1. Mobile Company has sales of $4,885,340 in sales at 12/31/10, cost of goods sold of $2,542,353 at 12/31/10, inventories of $338,599 at 12/31/10 and $487,505 at 12/31/09 and accounts payable

1.  Mobile Company has sales of $4,885,340 in sales at 12/31/10, cost of goods sold of $2,542,353 at 12/31/10, inventories of $338,599 at 12/31/10 and $487,505 at 12/31/09 and accounts payable of $296,307 at 12/31/10 and $334,207 at 12/31/09, the company's accounts payable outstanding at 12/31/0 would be:    

2.  Which of the following is the date on which a company incurs a legal liability to distribute the dividend to owners of the stock?

        Date of record

        Commitment date

        Date of declaration

        Date of payment

3.  A company would need to record an impairment loss for its equipment when 

        the original cost of the equipment exceeds its fair value and is deemed not recoverable.

        the carrying amount of the equipment exceeds its fair value and is deemed not recoverable

        management determines that the equipment will no longer be used.

        the cash flows from the equipment are less than its fair value.

4.  Below is selected information from Marker’s 2012 financial statements:

                                   As of Dec. 31, 2012    Dec. 31, 2011

Cash and short-term investments$    958,245$   745,800

Accounts Receivable (net)               125,850135,400

Inventories                                 195,650175,840

Prepaid Expenses and other current assets45,30030,860

Total Current Assets                      $1,325,045 $1,087,900

Plant, Property and Equipment, net1,478,3201,358,700

Intangible Assets                       125,600120,400

Total Assets                           $2,928,965$2,567,000  

Short-term borrowings            $    25,190$    38,108

Current portion of long-term debt        45,00040,000

Accounts payable                          285,400325,900

Accrued liabilities                       916,722705,891

Income taxes payable                      125,400115,600

Total Current Liabilities         $1,397,712$1,225,499

Long-term Debt                              450,000430,000

Total Liabilities                          $1,847,712$1,655,499

Shareholders' Equity                  $1,081,253$   911,501

Total Liabilities and Shareholders' Equity$2,928,965$2,567,000

Selected Income Statement Data - for the year ending December 31, 2012:

Net Sales$3,210,645 

Cost of Goods Sold(2,310,210) 

Operating Income$   900,435 

Net Income$   324,850 

Selected Statement of Cash Flow Data - for the year ending December 31, 2012:

Cash Flows from Operations$584,750 

Interest Expense42,400 

Income Tax Expense114,200 

Marker’s Liabilities to Assets Ratio for 2012 is

5.  GAAP stipulates that firms should do what with expenditures that increase the service potential of an asset beyond that originally anticipated?

        Capitalize the expenditure and depreciate it over the remaining service life of the asset.

        Expense the expenditure immediately.

        Capitalize the expenditure, but do not depreciate the asset.

        Charge it off to shareholders’ equity.

6.  Below is selected information from Marker’s 2012 financial statements:

                                     As of Dec. 31, 2012Dec. 31, 2011

Cash and short-term investments$    958,245$   745,800

Accounts Receivable (net)            125,850135,400

Inventories                              195,650175,840

Prepaid Expenses and other current assets45,30030,860

Total Current Assets                    $1,325,045$1,087,900

Plant, Property and Equipment, net1,478,3201,358,700

Intangible Assets                       125,600120,400

Total Assets                          $2,928,965$2,567,000

Short-term borrowings$    25,190$    38,108

Current portion of long-term debt45,00040,000

Accounts payable285,400325,900

Accrued liabilities916,722705,891

Income taxes payable    125,400115,600

Total Current Liabilities$1,397,712$1,225,499

Long-term Debt450,000430,000

Total Liabilities$1,847,712$1,655,499

Shareholders' Equity$1,081,253$   911,501

Total Liabilities and Shareholders' Equity$2,928,965$2,567,000

Selected Income Statement Data - for the year ending December 31, 2012:

Net Sales$3,210,645 

Cost of Goods Sold(2,310,210) 

Operating Income$   900,435 

Net Income$   324,850 

Selected Statement of Cash Flow Data - for the year ending December 31, 2012:

Cash Flows from Operations$584,750 

Interest Expense42,400 

Income Tax Expense114,200

Marker’s 2012 Long-term debt to Shareholder's Equity ratio is: 

7.  All of the following statements are true regarding accounting for software development costs except: 

        Firms must expense as incurred all costs incurred internally in developing computer software until such development achieves the technological feasibility of a product.

