Carolina Company has options for 100,000 shares outstanding that may be exercised at the

Washington, Inc.抯 stock transactions during the year 2001 were as follows:

January 1 720,000 shares issued and outstanding

May 1 2 for 1 stock split occurred

October 1 Acquisition of Block Corp. in exchange for 240,000 shares in a

transaction accounted for by the pooling of interests method.

What was Washington 抯 weighted average number of shares outstanding during 2001, for

earnings per share (EPS) computation purposes?

A.1,680,000.

B.1,500,000.

C.1,740,000.

D.1,666,667.

r

31, 2000 and 2001 are as follows (in $ millions):

2000 2001

Cash 20 25

Marketable Securities 30 35

Receivables 50 60

Inventory 100 80

Property, Plant & Equipment (net) 150 150

Accounts Payable 50 40

Long-term Debt 75 100

Selected financial data from Flag, Inc 抯 financial statements for the years ended December

31, 2000 and 2001 are as follows (in $ millions):

A.Cash Ratio 2000-Below average; Cash Ratio 2001-Below average.

B.Cash Ratio 2000-Above average; Cash Ratio 2001-Below average.

C.Cash Ratio 2000-Below average; Cash Ratio 2001-Above average.

D.Cash Ratio 2000-Above average; Cash Ratio 2001-Above average.

Bingham Corp.抯 income statements for the years ended December 31, 2000 and December

31, 2001 are as follows: (in $ millions)

2000 2001

Sales 100 150

Cost of Goods Sold (72) (100)

Gross Profit 28 50

Depreciation (10) (20)

Operating Profit (EBIT) 18 30

Interest Expense (5) (6)

Earnings Before Taxes 13 24

Income Taxes (5) (11)

Earnings After Taxes 8 13

Balance Sheets for these years showed that total assets were $100 million and total equity

was $35 million on December 31, 2000, and total assets were $118 million and total equity

was $40 million on December 31, 2001. Which component of the traditional Du Pont equation

explains more of Bingham Corp 抯 financial improvement than any other component of the

equation?

A.Net Profit Margin.

B.Equity Multiplier.

C.Asset Turnover.

D.Financial Leverage Multiplier.

Marcus Corp.抯 balance sheet as of December 31, 2001 is as follows (in $ millions):

Cash 30 Accounts Payable 15

Accounts Receivable 15 Long-term Debt 30

Inventory 15 Common Stock 45

Property, Plant & Equip.(net) 60 Retained Earnings 30

Total Assets 120 Total Liabilities & Equity 120

Marcus Corp.抯 current ratio is:

A.4.0.

B.3.0.

C.2.0.

D.1.0.

ent used in its operations. The bonds were convertible into common stock at a conversion rate of 100 shares per $1,000 bond. In 2001 the market price of Copper, Inc.抯 common stock rose above $10 per share, and all of the outstanding bonds were converted into common stock when the common stock was selling for an average price of $15 per share. Copper, Inc. prepares its Statement of Cash Flows using the indirect method. Given the above information, Copper 抯 Statement of Cash Flows for the year ended December 31, 2001 should include the following:

A.no reporting of the transaction in the Statement of Cash Flows, except for a footnote describing the conversion of the bonds into common stock.

B.under Cash Flow from Financing, "Retirement of Bonds: $4,000,000" and "Issuance of Common Stock: $4,000,000."

C.under Cash Flow from Financing, "Retirement of Bonds: $4,000,000" and "Issuance of Common Stock: $6,000,000" and under Cash Flow from Investing "Loss on Retirement of Bonds: $2,000,000."

D.no reporting of the transaction.

A.be relevant.

B.be reliable.

C.consider the economic impact of the reported information.

D.be useful.

ear

ended December 31, 2001:

Sales $3,400,000

Cost of Goods Sold (2,100,000)

Depreciation (300,000)

Interest Paid (200,000)

Gain on Sale of Old Equipment 400,000

Income Taxes Paid (300,000)

Net Income $900,000

Brown issued bonds on June 30, 2001 and received proceeds of $4,000,000.

Old equipment with a book value of $2,000,000 was sold on August 15, 2001 for

$2,400,000 cash.

Brown purchased land for a new factory on September 30, 2001 for $3,000,000,

issuing a $2,000,000 note and paying the balance in cash.

Using the definition of free cash flow as cash flow from operations less capital expenditures,

Brown 抯 free cash flow available to equity shareholders for 2001 is:

A) $2,200,000

A.$2,200,000.

B.$200,000.

C.$2,600,000.

D.$6,200,000.

White Corp.抯 financial statements for the year ended December 31, 2001 included the

following:

Income Statement

Sales $8,000,000

Cost of Goods Sold (3,800,000)

Gross Profit 4,200,000

Wages (1,000,000)

Depreciation (600,000)

Interest (500,000)

Taxes (600,000)

Net Income $1,500,000

Selected Balance Sheet Accounts

Dec. 31, 2000 Dec. 31, 2001

Accounts Receivable $1,200,000 $1,500,000

Inventory 800,000 1,000,000

Accounts Payable 600,000 400,000

Equipment 5,300,000 5,500,000

White prepares its Statement of Cash Flow using the direct method.

The Cash Flow from Operations (CFO) section of the statement will show Cash Collections of:

A.$7,700,000.

B.$7,100,000.

C.$6,900,000.

D.$6,700,000.

Data Corp. manufactures and sells computer equipment. The following information is

available concerning a transaction between Data and Venture, Inc.:

On November 30, 2001 Data Corp. received a signed purchase order from Venture Inc.

for 100 model D computers at a price of $150,000. Under the terms of the purchase

order, Data arranges and pays for shipping, risk of ownership passes upon delivery,

and the transaction is not subject to revocation.

On December 29, 2001 100 model D computers were shipped from Data Corp.抯

factory.

On December 31, 2001 Data Corp. received cash payment for the computers in the

amount of $150,000.

On January 2, 2002 the computers were received at Venture, Inc.抯 headquarters.

Data Corp. should recognize $150,000 of revenue as of:

A.January 2, 2002.

B.November 30, 2001.

C.December 29, 2001.

D.December 31, 2001.

A.Reported earnings under the completed-contract method are more volatile than under the percent-of-completion method.

B.Reported earnings under the completed-contract method are more volatile than under the percent-of-completion method; Analysis of cash flow from operations is more important when using the completed-contract method than when using the percent-of-completion method.

C.Reported earnings under the completed-contract method are more volatile than under the percent-of-completion method; When cash receipts are greater than revenues earned the completed-contract method will give lower net income, retained earnings, liabilities, and current assets than the percent-of-completion method.

D.Analysis of cash flow from operations is more important when using the completed-contract method than when using the percent-of-completion method; When cash receipts are greater than revenues earned the completed-contract method will give lower net income, retained earnings, liabilities, and current assets than the percent-of-completion method.