Assignment
MODEL ONE:
QUESTION 1
Decisions made by managers that relate to the acquisition of resources that are needed to carry out its business activities is the definition of which of the following?
a. Strategy decisions
b. Operating decisions
c. Investing decisions
d. Financing decisions
e. Reporting decisions
f. None of the above
QUESTION 2
Transactions and outcomes that result in economic consequences for the business is the definition of which of the following?
a. Events
b. GAAP
c. Board of directors
d. Annual reports
e. None of the above
QUESTION 3
Which of the following parties that have primary responsibility for the integrity and objectivity of financial reporting?
a. Inside-the-firm CPAs
b. Top-level management, specifically the CEO and CFO
c. Mid-level management, specifically the Controller and the firm s bookkeepers
d. The firm s independent auditor
e. None of the above
QUESTION 4
The technical processes and procedures used to create financial statements is the definition of which of the following?
a. Ratio analysis
b. Other drivers
c. Footnotes
d. Bookkeeping
e. None of the above
QUESTION 5
Which of the follow is NOT one of the four primary GAAP issues?
a. Articles of incorporation
b. Recognition
c. Valuation (aka measurement)
d. Presentation
e. Disclosure
QUESTION 6
The official authoritative literature that provides principles and rules to guide the professional judgment of accountants as they exercise their role as preparers and auditors of financial statements is the definition of which of the following?
a. GAAP
b. SEC
c. FBI
d. PCAOB
e. CPA
QUESTION 7
The issue deals with whether and when to record an event relates to which of the follow?
a. Articles of incorporation
b. Recognition
c. Valuation (aka measurement)
d. Presentation
e. Disclosure
QUESTION 8
Which of the following is the name given to a financial report that presents revenues, gains, expenses, losses and net income for a specific period of time (such as the year ended 12/31/2012)?
a. Balance sheet
b. Income statements
c. Statement of cash flows
d. Statement of equity
e. Statement of insiders ownership interests
QUESTION 9
Which of the following is the name given to a financial report that describes how cash balances change between two points in time and shows cash flows from operations (CFO), cash flows from investing (CFI), cash flows from financing (CFF), and changes in cash balances due to changes in the exchange rates of foreign currencies?
a. Balance sheet
b. Statement of insiders ownership interests
c. Income statements
d. Statement of equity
e. Statement of cash flows
QUESTION 10
Which of the following is the name given to a financial report that highlights the components and amounts of three important categories of accounts: assets, liabilities, and equity at a point in time (e.g., December 31, 2012)?
a. Balance sheet
b. Income statements
c. Statement of cash flows
d. Statement of equity
e. Statement of insiders ownership interests
QUESTION 11
Disclosures about the firm s accounting principles, assumptions, estimates, and details about certain items on the four primary financial statements is the definition of which of the following?
a. Footnotes
b. Table of contents
c. Cover page
d. Reference section
e. Title page
QUESTION 12
Which of the following is the name given to a financial report that describes the elements that brought about changes in equity between two points in time?
a. Balance sheet
b. Income statements
c. Statement of cash flows
d. Statement of equity *=
e. Statement of insiders ownership interests
QUESTION 13
The process of analyzing financial statements to help decision-makers to make inferences about the decisions and capabilities of the management team and to assess the firm s economic prospects is the definition of which of the following?
a. Financial statement analysis
b. Wall street journal
c. Bank contracts
d. Private placement memorandum
e. Operating agreements
f. Business plan
QUESTION 14
Financial reporting rules that ,mandate that financial statements have relevant information that investors need to accurately forecast future metrics refers to which of the following?
a. Contracting role of financial reporting
b. Treasury role of financial reporting
c. Governance role of financial reporting
d. Valuation role of financial reporting
e. Double-entry accounting
QUESTION 15
Relates to whether financial information can be trusted to provide a reasonably accurate and agreed upon measures is the definition of which of the following?
a. Reliability
b. Related party transactions
c. Bright-line law
d. Price-to-book analysis
e. Chairperson of the Securities and Exchange Commission
MODEL TWO:
QUESTION 1
Labels given to categories of similar economic items is the definition of which of the following?
a. Accumulated depreciation
b. Inventory
c. Accounts
d.Current liability
e.None of the above
QUESTION 2
Tangible assets such as buildings, land, and equipment that are expected to be used in the business over a period of time greater than a year is the definition of which of the following?
a. Goodwill
b. Property, plant, and equipment
c. Accounts receivable
d. Bonds
e. None of the above
QUESTION 3
Assets that the business expects to use or convert into cash within one year or less is the definition of which of the following?
