答案和详解如下！ Question 51 On its financial statements for the year ended December 31, Jackson, Inc. listed $2,000,000 in post retirement benefits expense. Jackson, Inc. contributed $200,000 of the expense to its retirement plan during the year. Tax law recognizes cash contributions to a pension account as tax deductible, but not expense accruals. Jackson’s tax rate is 40%. For the year ended December 31, Jackson, Inc. should show, based on the above, an increase in its deferred tax: A) asset account of $800,000. B) asset account of $720,000. C) liability account of $80,000. D) liability account of $720,000. The correct answer was B) asset account of $720,000. Jackson’s post-retirement benefits expense will decrease income tax expense by $2,000,000 × 0.40 = $800,000. The cash contribution will decrease income taxes payable by $200,000 × 0.40 = $80,000. Because taxes payable will exceed income tax expense, the difference of $800,000 − $80,000 = $720,000 is an increase in the deferred tax asset account.
This question tested from Session 9, Reading 38, LOS f
Question 52 Which of the following ratio classifications best describes debt-to-equity and price-to-cash-flow per share, respectively? Debt-to-equity Price to cash flow per share A) Solvency ratio Profitability ratio B) Liquidity ratio Valuation ratio C) Solvency ratio Valuation ratio D) Liquidity ratio Profitability ratio
The correct answer was C) Solvency ratio Valuation ratio The debt-to-equity ratio is an example of a solvency ratio, which gives information on the firm’s financial leverage. Price to cash flow per share is an example of a ratio used in the relative valuation of companies. This question tested from Session 10, Reading 41, LOS c
Question 53 Saunders Inc. is involved with two leases, a capital lease and an operating lease. Which of the following statements most accurately compares the ratio and financial statement effects of these leases in terms of Saunders’ fixed asset turnover ratios and return on assets, respectively?
Fixed asset turnover ratio Return on assets A) Lower for capital lease Higher for operating lease B) Lower for capital lease Lower for operating lease C) Higher for capital lease Higher for operating lease D) Higher for capital lease Lower for operating lease
The correct answer was A) Lower for capital lease Higher for operating lease Capital leases create an asset and a liability. Therefore, turnover ratios that use fixed assets in their denominator will appear lower for capital leases relative to operating leases. As well, return on assets will be higher for operating leases than for capital leases since the inclusion of an asset will increase the denominator for capital leases.
This question tested from Session 9, Reading 40, LOS b
Question 54 Costiuk Inc. is a manufacturing firm that has committed to purchasing 10,000 kilograms of fertilizer over the next three years. Which part of the financial statements will most likely contain information regarding this transaction? A) Balance sheet. B) Management’s discussion and analysis. C) Cash flow statement. D) Footnotes.
The correct answer was D) Footnotes. The commitment is an example of an off-balance-sheet liability. Neither the value of the fertilizer nor the liability to pay for the fertilizer would be recognized on the balance sheet. However, Costiuk must disclose the nature and minimum required payments of this transaction in the footnotes to the financial statements. The commitment is not reported in the income statement or the cash flow statement and would likely not be addressed in the MD&A.
This question tested from Session 9, Reading 39, LOS e, (Part 1)
Question 55 Selected information from Ebony, Inc.’s financial activities in the most recent year is as follows: - Net income was $1,200,000.
- 870,000 shares of common stock were outstanding on January 1.
- The average market price per share was $6.
- 8,000 shares of 7%, $200 par value preferred shares, convertible into common shares at a rate of 20 common shares for each preferred share, were outstanding for the entire year.
- 1,000 warrants, which allow the holder to purchase 100 shares of common stock for each warrant held at a price of $8.00 per common share, were outstanding for the entire year.
Ebony, Inc.’s basic and diluted earnings per share are closest to: Basic Diluted A) $1.25 $1.25 B) $1.25 $1.17 C) $1.33 $1.25 D) $1.33 $1.17 The correct answer was B) $1.25 $1.17 Basic earnings per share [(net income – preferred dividends) / weighted average shares outstanding] are ($1,200,000 − $112,000) / 870,000 = $1.25. Diluted EPS, which is calculated by redeeming the convertible preferred and eliminating the subtraction for preferred dividends, is $1,200,000 / $1,030,000 = $1.17. The warrants are antidilutive because the average market price of $6 is less than the exercise price of $8 per share. This question tested from Session 8, Reading 32, LOS i | 
发表于 2008-5-10 14:03
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