MBA exam 2 UPDATED ACTUAL
Questions and CORRECT Answers
All of the above - CORRECT ANSWER✔✔- Which of the following items creates
complications related to revenue recognition?
A) Bonuses tied to sales goals
B) Long-term construction contracts
C) Multiple element sales contracts
D) Consignment goods
E) All of the above
$96 million - CORRECT ANSWER✔✔- In spring 2017, Parmac Engineering Company
signed a $240 million contract with the city of Parkersburg, to construct a new city hall.
Parmac expects to construct the building within two years and incur expenses of $180
million. The city of Parkersburg paid $60 million when the contract was signed, $120 million
within the next six months, and the final $60 million exactly one year from the signing of the
contract. Parmac incurred $72 million in costs during 2017 and rest in 2018 to complete the
contract on time. Using the cost-to-cost method how much revenue should Parmac recognize
in 2017?
A) $ 60 million
B) $108 million
C) $ 96 million
D) $180 million
E) None of the above
$31 because both the fee from the customer and the Blue Man Group producer are earned -
CORRECT ANSWER✔✔- Ticketmaster contracts with the producer of Blue Man Group to
sell tickets online. Ticketmaster charges each customer a fee of $9 per ticket and receives $22
per ticket from the producer. Ticketmaster does not take control of the ticket inventory.
Average ticket price for the event is $105. How much revenue should Ticketmaster recognize
for each Blue Man Group ticket sold?
A) $9 because the $22 from the producer is similar to a negative cost of goods sold
B) $105 because the $83 is cost of goods sold paid to the Blue Man Group producer
C) $31 because both the fee from the customer and the Blue Man Group producer are earned
D) $114 because the $83 is cost of goods sold paid to the Blue Man Group producer
, E) None of the above
$493.8 million - CORRECT ANSWER✔✔- The 2016 financial statements of Leggett &
Platt, Inc. include the following information in a footnote. What are the company's current
gross accounts and other receivables at the end of 2016?
(in millions) 2016 2015 Allowance for doubtful accounts$7.2 $9.3 Total accounts and other
receivables, net $486.6 $520.2
A) $486.6 million
B) $479.4 million
C) $452 million
D) $493.8 million
E) None of the above
16.5% - CORRECT ANSWER✔✔- The 2016 financial statements of Leggett & Platt include
the accounts receivable footnote:Total accounts and other receivables at December 31
consisted of the following:
(in millions) 2016 2015 Total accounts and other receivables $493.8 $529.5 Allowance for
doubtful accounts (7.2) (9.3) Total accounts and other receivables, net $486.6 $520.2
The balance sheet reports total assets of $2,984.1 million at December 31, 2016. The
common-size amount for gross accounts and other receivables are:
A) $486.6 million
B) $493.8 million
C) 16.5%
D) 5.0%
E) None of the above
49 days - CORRECT ANSWER✔✔- The 2016 income statements of Leggett & Platt, Inc.
reports net sales of $3,749.9 million. The balance sheet reports accounts receivable, net of
$486.6 million at December 31, 2016 and $520.2 million at December 31, 2015. The days
sales outstanding in 2016 was:
A) 49 days
B) 10 days
C) 44 days
D) 8 days
Questions and CORRECT Answers
All of the above - CORRECT ANSWER✔✔- Which of the following items creates
complications related to revenue recognition?
A) Bonuses tied to sales goals
B) Long-term construction contracts
C) Multiple element sales contracts
D) Consignment goods
E) All of the above
$96 million - CORRECT ANSWER✔✔- In spring 2017, Parmac Engineering Company
signed a $240 million contract with the city of Parkersburg, to construct a new city hall.
Parmac expects to construct the building within two years and incur expenses of $180
million. The city of Parkersburg paid $60 million when the contract was signed, $120 million
within the next six months, and the final $60 million exactly one year from the signing of the
contract. Parmac incurred $72 million in costs during 2017 and rest in 2018 to complete the
contract on time. Using the cost-to-cost method how much revenue should Parmac recognize
in 2017?
A) $ 60 million
B) $108 million
C) $ 96 million
D) $180 million
E) None of the above
$31 because both the fee from the customer and the Blue Man Group producer are earned -
CORRECT ANSWER✔✔- Ticketmaster contracts with the producer of Blue Man Group to
sell tickets online. Ticketmaster charges each customer a fee of $9 per ticket and receives $22
per ticket from the producer. Ticketmaster does not take control of the ticket inventory.
Average ticket price for the event is $105. How much revenue should Ticketmaster recognize
for each Blue Man Group ticket sold?
A) $9 because the $22 from the producer is similar to a negative cost of goods sold
B) $105 because the $83 is cost of goods sold paid to the Blue Man Group producer
C) $31 because both the fee from the customer and the Blue Man Group producer are earned
D) $114 because the $83 is cost of goods sold paid to the Blue Man Group producer
, E) None of the above
$493.8 million - CORRECT ANSWER✔✔- The 2016 financial statements of Leggett &
Platt, Inc. include the following information in a footnote. What are the company's current
gross accounts and other receivables at the end of 2016?
(in millions) 2016 2015 Allowance for doubtful accounts$7.2 $9.3 Total accounts and other
receivables, net $486.6 $520.2
A) $486.6 million
B) $479.4 million
C) $452 million
D) $493.8 million
E) None of the above
16.5% - CORRECT ANSWER✔✔- The 2016 financial statements of Leggett & Platt include
the accounts receivable footnote:Total accounts and other receivables at December 31
consisted of the following:
(in millions) 2016 2015 Total accounts and other receivables $493.8 $529.5 Allowance for
doubtful accounts (7.2) (9.3) Total accounts and other receivables, net $486.6 $520.2
The balance sheet reports total assets of $2,984.1 million at December 31, 2016. The
common-size amount for gross accounts and other receivables are:
A) $486.6 million
B) $493.8 million
C) 16.5%
D) 5.0%
E) None of the above
49 days - CORRECT ANSWER✔✔- The 2016 income statements of Leggett & Platt, Inc.
reports net sales of $3,749.9 million. The balance sheet reports accounts receivable, net of
$486.6 million at December 31, 2016 and $520.2 million at December 31, 2015. The days
sales outstanding in 2016 was:
A) 49 days
B) 10 days
C) 44 days
D) 8 days