a. Current liabilities
b. Non-current liabilities
c. Treasury shares
d. Non-current assets
e. Retained earnings
f. None of the above
QUESTION 4
A liability account created when the business receives an asset before the business provides the promised product or service is the definition of which of the following?
a. Wages payable
b. Accounts payable
c. Treasury shares
d. Bonds
e. Unearned revenue
f. None of the above
QUESTION 5
Obligations the business owes to others is the definition of which of the following?
a. Liability
b. Additional paid in capital
c. Cash flow
d. Accumulated depreciation
e. Revenue
f. None of the above
QUESTION 6
The number of common shares issued minus the number of treasury shares repurchased from investors (at the balance sheets dates) is the measure of which of the following?
a. Shares outstanding
b. Number of shares authorized
c. Par value per share
d. Number of treasury shares
e. Number of stock options
f. None of the above
QUESTION 7
The aggregate dollar amount received from investors for shares issued minus the aggregate par value for those issued shares is the definition of which of the following?
a. Contributed capital
b. Additional paid in capital
c. Retained earnings
d. Net PP&E
e. Treasury shares
f. None of the above
QUESTION 8
Shares that were issued to investors and repurchased by the business later is the definition of which of the following?
a. Contributed capital
b. Accumulated depreciation
c. Retained earnings
d. Generally accepted accounting principles (GAAP)
e. Treasury shares *
f. None of the above
QUESTION 9
The account that shows the sum of all net income minus all dividends up to the date of the balance sheet is the definition of which of the following?
a. Prepaid rent
b. PP&E
c. Retained assets
d. Retained earnings
e. Retained income
f. None of the above
QUESTION 10
A statement presents revenues, gains, expenses, losses and net income for a specific period of time refers to which of the following?
a. Statement of retained earnings
b. Statement of cash flows
c. Statement of financial position
d. Statement of stockholders equity
e. None of the above
QUESTION 11
A measure of the inflow of assets or the decrease of liabilities from delivering goods, rendering services, or other activities that constitute the entity s ongoing major or central operations of the business is the definition of which of the following?
a. Sales
b. Revenue
c. Turnover
d. Top line
e. All of the above
QUESTION 12
A broad category of operating expenses such as wage expense, depreciation expense, rent expense, but does not include COGS is the definition of which of the following?
a. Tax expense
b. Gross margin
c. Net income
d. Selling, general, and administrative (SG&A) expense
e. None of the above
QUESTION 13
An operating expense that reflects a systematic allocation of the costs of tangible non-current assets for the period of time is the definition of which of the following?
a. Accumulated depreciation
b. Tax expense
c. Depreciation expense
d. Dividends
e. None of the above
QUESTION 14
Which of the following is not an expense?
a. Tax expense
b. Depreciation expense
c. Dividends
d. Cost of goods sold (COGS)
e. None of the above
QUESTION 15
The dollar measure of the value that was created or lost from the following items: Revenue plus gains minus expenses minus losses is the definition of which of the following?
a. Net income
b. Operating income
c. Gross profit
d. Accumulated depreciation
e. None of the above
MODEL THREE:
QUESTION 1
Which of the following accounts is not a liability account?
A. Rent received in advance
B. Marketable Securities
C. Taxes payable
D. Unearned revenue
QUESTION 2
Which of the following statements is incorrect?
A. An increase to an asset account is a debit
B. An increase to a paid-in-capital account is a credit
C. An increase to a retained earnings account is a credit
D. An increase to a dividends account is a credit
QUESTION 3
Which of the following items are requirements of double-entry accounting?
A. Assets = Liabilities + Equity
B. Debits = Credits
C. Both A and B
D. Neither A or B
QUESTION 4
‘Entries made at the end of the accounting period to record economic events which have occurred but have not been recorded and to otherwise update account balances' is the definition of which of the following?
A. Trial balance
B. Closing entries
C. Posting
D. Adjusting entries
QUESTION 5
‘Entries made at the end of the accounting period to clear all revenue, gain, expense, loss and dividends accounts to zero and to transfer the net increase or decrease to the Retained Earnings account' is the definition of which of the following?
A. Trial balance
B. Closing entries
C. Posting
D. Adjusting entries
QUESTION 6
In a manual accounting system, journal entries follow a standard format, which includes?
A. Explanation
B. Accounts credited
C. Ledger folio notation
D. Both A and B
E. A, B, and C
QUESTION 7
What is the correct order of sixth steps of the Accounting Cycle?
