ACC 599 Midterm Exam: Financial and Managerial Accounting Concepts

Preview (3 of 7 Pages)

100%

Purchase to unlock

Loading page image...

ACC 599 Midterm Exam: Financial and Managerial Accounting ConceptsQuestion 1Dawn Alive reported the following for 2012.Ending market price $40.75Earnings per share:Basic 2.50Diluted 2.08Dividends per share 1.10The price/earnings ratio anddividend payout were:Answer19.59 and 52.88%16.30 and 52.88%16.30 and 44.00%19.59 and 44.00%37.04 and 52.88%Question 2The ratio percentage of earnings retained is the same as that termed:Answerdividend yield.dividend payout.this year's retained earnings to net income.return on common equity.book value.Question 3What is the effect of the exercise of stock options?AnswerThey generate cash to the issuing firm and therefore increase profit per share.They are an expense at the time of exercise.This lowers net income.They increase debt and lower borrowing capacity but have no effect on profit.They increase the number of shares outstanding.They have no immediate effect on profitabilityQuestion 4Interest expense creates magnification of earnings through financial leverage because:Answerthe interest rate is variable.interest accompanies debt financing.the use of interest causes higher earnings.interest costs are cheaper than the required rate of return to equity owners.

Loading page image...

while earnings available to pay interest rise, earnings to residual owners rise faster.Question 5Book value per share may not approximate market value per share because:Answerthe book value is after tax.book values are based on replacement costs rather than market values.book value is related to book figures and market value is related to the future potential as seen byinvestors.investors do not understand book value.book value is not related to dividends.Question 6The price/earnings ratio:Answermeasures the past earning ability of the firm.is a gauge of future earning power as seen by investors.relates price to dividends.relates price to total net income.Question 7Which of the following ratios appears most frequently in annual reports?AnswerEarnings per ShareReturn on EquityProfit MarginEffective Tax RateDebt/EquityQuestion 8Which of the following ratios is rated to be a primary measure of liquidity and the highestsignificance rating of the liquidity ratios according to commercialloan departments?AnswerDebt/EquityCurrent RatioDegree of Financial LeverageInventory Turnover in DaysAccounts Receivable Turnover in DaysQuestion 9Which of the following ratios is given the highest significance rating by controllers?AnswerCurrent RatioEarning Per ShareReturn on Equity-After Tax

Preview Mode

This document has 7 pages. Sign in to access the full document!

Report

Study Now!

Document Details

Related Documents

Accounting

Master Managerial Accounting Techniques

Controlling and Reporting of Real Assets

Sarbanes Oxley Act, GAAP and IFRS

Accounting Audit Final Exam MCQs 2015

Team A Week 5 Problems

IFRS or US GAAP Which is the Best Reporting Standard

Understanding Key Concepts in Managerial Accounting

Financial Reporting, Regulations, and Corporate Governance

Midterm Exam on Governmental and Not-for-Profit Accounting

Company

Explore

Study Tools