Angelinasmiths

L.O.a: Describe corporate governance. 1. Which of the following is the most appropriate definition of corporate governance? A. A system of defined roles for management and the majority shareholders. B. A system of checks and balances to minimize the conflicting interests among shareowners. C. A system of internal controls and procedures by which individual companies are managed. 2. Analyst 1: Corporate governance is the system of internal controls and procedures by which individual compan...

LO.a: Evaluate a company’s past financial performance and explain how a company’s strategy is reflected in past financial performance. 1. Projections of future financial performance based on past results would be least reliable when a company: A. is large and operating in a mature industry. B. has just entered the industry. C. is operating in a stable industry. 2. An analyst uses the average net profit margin over the past three years of a heavy equipment manufacturing firm to foreca...

LO.a: Distinguish between financial reporting quality and quality of reported results (including quality of earnings, cash flow, and balance sheet items). 1. The information provided by a high quality financial report will least likely: A. contain information that is relevant, neutral, and free from error. B. decrease company value. C. help in assessing the earnings quality of a firm. 2. High quality financial reports least likely reflect: A. decision-useful information. B. earnings smoo...

LO.a: Determine the initial recognition, initial measurement and subsequent measurement of bonds. 1. A company raises debt in the form of bonds of £10 million face value. When bonds are issued, the company will record a: A. cash inflow from financing activities. B. cash outflow from financing activities. C. cash inflow from investing activities. 2. Federal Motors reports using US GAAP. If at the time of its latest bond issue, it incurs €20,000 in printing, legal fees, commissions and ...

LO.a: Describe the differences between accounting profit and taxable income, and define key terms, including deferred tax assets, deferred tax liabilities, valuation allowance, taxes payable, and income tax expense. 1. A company’s income tax expense: A. is equal to income tax payable + (net increase in deferred tax liabilities – net increase in deferred tax assets). B. appears on the balance sheet. C. is equal to income tax payable + net increase in deferred tax assets and liabilities...

LO.a: Distinguish between costs that are capitalized and costs that are expensed in the period in which they are incurred. 1. A company recently purchased a warehouse property and related equipment for €20 million. The company incurred the following additional costs: • €1.0 million for repairs to the building’s roof • €0.3 million to modify the interior layout to meet their needs (moving walls and doors, inserting and removing partitions, etc.) • €0.2 million on an orienta...

LO.a: Distinguish between costs included in inventories and costs recognized as expenses in the period in which they are incurred. 1. A company manufactures copper wires and prepares its financial statements in accordance with IFRS. During its latest full fiscal year, the company recorded the following data: Inventory Item Amount € Raw material copper costs 200,000 Storage of finished wires 50,000 Wasted copper materials from abnormal production errors during the year 25,000 Transpor...

LO.a: Describe tools and techniques used in financial analysis, including their uses and limitations. 1. The use of financial ratio analysis is most likely limited in which of the following situations? A. Comparing companies using different accounting methods. B. Providing a means of evaluating management’s ability. C. Providing insights into microeconomic relationships within a company that help analysts project earnings and free cash flow. 2. Thiago Silva, an equity research analyst, ...

LO.a: Compare cash flows from operating, investing, and financing activities and classify cash flow items as relating to one of those three categories given a description of the items. 1. Which of the following activities will most likely increase the cash from investing activities for a company which manufactures and sells computers? A. Proceeds from issuance of corporate bonds. B. Proceeds from sale of manufacturing equipment. C. Proceeds from sale of computers. 2. A company recorded th...

LO.a: Describe the elements of the balance sheet: assets, liabilities, and equity. 1. Which of the following statements is most accurate? A. A classified balance sheet is one which departs materially from accounting standards as per an auditor’s opinion. B. A classified balance sheet is grouped into current and non-current assets and liabilities. C. The excess of current assets over current liabilities is known as liquidity. 2. An asset or liability is created on the balance sheet when r...