A. Journalize events in the journal, Post the journal information to the ledger, Make adjusting entries, Create the trial balance based on ledger information, Prepare financial statements, Close the books, Journalize events in the journal
B. Journalize events in the journal, Post the journal information to the ledger, Make adjusting entries, Create the trial balance based on ledger information, Close the books, Prepare financial statements, Journalize events in the journal
C. Journalize events in the journal, Post the journal information to the ledger, Create the trial balance based on ledger information, Make adjusting entries, Prepare financial statements, Close the books, Journalize events in the journal
D. Journalize events in the journal, Post the journal information to the ledger, Create the trial balance based on ledger information, Make adjusting entries, Close the books, Prepare financial statements, Journalize events in the journal
QUESTION 8
Which of the following transactions affects only balance sheet accounts?
A. A firm received cash from selling goods or services to customers
B. An inventory is delivered to customers who have purchased it
C. A company borrows money from the bank
D. A company owes payment to employees for work they performed this period
QUESTION 9
Which of the following transactions affects balance sheet accounts and various income statement accounts?
A. A company issues shares of stock in exchange for cash.
B. A company uses cash to pay off an account payable
C. A long-term holder of the company's note agrees to exchange (convert) it into capital stock.
D. A firm received cash from selling goods or services to customers
QUESTION 10
If Apple purchase office equipment for $100,000 and expects its useful life to be 10 years with a salvage value of $4,000, what is the monthly depreciation cost?
A. 10,000
B. 9600
C. 833
D. 800
QUESTION 11
For questions 11 to 15, select the correct journal entry for each transaction.
Chris began by filing articles of incorporation with the state of Missouri on June 1, 2016. He named his new business Banana. The articles of incorporation authorized 40,000 shares of common stock each with a par value of $0.35.
June 1, 2016: Banana transferred $40,000 cash to the corporation in exchange for 20,000 shares of common stock.
A. Debit Cash $7,000; Credit Common Stock $7,000
B. Debit Cash $40,000; Credit Common Stock $40,000
C. Debit Cash $40,000; Credit Common Stock $7,000, Credit Additional Paid-in Capital $33,000
D. Debit Cash $40,000; Credit Common Stock $14,000, Credit Additional Paid-in Capital $26,000
QUESTION 12
June 1, 2016: Banana agreed to lease a downtown storefront for the next two years. Banana agreed to pay $600 a month for the space and paid the first year's rent on this date in cash.
A. Debit Prepaid Rent $600; Credit Cash $600
B. Debit Prepaid Rent $3,600; Credit Cash $3,600
C. Debit Prepaid Rent $7,200; Credit Cash $7,200
D. Debit Prepaid Rent $14,400; Credit Cash $14,400
QUESTION 13
On June 10, 2016, Chris purchased two game-worm Tennessee State College basketball jerseys as inventory for $80 each (from a disgruntled fan), promising to pay within one month.
A. Debit Inventory $80; Credit Cash $80
B. Debit Inventory $80; Credit A/P $80
C. Debit Inventory $160; Credit Cash $160
D. Debit Inventory $160; Credit A/P $160
QUESTION 14
On June 10, 2016, Chris took an order from Ben for "one" game-worn Tennessee State College basketball jersey. Ben paid $300 of the total $500 price in cash on that day and agreed to pay back the remaining amount in one month. He took possession of the jersey right after he paid the cash. Select the correct journal entry for Chris's realizing of revenue:
A. Debit Cash $300, Debit A/R $200; Credit Revenue $500
B. Debit Cash $200, Debit A/R $300; Credit Revenue $500
C. Debit Cash $500; Credit Revenue $500
D. Debit A/R $500; Credit Revenue $500
QUESTION 15
Using the same information from the question 13 and 14, record the transactions for recording COGS.
A. Debit Cost of Goods Sold $80; Credit Inventory $80
B. Debit Inventory $80; Credit Cost of Goods Sold $80
C. Debit Cost of Goods Sold $160; Credit Inventory $160
D. Debit Inventory $160; Credit Cost of Goods Sold $160
MODEL FOUR: MICROSOFT ANNUAL REPORT
QUESTION 1
CEO Letter to Shareholders: Who wrote the CEO letter for Microsoft s 2014 annual report?
a. Bill Gates
b. Satya Nadella
c. Paul Allen
d. Indra Nooyi
e. Steve Ballmer
QUESTION 2
Financial Summary: When is Microsoft s fiscal year end?
