Corporate Finance_Final Exam

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California Polytechnic State University, Pomona *

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MISC

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Finance

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Jan 9, 2024

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pdf

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UOG-Corporate Finance NAME STUDENT ID 1. All of the following information, except one, should be disclosed as supplemental information in the statement of cash flows. Which one is the exception? A. Cash flow per share B. Conversion of debt to equity C. Issuance of common stock to purchase assets D. Exchange of long-term assets 2. Golden Co. is using the indirect method to prepare its Y1 statement of cash flows. On 7/1/Y1, Golden Co. sold an equipment with a gain. How should Golden Co. deal with this gain for its Y1 statement of cash flows? A. Deduct from sale proceeds to calculate net cash provided by investing activities B. Report as a cash outflow from investing activities C. Deduct from net income to calculate net cash provided by operating activities D. Add to net income to calculate net cash provided by operating activities 3. Golden Co. is preparing its Y1 statement of cash flows. During Y1, Golden has cash inflows of $30,000 from held-to-maturity securities related transactions. Golden also has cash inflows of $26,000 from available-for-sale securities related transactions. In its Y1 statement of cash flows, Golden Co. should report net cash from investing activities with an amount of ______. A. $0 B. $26,000 C. $30,000 D. $56,000 4. Which of the following is a nonfinancial performance measure? A. Customer retention ratio. IMPORTANT 1. The exam consists of 20 MCQ problems. Make sure that you have a complete exam. 2. To receive credit for your answers on the problems you must show and clearly label all of your computations. Your grade will be influenced by the orderliness and clarity of your answers. 3. When you finish the exam, please turn it in to the teacher.
UOG-Corporate Finance B. Return on asset. C. Net profit margin. D. Economic value-added. 5. Star Co. is a retail store specializing in contemporary furniture. The following information is taken from Star's June budget: Sales $540,000 Cost of goods sold 300,000 Merchandise inventory–June 1 150,000 Merchandise inventory–June 30 180,000 Accounts payable for purchases–June 1 85,000 Accounts payable for purchases–June 30 75,000 What amount should Star budget for cash disbursements for June purchases? A. $260,000 B. $280,000 C. $320,000 D. $340,000 6. The essence of responsibility accounting is A. Developing performance reports emphasizing costs and revenues that managers can control. B. Allocating service department costs to production departments so that production department managers know all costs for which they are responsible. C. Determining who is to blame for unfavorable variances. D. Investigating all variances, regardless of their status as favorable or unfavorable. 7.As part of the annual budgeting process, Fair Theatre Company compiled the following information for its next play production: Fixed expenses $48,000 Variable expenses $10 per ticket Ticket price $16 How many tickets would Fair need to sell for the play's run to obtain a $24,000 profit?
UOG-Corporate Finance A. 4,500 B. 7,200 C. 8,000 D. 12,000 8. An increase in the federal debt may create inflationary pressures for which of the following reasons? A. Businesses may have difficulty raising investment capital. B. The government may need to cut spending. C. Lenders may charge higher interest rates. D. The economy's money supply may increase. 9. Which of the following quantitative factors, when compared to its industry average, could be an indicator of potential corporate failure? A. High cash flow to total liabilities B. High retained earnings to total assets C. High fixed cost to total cost structure D. High fixed assets to non-current liabilities 10. According to the COSO Enterprise Risk Management Framework, each of the following is considered by management as part of a risk assessment, except A. Inherent risk. B. Unknown risk. C. Actual residual risk. D. Target residual risk. 11. A manufacturer actively monitors a foreign country's political events whenever a supply chain disruption occurs within the country that exceeds 90 days. According to the COSO Enterprise Risk Management principles, the manufacturer is following which of the following risk-response strategies? A. Share. B. Avoid. C. Accept. D. Reduce.
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UOG-Corporate Finance 12. According to the COSO Enterprise Risk Management Framework, uncertainty in enterprise risk management refers to A. The impact of events or the time it would take to recover. B. The state of not knowing how or if potential events may manifest. C. The possibility that events will occur and affect the achievement of objectives. D. The boundaries of acceptable variation in performance related to achieving business objectives. 13. A company has the following financial information: Net operating profit after taxes $18,000 Capital expenditures 10,000 Depreciation expense 8,000 Change in working capital 4,000 What amount is the company's free cash flow? A. $4,000 B. $8,000 C. $12,000 D. $16,000 14. Under which of the following circumstances does substantial doubt exist about an entity's ability to continue as a going concern? A. The entity is not in compliance with statutory capital requirements. B. The entity's CFO has retired, and there is no definitive succession plan in place. C. The entity projects that it will have negative cash flows from operating activities over the next 12 months. D. It is probable that the entity will be unable to meet its obligations coming due within 12 months of financial statement issuance. 15. The following is information about three companies: ABC Co. XYZ Co. KLM Co. Total assets $109,000 $450,000 $850,000 Total liabilities 44,000 150,000 450,000 Total equity 65,000 300,000 400,000 Which company would be considered least risky from a creditor’s viewpoint? A. KLM, because the debt ratio is the highest. B. ABC, because the debt ratio is average. C. XYZ, because the debt ratio is the lowest.
UOG-Corporate Finance D. XYZ, because the debt ratio is the highest. 16. A corporation declared a 10% stock dividend on 15,000 shares outstanding of $5 par common stock when the fair value was $10 per share. Which change in the corporation's stockholders' equity accounts is correct? A. Retained earnings is decreased by $15,000. B. Additional paid-in-capital is increased by $15,000. C. Common stock is decreased by $7,500. D. Common stock is increased by $15,000. 17. With respect to litigation involving a nonissuer that could give rise to a risk of material misstatement, an auditor should obtain audit evidence relevant to each of the following matters, except A. The period in which the underlying cause for legal action occurred. B. The amount or range of potential loss resulting from the litigation. C. The degree of probability of an unfavorable outcome. D. The objectivity and experience of the entity's legal counsel. 18. An overall response to address a high assessed risk of material misstatement at the financial statement level of a nonissuer may include A. Increasing reliance on results of internal control testing. B. Emphasizing the need for more accounting staff. C. Incorporating additional predictability into the selection of procedures. D. Providing more supervision of the audit team 19. Marble Co. prepared its statement of cash flows using the following amounts Net decrease in fixed assets $ (3,750) Depreciation expense 13,000 Gain on sale of equipment, (net book value, $3,250) 1,250 Capital expenditures 12,500 Marble reported net income of $20,000 at year end. What amount should Marble report as net cash provided by operating activities? A. $19,500 B. $29,250
UOG-Corporate Finance C. $31,750 D. $33,000 20. Glass Co. had net income of $70,000 during the year. Depreciation expense was $10,000. The following information is available: Accounts receivable increase $20,000 Equipment gain on sale (sale price $100,000) 10,000 increase Nontrade notes payable increase 50,000 Equipment purchases 40,000 increase Accounts payable increase 30,000 What amount should Glass report as net cash provided by investing activities in its statement of cash flows for the year? A. $(40,000) B. $10,000 C. $50,000 D. $60,000
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