Week 6 mod 6 quiz - Answer Key PDF

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Question 1 2.5 / 2.5 pts The year end financial statements for Pratt Inc., report the following information: Year ended December 31, (In millions)

Year 2

Year 1

Depreciation expense

$86.8

$83.5

Property and equipment, net

565.5

540.8

Land

37.7

40.0

Accumulated depreciation

932.0

917.2

Which of the following estimates the property and equipment’s percent-used-up at December 31, Year 2? Correct! 63.8%

None of these are correct.

60.7%

62.2%

15.3%

Question 2 2.5 / 2.5 pts

The January 28 (fiscal year-end) financial statements of Collette Inc. reported the following information (in millions). Year 2

Year 1

Cost of sales

$1,213,918

$1,223,622

Inventories, net

468,611

437,396

LIFO reserve

3,476

3,275

If Collette had used the FIFO method of inventory costing, Year 2 inventory would have been:

$405,482 million

None of these are correct.

$468,812 million

$465,135 million Correct! $472,087 million

Question 3 2.5 / 2.5 pts Hasten Corporation has the following metrics for the year. Amount in days Days sales outstanding

34.7

Amount in days Days payables outstanding

23.6

Days inventory outstanding

56.1

The cash conversion cycle for the year is: Correct! 67.2 days

45.0 days

58.3 days

None of these are correct.

2.2 days

Question 4 2.5 / 2.5 pts An asset is impaired when the asset's carrying value is:

None are correct

Less than the sum of discounted expected cash flows

Less than the sum of undiscounted expected cash flows

Correct! Greater than the sum of undiscounted expected cash flows

Greater than the sum of discounted expected cash flows

Question 5 2.5 / 2.5 pts Central Supply purchased a new printer for $64,125 . The printer is expected to operate for nine (9) years, after which it will be sold for salvage value (estimated to be $6,413 ). How much is the first year’s depreciation expense if the company uses the doubledeclining-balance method?

$7,125

None of these are correct. Correct! $14,250

$12,825

$17,100

Question 6 2.5 / 2.5 pts The year-end financial statement of Wando's Vineyards reported Net revenues of $19,425,412 and Cost of goods sold of $7,204,884 in year 2. Note 3 to the financial statements reported that Inventories consisted of:

Year 2

Year 1

Winemaking and packaging materials

$654,269

$552,234

Work-in-process

5,307,211

4,846,961

Finished goods

3,615,045

3,106,775

Total inventories

$9,576,525

$8,505,970

The inventory turnover for Year 2 was:

0.75

None of these are correct. Correct! 0.8

2.14

0.85

Question 7 2.5 / 2.5 pts The year-end financial statements of City Health Corporation reported the following information (in millions):

Net sales

Year 2

Year 1

$168,650

$145,626

Year 2

Year 1

Cost of sales

141,236

120,424

Inventories, net

14,760

14,001

The inventory turnover ratio for Year 2 is: Correct! 9.82

11.73

9.57

None of these are correct.

9.1

Question 8 0 / 2.5 pts Aiello, Inc. had the following inventory in its fiscal year. The company uses the LIFO method of accounting for inventory. Beginning Inventory, January 1:

104

units @ $15.00

Purchase

160

units @ $18.00

Purchase

40

units @ $13.50

Purchase

88

units @ $15.75

Beginning Inventory, January 1:

104

units @ $15.00

Ending Inventory, December 31:

96

units

The company’s cost of goods sold for its fiscal year is:

$1,440.00

None of these are correct.

$4,244.60 Correct Answer $4,926.00 You Answered $4,872.00

Question 9 2.5 / 2.5 pts One difference between straight-line and double-declining-balance depreciation methods is that: Correct! None are correct.

Straight-line method will fully depreciate the asset more quickly.

Income taxes paid will be lower under the double-declining-balance method.

Losses on disposal will be lower under the straight-line method.

Double-declining-balance method will fully depreciate the asset more quickly.

