Q30. The stock of Simonsen, Inc. is being bought up by an individual who intends
ID: 448690 • Letter: Q
Question
Q30. The stock of Simonsen, Inc. is being bought up by an individual who intends to take over Simonsen and sell off its assets for a profit. What is the individual in this scenario called? a. angel investor b. corporate raider c. inside trader d. stock broker e. bondholder
Q31. Which of the following statements best describes the difference between current and long-term liabilities? a. Current liabilities are debts that need to be paid immediately, whereas long-term liabilities do not. b. Current liabilities are those which will cost more in debt interest than long-term liabilities. c. Current liabilities are debts that are settled sooner than long-term debts. d. Current liabilities are debts on tangible assets, whereas long-term liabilities are debts on intangible assets. e. Current liabilities are debts on current assets, whereas long-term liabilities are debts on fixed and intangible assets.
Q32. Which of the following scenarios would most likely occur with a company that has reported disappointing earnings recently but still looks to be financially stable for quite some time? a. high long-term solvency ratio but low profitability ratio b. high short-term solvency ratio but low profitability ratio c. high long-term solvency ratio but low activity ratio d. high short-term solvency ratio but low activity ratio e. high long-term solvency ratio but low short-term solvency ratio
Q33. How much profit does a company which has a total of $5 million invested by its owners and $4 million in liabilities need to make in order to have an assets-to-liabilities ratio of 2:1? a. $2 million b. $3 million c. $5 million d. $7 million e. $8 million
Q34. Revenue from the earnings of a particular transaction is able to be reported as soon as the product or service is delivered. a. True b. False Q35. Which organization provides guidelines for ethical conduct for the accounting profession? a. AICPA b. SEC c. GAAP d. FASB e. CMA
Explanation / Answer
30 - The correct answer is b - Corporate Raider Corporate Raider refers to an individual or group of individuals or a body corporate which initiates hostile takeover of companies which an intent to resell them at profit or control them 31 - The correct answer is c. Current liabilities are debts that are settled sooner than long-term debts Option a is incorrect as Long term debts are also required to be paid off Option b is incorrect as it is not necessary which debt will cost more Option d is incorrect as it is not necessary to procure funds based on tangibility of assets Option e is incorrect because at time long term debts can be used for financing current assets 32 - The correct answer is a. high long-term solvency ratio but low profitability ratio This is because the company is financially stable for quite some which means high long term solvency ratio. However the company has reported dissapointed earning which means lower profitability, implying low profitability ratio 33 - The correct answer is b - $3 million Profit Required = (Equity + Profit) / Liabilities = (5 + Profit) / 4 Profit Required = $3 million 34 - True Revenue is recognized when significant risks and rewards are transferred to buyer. Generally when delivery takes place, significant risks and rewards are also transferred. 35 - The correct answer is a. AICPA AICPA or American Institute of Certified Public Accountants provides guidelines for ethical conduct for the accounting profession SEC is for only Issuers, FASB works for betterment of GAAP, GAAP are Generally Accepted Accounting Principles and CMA is the professional certification provided by IMA and stands for Certified Management Accountant
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