FIN 461 REVIEW TIPS QUESTIONS AND ANSWERS
SURE A+
✔✔How is a firm's average income tax rate calculated?
a. Income taxes divided by earnings before income taxes.
b. Income taxes divided by net income.
c. Income taxes divided by sales.
d. Income taxes divided by gross profit. - ✔✔a
✔✔What is the required reporting for discontinued operations?
a. The results of discontinued operations should be reported as an extraordinary item.
b. The gain or loss on the disposal should be reported in comprehensive income.
c. The operating results of discontinued operations should be reported as part of
continuing operations and any gain or loss on disposal should be disclosed separately
from continuing operations.
d. The operating results of discontinued operations should be reported separately from
continuing operations and any gain or loss on disposal should be also be disclosed
separately from continuing operations. - ✔✔d
✔✔What information can be found on a statement of shareholders' equity?
a. Details of assets and liabilities.
b. A reconciliation of beginning to ending cash.
c. Detail of changes in equity accounts.
d. Assets = Liabilities + Stockholders' Equity. - ✔✔c
✔✔Sales ('11) 400, ('10) 400
COGS ('11) 250, ('10) 200
Operating expenses ('11) 80, ('10) 70
Income taxes ('11) 22, ('10) 40
, Gray Co.'s gross profit, operating profit and net profit margins for 2011 are:
a. 50.0%, 32.5%, 22.5% respectively.
b. 37.5%, 17.5%, 12.0%, respectively.
c. 62.5%, 50.0%, 22.5%, respectively.
d. 62.5%, 17.5%, 12.0%, respectively. - ✔✔b
✔✔Sales ('11) 400, ('10) 400
COGS ('11) 250, ('10) 200
Operating expenses ('11) 80, ('10) 70
Income taxes ('11) 22, ('10) 40
Gray Co.'s average tax rates for 2011 and 2010 are:
a. 5.5% and 10.0%
b. 27.5% and 57.1%
c. 45.8% and 44.4%.
d. 31.4% and 30.8%. - ✔✔d
✔✔In which section of the income statement should this item be classified?
Sales Expense
a. Net sales.
b. Operating expenses.
c. Other revenue/expense.
d. Special items. - ✔✔b
✔✔In which section of the income statement should this item be classified?
Revenues
a. Net sales.
b. Operating expenses.
c. Other revenue/expense.
d. Special items. - ✔✔a
✔✔In which section of the income statement should this item be classified?
Marketing Expenses
a. Net sales.
b. Operating expenses.
c. Other revenue/expense.
d. Special items. - ✔✔b
SURE A+
✔✔How is a firm's average income tax rate calculated?
a. Income taxes divided by earnings before income taxes.
b. Income taxes divided by net income.
c. Income taxes divided by sales.
d. Income taxes divided by gross profit. - ✔✔a
✔✔What is the required reporting for discontinued operations?
a. The results of discontinued operations should be reported as an extraordinary item.
b. The gain or loss on the disposal should be reported in comprehensive income.
c. The operating results of discontinued operations should be reported as part of
continuing operations and any gain or loss on disposal should be disclosed separately
from continuing operations.
d. The operating results of discontinued operations should be reported separately from
continuing operations and any gain or loss on disposal should be also be disclosed
separately from continuing operations. - ✔✔d
✔✔What information can be found on a statement of shareholders' equity?
a. Details of assets and liabilities.
b. A reconciliation of beginning to ending cash.
c. Detail of changes in equity accounts.
d. Assets = Liabilities + Stockholders' Equity. - ✔✔c
✔✔Sales ('11) 400, ('10) 400
COGS ('11) 250, ('10) 200
Operating expenses ('11) 80, ('10) 70
Income taxes ('11) 22, ('10) 40
, Gray Co.'s gross profit, operating profit and net profit margins for 2011 are:
a. 50.0%, 32.5%, 22.5% respectively.
b. 37.5%, 17.5%, 12.0%, respectively.
c. 62.5%, 50.0%, 22.5%, respectively.
d. 62.5%, 17.5%, 12.0%, respectively. - ✔✔b
✔✔Sales ('11) 400, ('10) 400
COGS ('11) 250, ('10) 200
Operating expenses ('11) 80, ('10) 70
Income taxes ('11) 22, ('10) 40
Gray Co.'s average tax rates for 2011 and 2010 are:
a. 5.5% and 10.0%
b. 27.5% and 57.1%
c. 45.8% and 44.4%.
d. 31.4% and 30.8%. - ✔✔d
✔✔In which section of the income statement should this item be classified?
Sales Expense
a. Net sales.
b. Operating expenses.
c. Other revenue/expense.
d. Special items. - ✔✔b
✔✔In which section of the income statement should this item be classified?
Revenues
a. Net sales.
b. Operating expenses.
c. Other revenue/expense.
d. Special items. - ✔✔a
✔✔In which section of the income statement should this item be classified?
Marketing Expenses
a. Net sales.
b. Operating expenses.
c. Other revenue/expense.
d. Special items. - ✔✔b