        Firms must capitalize as incurred all costs incurred internally in developing computer software. 

        Researchers have found a significant association between costs and future earnings which support capitalizing and amortizing product development costs permitted by U.S. GAAP and IFRS.

        The interpretation of the meaning of technological feasibility has created diversity in the practice of accounting for software development costs.

8.   All of the following are typically recognized as accounting liabilities except: (Points : 5)

        Bonds payable

        Loan Guarantees

        Rental fees received in advance

        Taxes Payable

9.   Below is selected information from Marker’s 2012 financial statements:

                                    As of Dec. 31, 2012  Dec. 31, 2011

Cash and short-term investments$    958,245$   745,800

Accounts Receivable (net)               125,850135,400

Inventories                              195,650175,840

Prepaid Expenses and other current assets45,30030,860

Total Current Assets                 $1,325,045$1,087,900

Plant, Property and Equipment, net1,478,3201,358,700

Intangible Assets                    125,600  120,400

Total Assets                     $2,928,965  $2,567,000

Short-term borrowings$    25,190$    38,108

Current portion of long-term debt45,00040,000

Accounts payable285,400325,900

Accrued liabilities916,722705,891

Income taxes payable    125,400115,600

Total Current Liabilities$1,397,712$1,225,499

Long-term Debt                  450,000   430,000

Total Liabilities                $1,847,712$1,655,499

Shareholders' Equity$1,081,253$   911,501

Total Liabilities and Shareholders' Equity$2,928,965$2,567,000

Selected Income Statement Data - for the year ending December 31, 2012:

Net Sales$3,210,645 

Cost of Goods Sold(2,310,210) 

Operating Income$   900,435 

Net Income$   324,850 

Selected Statement of Cash Flow Data - for the year ending December 31, 2012:

Cash Flows from Operations$584,750 

Interest Expense42,400 

Income Tax Expense114,200

Marker’s Long-term debt to long-term capital for 2012 is

10. Which kind of dividend is a return of the original investment by shareholders?

        Cash dividend

        Stock dividend

        Liquidating dividend

        Scrip dividend

11.  All of the following conditions signal that revenue recognition may have been recorded 

too early except:

        large and volatile amounts of uncollectible accounts receivable.

        unusually large amounts of returned goods.

        excessive warranty expenditures.

        a decrease in the number of days accounts receivable are outstanding.

12.  If the portions of the firm’s foreign operations in higher-tax-rate countries grew more rapidly than foreign operations in lower-tax-rate countries, the company may seek out more tax effective ways of operating abroad through all of the following means except:

Assess whether transfer prices or cost allocations can be adjusted to shift income

from high-tax-rate to low-tax-rate jurisdictions.

Shift from domestic to foreign borrowing to increase deductions for interest against

foreign-source income.

Shift from debt to equity financing of foreign operations to increase interest deductions

against foreign-source income.

Shift some operations, like marketing, to the United States where the average tax rate is lower.

13.  Under current U.S. GAAP unrealized gains and losses from four balance sheet items are reported in accumulated other comprehensive income or loss. Which of the following is not one of the balance sheet items?

        Derivatives held as cash flow hedges.

        Deferred tax assets related to net operating loss carry-forwards.

        Minimum pension obligations.

        Investment securities classified as available for sale.

14.  All of the following are benefits of leasing except:

        They have the ability to shift the tax benefits from depreciation and other deductions from a lessee that has little or no taxable income to a lessor that has substantial taxable income.

        They provide flexibility to change capacity as needed without having to purchase or sell assets.

        They have the ability to reduce the risk of technological obsolescence, relative to outright ownership, by maintaining the flexibility to shift to technologically more advanced assets

        In an operating lease, the lessee recognizes the signing of the lease as the simultaneous acquisition of a long-term asset and the incurring of a long-term liability for lease payments.

15.

