20. How competitors calculate inventory cost is least likely to affect compariso
ID: 2473672 • Letter: 2
Question
20. How competitors calculate inventory cost is least likely to affect comparisons between competitors if inventory makes up a:
A. large percentage of assets and inventory costs are stable.
B. small percentage of assets and inventory costs are stable.
C. small percentage of assets and inventory costs are not stable.
D. large percentage of assets and inventory costs are not stable.
21. Walter Co. declared a dividend. On the payment date of the dividend, its:
A. assets decreased and its liabilities decreased.
B. assets decreased and its stockholders' equity decreased.
C. assets decreased and its stockholders' equity increased.
D. liabilities decreased and its common stock decreased.
22. If a company's earnings per share and return on equity both increase:
A. it could mean that net income is rising or it could mean that the number of outstanding shares is falling. In either case, stockholders can expect greater future returns indefinitely.
B. it could mean that net income is rising or it could mean that the number of outstanding shares is falling. The first is sustainable; the second cannot be continued indefinitely.
C. it means that the company is becoming more profitable and stockholders will see greater returns.
D. it means that the company's tax liability will rise in the future and cause a decline in profitability.
23. Assume the following sales data for a company:
Year 1 $6,000,000
Year 2 8,400,000
Year 3 7,500,000
By what percentage did sales differ between Years 1 and 2 and Years 2 and 3, respectively?
A. 40.0% and (15.0%)
B. 32.0% and (10.7%)
C. 28.6% and (12.0%)
D. 40.0% and (10.7%)
24. Which of the following would not be considered a contingent liability?
A. Pending lawsuits
B. Cash received from advance ticket sales
C. Products sold with a warranty
D. Frequent flyer miles earned by passengers
25. If Interest Revenue for the period is $15,000 and the beginning and ending Interest Receivable balances are $1,820 and $6,400, respectively, cash received for interest is:
A. $10,420
B. $19,500
C. $15,000
D. $8,600
Explanation / Answer
Q20 large percentage of assets and inventory costs are stable Q21 A. assets decreased and its liabilities decreased. As on the payment date cash (asset) is decreased and libilities ( dividend payable) is decreased Q22 it means that the company is becoming more profitable and stockholders will see greater returns Q23 Difference in year 1 and year 2 =(8400000 - 6000000) / 6000000 40.00% Difference in year 2 and year 3 =(7500000 - 8400000)/8400000 -10.71% Q24 A. Pending lawsuits, the other three are not th contingent liability since they are actual liabilities Q25 Beginning + interest revenue - Closing = 1820+15000 - 6400 = 10420
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