CFA Level 1 － Mock Exam 1 模拟真题－Q61-65 face, normal, style, class

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61、Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.

All else equal, the net profit margin for a company will be highest if, for new depreciable assets, that company uses:

Select exactly 1 answer(s) from the following:

A. low salvage value estimates and long average lives.

B. high salvage value estimates and long average lives.

C. low salvage value estimates and short average lives.

D. high salvage value estimates and short average lives.

62、Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.
An analyst gathered the following information about a company ($ millions):

	2007	2006
Sales	283.5	234.9
Year-end inventory (LIFO inventory method)	81.4	53.7
LIFO reserve	36.4	21.8
Cost of goods sold (LIFO)	203.9	167.3

If the company used the FIFO inventory method instead of LIFO, the company's 2007 gross profit margin would be closest to:

Select exactly 1 answer(s) from the following:

A. 22.9%.

B. 28.1%.

C. 29.8%.

D. 33.2%.

63、Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.
An analyst gathered the following information about a company that uses the LIFO method:

LIFO reserve as of 31 December 2006	$420,000
LIFO reserve as of 31 December 2007	$450,000
Marginal tax rate	30%

If the company had used the FIFO method instead of LIFO, the company's 2007 net income would most likely have been:

Select exactly 1 answer(s) from the following:

A. $21,000 lower.

B. $9,000 lower.

C. $9,000 higher.

D. $21,000 higher.

64、Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.

Greene Corporation uses the LIFO inventory method, but most of the other companies in Greene's industry use FIFO. Which of the following best describes one of the adjustments that would be made to Greene's financial statements to compare that company with other companies in the industry? To adjust Greene's ending inventory to the FIFO method, the amount reported for Greene's ending inventory should be:

Select exactly 1 answer(s) from the following:

A. increased by the ending balance in Greene's LIFO reserve.

B. decreased by the ending balance in Greene's LIFO reserve.

C. increased by the change in Greene's LIFO reserve for that period.

D. decreased by the change in Greene's LIFO reserve for that period.

65、Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.
An analyst gathered the following information about a company:

Average market price per share of common stock during the year	$40
Exercise price per share for options on 50,000 common shares	$50
Exercise price per share for warrants on 20,000 common shares	$30

Using the treasury stock method, the number of incremental shares that should be used to compute diluted earnings per share is closest to:

Select exactly 1 answer(s) from the following:

A. 5,000.

B. 12,500.

C. 15,000.

D. 17,500.

[此贴子已经被作者于2008-11-6 10:47:17编辑过]

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答案和详解如下：

61 Correct answer is B

“Analysis of Long-Lived Assets: Part II - Analysis of Depreciation and Impairment,” Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried
2008 Modular Level I, Vol. 3, pp. 394-397
Study Session 9-37-b
demonstrate how modifying the depreciation method, the estimated useful life and/or the salvage value used in accounting for long-lived assets affect financial statements and ratios
A high salvage value estimate reduces the depreciable base and thus depreciation expense; long average lives reduce the annual depreciation expense for any given depreciable base. The combination of the two would result in the lowest depreciation expense, which leads to the highest net income and profit margins.

62 Correct answer is D

“Analysis of Inventories,” Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried
2008 Modular Level I, Vol. 3, pp. 312-314
Study Session 9-35-c, d
compare and contrast the effect of the different methods on cost of goods sold and inventory balances, and discuss how a company’s choice of inventory accounting method affects other financial items such as income cash flow, and working capital;
compare and contrast the effects of the choice of inventory method on profitability, liquidity, activity, and solvency ratios
COGS on a FIFO basis will equal COGS LIFO - Change in the LIFO reserve. The change in the LIFO reserve is 36.4 - 21.8 = 14.6; FIFO COGS will be 203.9 - 14.6 = 189.3. Gross profit will be 283.5 - 189.3 = 94.2. The gross margin will be 94.2 / 283.5 = 33.23%. (The gross margin for LIFO is 28.1%.)

63 Correct answer is D

“Analysis of Inventories,” Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried
2008 Modular Level I, Vol. 3, pp. 315-320
Study Session 9-35-c, e
compare and contrast the effect of the different methods on cost of goods sold and inventory balances, and discuss how a company’s choice of inventory accounting method affects other financial items such as income cash flow, and working capital;
indicate the reasons that a LIFO reserve might decline during a given period and evaluate the implications of such a decline for financial analysis
The LIFO reserve increased by $30,000. If an increase in the LIFO reserve occurs, LIFO cost of goods sold will be higher than FIFO by the amount of the increase and net income would be lower than FIFO by $30,000(1 - 0.30) = $21,000. After-tax FIFO net income would be $21,000 higher.

64 Correct answer is A

“Analysis of Inventories,” Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried
2008 Modular Level I, Vol. 3, p. 312
Study Session 9-35-c, d
compare and contrast the effect of the different methods on cost of goods sold and inventory balances, and discuss how a company’s choice of inventory accounting method affects other financial items such as income cash flow, and working capital;
compare and contrast the effects of the choice of inventory method on profitability, liquidity, activity, and solvency ratios
Adding the ending balance in the LIFO reserve to the LIFO inventory would equal the ending balance for inventory on a FIFO basis.

65 Correct answer is A

“Understanding the Income Statement,” Thomas R. Robinson, Hennie van Greuning, Elaine Henry, and Michael A. Broihahn
2008 Modular Level I, Vol. 3, pp. 177-178
Study Session 8-32-h
describe the components of earnings per share and calculate a company’s earnings per share (both basic and diluted earnings per share) for both a simple and complex capital structure
Diluted EPS is calculated using the treasury stock method that considers what would be the effect if the options or warrants had been exercised. Only options or warrants that are in-the-money are included, as out-of-the-money options would not be exercised. Therefore, only the warrants are dilutive; the exercise price is below the average market price of the stock. Using the treasury stock method:
20,000($30) = $600,000 in proceeds. $600,000 / $40 = 15,000 shares treasury stock. Incremental shares using the treasury stock method = 20,000 - 15,000 = 5,000.

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