Current AssetsAs of Dec. 31, 2010Dec. 31, 2009

Cash and short-term investments$1,267,038$   616,604

Accounts Receivable (net)490,816665,828

Inventories338,599487,505

Prepaid Expenses and other current assets292,511291,915

Total Current Assets$2,388,964$2,061,852

Current Liabilities 

Short-term borrowings$   25,190$   38,108

Current portion of long-term debt182,295210,090

Accounts payable296,307334,247

Accrued liabilities941,912743,999

Income taxes payable203,049239,793

Total Current Liabilities1,648,7531,566,237

Selected Income Statement Data - for the year ending December 31, 2010: 

Net Sales$4,885,340

Cost of Goods Sold2,542,353

Operating Income733,541

Net Income230,101

Selected Statement of Cash Flow Data - for the year ending December 31, 2010: 

Cash Flows from Operations$1,156,084

Mobile's current ratio in 2010 was: 

16.   If Mobile has accounts receivable of $490,816 at 12/31/10 and $665,828 at 12/31/09, inventories of $338,599 at 12/31/10 and $487,505 at 12//31/09, and sales of $4,885,340 and cost of goods sold of $2,542,353 in 2010, Mobile's days receivables at the end of 2010 would be:  

17. Below is selected information from Marker’s 2012 financial statements:

 As of Dec. 31, 2012Dec. 31, 2011

Cash and short-term investments$    958,245$   745,800

Accounts Receivable (net)125,850135,400

Inventories 195,650175,840

Prepaid Expenses and other current assets45,30030,860

Total Current Assets$1,325,045$1,087,900

Plant, Property and Equipment, net1,478,3201,358,700

Intangible Assets125,600120,400

Total Assets$2,928,965$2,567,000

Short-term borrowings$    25,190$    38,108

Current portion of long-term debt45,00040,000

Accounts payable285,400325,900

Accrued liabilities916,722705,891

Income taxes payable125,400115,600

Total Current Liabilities$1,397,712$1,225,499

Long-term Debt450,000430,000

Total Liabilities$1,847,712$1,655,499

Shareholders' Equity$1,081,253$   911,501

Total Liabilities and Shareholders' Equity$2,928,965$2,567,000

Selected Income Statement Data - for the year ending December 31, 2012:

Net Sales$3,210,645 

Cost of Goods Sold(2,310,210) 

Operating Income$   900,435 

Net Income$   324,850 

Selected Statement of Cash Flow Data - for the year ending December 31, 2012:

Cash Flows from Operations$584,750 

Interest Expense42,400 

Income Tax Expense114,200 

Marker’s 2012 Liabilities to Shareholders’ Equity ratio is:   

18. For U.S. GAAP, software development costs are capitalized as intangible assets  (Points : 5)

        once the technological feasibility of the product is established.

        after a copyright is obtained.

        from the beginning of development.

        once the product is introduced into the marketplace.

19. Below is selected information from Marker’s 2012 financial statements:

 As of Dec. 31, 2012Dec. 31, 2011

Cash and short-term investments$    958,245$   745,800

Accounts Receivable (net)125,850135,400

Inventories 195,650175,840

Prepaid Expenses and other current assets45,30030,860

Total Current Assets$1,325,045$1,087,900

Plant, Property and Equipment, net1,478,3201,358,700

Intangible Assets125,600120,400

Total Assets$2,928,965$2,567,000

Short-term borrowings$    25,190$    38,108

Current portion of long-term debt45,00040,000

Accounts payable285,400325,900

Accrued liabilities916,722705,891

Income taxes payable125,400115,600

Total Current Liabilities$1,397,712$1,225,499

Long-term Debt450,000430,000

Total Liabilities$1,847,712$1,655,499

Shareholders' Equity$1,081,253$   911,501

Total Liabilities and Shareholders' Equity$2,928,965$2,567,000

Selected Income Statement Data - for the year ending December 31, 2012:

Net Sales$3,210,645 

Cost of Goods Sold(2,310,210) 

Operating Income$   900,435 

Net Income$   324,850 

Selected Statement of Cash Flow Data - for the year ending December 31, 2012:

Cash Flows from Operations$584,750 

Interest Expense42,400 

Income Tax Expense114,200 

Marker’s interest coverage ratio for 2012 is:      

20. All of the following are criteria that financial reporting requires before recognizing an obligation as a liability except:

       The transaction or event that gave rise to the obligation has already occurred.

        The firm has a present obligation and little or no discretion to avoid the transfer.

        The firm must know the precise amount of the obligation before recording it.

        The obligation involves a probable future sacrifice of economic benefits–a future transfer of cash, goods, or services; the forgoing of a future cash receipt; or the transfer of equity shares–at a specified or determinable date.             The firm can measure with reasonable precision the cash-equivalent value of the resources needed to satisfy the obligation.