Question 10 2.5 / 2.5 pts Dow Chemical Corporation plans to build a laboratory dedicated to a special project. The company will not use the laboratory after the project is finished. Under GAAP, this laboratory should be:

None are correct Correct! Expensed in the current year

Depreciated and expensed

Capitalized and depreciated

Capitalized only

Question 11 2.5 / 2.5 pts Assume that Barber Co. uses the LIFO inventory costing method for both tax and financial reporting purposes. The balance sheet reports inventories at $297 million. Then, in its footnotes, the company reports that inventories would have been $327 million had the company used the FIFO method. The difference between these two numbers ($30 million) is referred to as:

Correct! LIFO reserve

LIFO holding gain

None are correct

Inventory temporary difference

LIFO conformity rule

Question 12 2.5 / 2.5 pts The January 28 (fiscal year-end) financial statements of Collette Inc. reported the following information (in thousands). Year 2

Year 1

Cost of sales

$1,213,918

$1,223,622

Inventories, net

468,611

437,396

LIFO reserve

3,476

3,275

If Collette had used the FIFO method of inventory costing, Year 2 COGS would have been: Correct! $1,213,717 thousand

None of these are correct.

$1,214,119 thousand

$1,210,442 thousand

$1,217,394 thousand

Question 13 2.5 / 2.5 pts The year-end financial statements for North Railway report the following information Year ended December 31, (In millions)

Year 2

Year 1

Revenues

$19,829

$21,967

Property and equipment, net

49,000

47,608

Total assets

84,122

81,703

The annual property, plant and equipment turnover is:

0.46

1.74

0.25

None of these are correct. Correct! 0.41

Question 14 2.5 / 2.5 pts Car Facts Inc. reports sales of $15,081,362 thousand and cost of sales of $13,691,824 thousand for the fiscal year ended February 28. The gross profit for the year is:

$1,391,144 thousand Correct! $1,389,538 thousand

9.20%

There is not enough information to determine gross profit.

90.8%

Question 15 2.5 / 2.5 pts Big Tech Corporation recorded pretax restructuring charges of $981.8 million during the year. The charges consisted of asset write-downs of $647 million, costs associated with exit or disposal activities of $94 million, and employee severance costs of $240.8 million. The company paid $103 million cash to settle these restructuring charges during the year. At year end, the restructuring accrual associated with these charges was:

$981.8 million Correct! $231.8 million

$240.8 million

$437.8 million

There is not enough information to determine the amount.

UnansweredQuestion 16 0 / 2.5 pts The year-end financial statements of Collette Inc. reported the following information (in thousands): Year 2

Year 1

Cost of sales

$1,441,527

$1,453,051

Inventories, net

585,764

546,745

LIFO reserve

4,345

4,094

The year 2 average days inventory outstanding is:

None of these are correct. Correct Answer 143.4 days

142.8 days

148.3 days

144.4 days

UnansweredQuestion 17 0 / 2.5 pts The annual financial statements of Valley Vineyards, Inc. include the following footnote: Note 4. Property and Equipment

Dec. 31, Year 2

Dec. 31, Year 1

Construction in progress

$359,527

$385,827

Land

8,063,716

5,089,472

Winery buildings and hospitality center

14,458,309

13,756,320

Equipment

10,122,593

9,055,987

33,004,145

28,287,606

(12,897,082)

(11,654,901)

$20,107,063

$16,632,705

$1,003,564

$955,353

Less accumulated depreciation

Depreciation expense

The average useful life of Valley’s depreciable assets at the end of its year is

24.9 years

32.9 years

None of these are correct.

20 years Correct Answer 24.5 years

Question 18 2.5 / 2.5 pts Other than raw materials and manufacturing overhead, what is the third component of inventories for manufacturing companies?

Equipment cost

Indirect labor Correct! Direct labor

Processing cost

Question 19 2.5 / 2.5 pts In times of falling prices, choosing LIFO over FIFO as an inventory cost method would affect the financial statements as follows:

Cost of goods sold will be lower and ending inventory will be lower

None are correct

Cost of goods sold will be higher and ending inventory will be lower

Cost of goods sold will be higher and ending inventory will be higher Correct! Cost of goods sold will be lower and ending inventory will be higher

Question 20 2.5 / 2.5 pts Aiello, Inc. had the following inventory in its fiscal year. The company uses the FIFO method of accounting for inventory. Beginning Inventory, January 1:

104

units @ $15.00

Purchase

160

units @ $18.00

Purchase

40

units @ $13.50

Purchase

88

units @ $15.75

Ending Inventory, December 31:

96

units

The company’s cost of goods sold for its fiscal year is:

$4,926.00

$4,244.60 Correct! $4,872.00

None of these are correct.

$4,854.00...