a. January 31
b. May 31
c. June 30
d. December 31
QUESTION 3
Financial Summary: Under what symbol is Microsoft s common stock traded on the NASDAQ Stock Market?
a. MCST
b. MSFT
c. MCS
d. MCSFT
QUESTION 4
Financial Summary: How many shares (in million) of common stock were repurchased in the first quarter under the Share Repurchase Program in 20014?
a. 53
b. 47
c. 28
d. 0
QUESTION 5
Description of Business and Segments: Beginning in fiscal year 2014, Microsoft changed its organizational structure as part of our transformation to a devices and services company. Which of the following was not one of the operating segments after this change?
a. Devices and Consumer ( D&C ) Licensing
b. D&C Hardware
c. D&C Other
d. Commercial Licensing
e. Commercial Other
f. All of the above are operating segments at the end of fiscal year 2014
QUESTION 6
Description of Business and Segments: How many full time employees did Microsoft have at the end of its 2014 fiscal year?
a. 128,000
b. 123,000
c. 18,000
d. 15,550
QUESTION 7
Quantitative and qualitative disclosures about market risk: Microsoft was exposed to various economic risks. What are four primary risks Microsoft identified in the 2014 annual report?
a. Employee risk, political risk, foreign currency risk, technology risk
b. Foreign currency risk, interest rate risk, equity risk, commodity risk
c. Product risk, equity risk, liquidity risk, employee risk
d. Liquidity risk, operational risk, legal risk, political risk
QUESTION 8
Quantitative and qualitative disclosures about market risk: Based on the Microsoft s 2014 annual report, what model did Microsoft use to estimate and quantify the market risks? (Hint: The model returns the expected loss, for a given confidence level, in the fair value of the portfolio due to adverse market movements over a defined time horizon)
a. SWOT
b. @Risk
c. Risk Heat Map (RHM)
d. Value-At-Risk (VaR)
QUESTION 9
Management s Discussion and Analysis (MD&A): How much Research and Development (R&D) expenses was incurred as a percent of revenue in 2014?
a. 11%
b. 12%
c. 13%
d. 14%
QUESTION 10
Critical Accounting Estimates: How were inventories accounted for by Microsoft?
a. First-In-First-Out (FIFO), subject to lower of cost or market
b. Last-In-Last-Out (LIFO), subject to lower of cost or net realizable value
c. Average cost, subject to lower of cost or market
d. Average cost, subject to lower of cost or net realizable value
QUESTION 11
Critical Accounting Estimates: When Microsoft entered into multiple-element arrangements, what hierarchy did Microsoft use to determine fair value to be used for allocating revenue to elements?
a. (i) Vendor-specific objective evidence of fair value ( VSOE ), (ii) Third-party evidence, (iii) Best estimate of selling price ( ESP )
b. (i) Best estimate of selling price ( ESP ), (ii) Third-party evidence, (iii) Vendor-specific objective evidence of fair value ( VSOE )
c. (i) Vendor-specific objective evidence of fair value ( VSOE ), (ii) Best estimate of selling price ( ESP ), (iii) Third-party evidence
d. None of above
QUESTION 12
Audit Report: Which of the following public accounting firms conducted audit with Microsoft?
a. PricewaterhouseCoopers
b. KPMG
c. Deloitte
d. Ernst & Young
QUESTION 13
Audit Report: What opinion did the auditing firm express on Microsoft s internal control over financial reporting?
a. Disclaimer
b. Adverse opinion
c. Unqualified opinion
d. Qualified opinion
QUESTION 14
Financial Statements: How much more revenue did Microsoft generate in 2014 compared to 2013 (in million)?
a. $ 8,937
b. $ 8,984
c. $ 8,993
d. $ 8,884
QUESTION 15
Financial Statements: What was Microsoft s diluted earnings per share in 2014?
a. $ 2.66
b. $ 2.68
c. $ 2.63
d. $ 2.60
QUESTION 16
Financial Statements: What was Microsoft s basic weighted average shares outstanding by the 2014 fiscal year end?
a. 8,399
b. 8,299
c. 8,499
d. 8,599
QUESTION 17
Financial Statements: What was Microsoft s cash dividends declared per common share in 2014?
a. $ 0.80
b. $ 0.92
c. $ 1.00
d. $ 1.12
QUESTION 18
Financial Statements: In which section of the cash flow statement can you find how much cash Microsoft paid for common stock cash dividends?
a. Net cash flow from operations
b. Net cash flow provided by financing
c. Net cash flow provided by investing
d. All of above
e. None of above
QUESTION 19
Financial Statements: What was Microsoft s net other comprehensive income (loss) in 2014 (in million)?
