A. stockholders' equity.
B. cash.
C. total assets.
D. current assets. - ✔✔C. total assets
For common size FINANCIAL statements, the base amount is *net revenues*. For
common size BALANCE SHEET'S (vertical analysis) the base amount is *total assets*.
In other words, under vertical analysis, everything on a balance sheet is represented as
a percentage of total assets.
San Marcos, Inc. reports accounts receivable of $100,000 in
2017 and $250,000 in 2018. Using horizontal analysis, what
would be the percentage increase or decrease in accounts
receivable?
A. 60% decrease
B. 60% increase
C. 150% decrease
D. 150% increase - ✔✔D. 150% increase
% increase (or decrease) is calculated as such:
, (Current-year amount less prior-year amount) / (prior-year amount)
So (250-100)/(100)*100 = 150%
Horizontal analysis will reveal, for example, the
percentage of net sales consumed by salaries
expense.
A. True
B. False - ✔✔B. Incorrectamundo
Expenses are not that specific on an income statement or balance sheet.
On an income statement expenses are separated by operating expenses and other
expenses, while on a balance sheet they're separated sorted into different liabilities.
Liquidity is the ability to earn a satisfactory net income.
A. True
B. False - ✔✔B.
Liquidity is the conversion of all a companies assets to cash, aka what the company is
worth as a dollar amount in real time
What is the effect of the collection of accounts receivable on the
current ratio and net working capital, respectively?
Current Ratio Net Working Capital
a. Increase - Increase
b. No effect - Increase
c. No effect - No effect
d. Increase - No effect - ✔✔C. No effect - no effect
Current ratio is calculated as such
(current assets)/(current liabilities)
Net working capital is calculated as such
(current liabilities less current assets)
SO since current assets do not change in either case (+/- an asset) then neither of them
change.
Allegheny Corporation's 2017 gross margin ratio on
the following schedule is:
Allegheny Corporation
2017
- Accounts receivable $30,000
