Financial information needed by the decision make

Assignment Help Accounting Basics

Reference no: EM1370124

1. Which of the following statements about depreciation is true?
A. Depreciation is a non-cash expense, but it is important because it affects a corporation's tax liability
B. Depreciation must be calculated the same way for financial reporting and tax purposes
C. The choice of depreciation method has no impact on a firm's value because the same amount of depreciation is taken over the life of an asset regardless of the method used
D. A shareholder wealth maximizing corporation prefers to defer depreciation expense in order to increase current reported profits

2. A financial manager is considering two projects, A and B. A is expected to add $2 million to profits this year while B is expected to add $1 million to profits this year. Which of the following statements is most correct?
A. The manager should select project A because it maximizes profits
B. The manager should select the project that maximizes long-term profits, not just one year of profits
C. The manager should select project A or he is irrational
D. The manager should select the project that causes the stock price to increase the most, which could be either A or B

3. When evaluating an investment project, which of the following best describes the financial information needed by the decision maker?
A. After tax accounting profits
B. After tax incremental cash flows to the company as a whole
C. Incremental cash flows before taxes so the decision will not be biased by a tax code that may change in the future
D. Pre tax accounting profits adjusted for any accounting method changes

4..Two companies have identical assets and operating activities. Which of the following statements is true?
A. Both companies have same net income
B. The company with more debt will have lower operating income due to interest expense
C. The company with more debt will have higher operating income due to leverage
D. The company with more debt will have lower net income due to interest expense

5. HighLev Incorporated borrows heavily and uses the leverage to boost its return on equity to 30% this year, nearly 10% higher than the industry average. However, HighLev's stock price decreases relative to its industry counterparts. How is this possible?
A. Markets are inefficient and fail to recognize the benefits of leverage
B. The increased debt resulted in interest payments that made HighLevs operating income drop even though return on equity increased
C. Shareholders are not interested in return on equity
D. the high levels of debt increased the riskiness HighLev relative to its competitors

6. The present value of a single future sum:
A. increases as the number of discount periods increases
B. is generally larger than the future sum
C. depends on the number of discount periods
D. increases as the discount rate increases

8. Which of the following ratios would be the best way to determine how customers are paying for their purchases?
A. Inventory Turnover
B. Total Asset Turnover
C. Current Ratio
D. Average Collection Period

Reference no: EM1370124

Questions Cloud

Determining taxes on property : Johnson Inc. is notified that local property taxes have raised. Johnson's economist states this will increase our cost of production and shift up our average total cost curve, average variable cost curve.

Explain what is the meaning of performance management : What is the meaning of performance management and what might be the advantages of applying performance management within the public sector?

Explain what are the potential obstacles of your team : Explain What are the potential obstacles of your team and How would you ensure each individual felt like a vital member of the team?

Techniques need to develop to control omm costs : How will you organize employees and coordinate their activities and what kinds of materials management techniques will you need to develop to control OMM costs and yet provide excellent customer service

Financial information needed by the decision make : A financial manager is planning two projects, A and project B. A is expected to add $2 million to profits this year while B is expected to add $1 million to profits this year.

Difference-total variable costs-average variable cost : Determine the difference between Total Variable Costs (TVC), Average Variable Costs (AVC) and Marginal Costs (MC).

Array of integers declared-initialized to number of tickets : Array of integers named parkingTickets has been declared and initialized to number of parking tickets given out by city police each day as beginning of current year.

Describe the haiti sm discussion with the saving lives : Compare and describe the Haiti SM discussion with the Saving Lives with Social Media case and Create a table that compares and contrasts elements from each

Cost function-average fixed cost-variable cost function : You appoint an intern from Southern University to help you examine your production process, and she uses your historical cost records to estimate that your total cost function is C(Q) = 100 + 2Q + 3Q2.

User Account

All Pages