a. $ 1,965
b. $ 321
c. $ 22,074
d. $ 24,039
QUESTION 20
Financial Statements: How did Microsoft s long term debt change in 2014 compared to 2013?
a. Increased
b. Decreased
c. The same
QUESTION 21
Financial Statements: What was Microsoft s total current assets in 2014 (in million)?
a. $ 142,431
b. $ 101,466
c. $ 172,384
d. $ 114,246
QUESTION 22
Financial Statements: What was Microsoft s net unrealized gains (losses) on investments net of tax effects in 2014 (in million)?
a. $ (390)
b. $ (363)
c. $ 363
d. $ 1,737
QUESTION 23
Financial Statements: By how much did Microsoft s total stockholders equity change in 2014 compared to 2013 (in million)
a. $ 10,740
b. $ 10,840
c. $ (10,740)
d. $ (10,840)
QUESTION 24
Financial Statements: Which section of Cash Flow Statements starts with the net income in determining the net change in cash and cash equivalents in that section?
a. Operations
b. Financing
c. Investing
d. All of above
e. None of above
QUESTION 25
Financial Statements: What was the accumulated depreciation of Property and Equipment in 2014 (in million)?
a. $ 12,513
b. $ 14,597
c. $ 14,793
d. $ 14,334
QUESTION 26
Footnotes: How many footnotes are there in Microsoft s 2014 annual report?
a. 22
b. 23
c. 24
d. 25
QUESTION 27
Footnotes: What was the total purchase price of acquiring substantially all of Nokia s Devices and Services Business on April 25, 2014 (in million)?
a. $ 9,305
b. $ 9,365
c. $ 9,465
d. $ 9,565
QUESTION 28
Footnotes: The allowance for doubtful accounts reflects Microsoft s best estimate of probable losses inherent in the accounts receivable balance. What was the ending balance of allowance for doubtful accounts in 2014 (in million)?
a. $ 301
b. $ 336
c. $ 389
d. $ 333
QUESTION 29
Footnotes: In which footnote can you find the information regarding Antitrust Litigation and Claims?
a. Note 1- Accounting Policies
b. Note 12- Debt
c. Note 17- Contingencies
d. Note 21- Segment Information and Geographic Data
QUESTION 30
Who was Microsoft s stock transfer agent?
a. Broadridge
b. Computershare
c. American Stock Transfer & Trust Company (AST)
d. VStock Transfer
MODEL FIVE:
QUESTION 1
‘Shares that were issued to investors and subsequently repurchased by the business later' is the definition of which of the following?
a. Blue-chip stocks
b. Treasury shares
c. Preferred shares
d. Partly paid shares
QUESTION 2
‘The proportion of debt and equity used to finance the assets of the business' is the definition of which of the following?
a. Capital structure
b. Gross margin
c. Net assets
d. Net realizable value
QUESTION 3
‘A measure of the amount that can be converted to cash within one year or one operating cycle' is the definition of which of the following?
a. Periodicity
b. Turnover
c. Solvency
d. Liquidity
QUESTION 4
‘The dollar value of assets the corporation transferred to investors based on proportionate ownership' is the definition of which of the following?
a. ROE
b. Bonus
c. Dividends
d. Pension
QUESTION 5
‘The excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination' is a definition of which of the following?
a. Intangible assets
b. Goodwill
c. Customer list
d. Non-controlling interest
QUESTION 6
The Total liabilities plus total shareholders' equity equal to:
a. Total assets plus Total stockholders' equity
b. Total assets
c. Total liabilities plus Total assets
d. Total assets minus Total shareholders' equity
QUESTION 7
Which of the following is false?
a. Common-size statements show the data as a percent of one financial metric, such as total assets
b. Capital structure is the proportion of debt and equity used to finance the assets of the business
c. ‘Allowance for doubtful accounts' is management's estimate of the amount of ‘Accounts receivable' that will not be collected
d. In general, P/B values are higher for firms with more cash as a percentage of total asset
QUESTION 8
‘The sum of all net income minus all dividends from the inception of the company up to date of the balance sheet' is the definition of which of the following?
a. Retained earnings
b. Other comprehensive income
c. Comprehensive income
d. Net income attributable to parent company
QUESTION 9
‘The amount of the historical cost of the PP&E recorded as being ‘used up' since the PP&E was acquired' is the definition of which of the following?
a. Amortization
b. Impairment
c. Accumulated depreciation
d. Depreciation expense.