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10. Which of the following is not a common characteristic of a company choosing to use LIFO rather than FIFO?
10. Which of the following is not a common characteristic of a company choosing to use LIFO rather than FIFO? A) Larger inventory balances B) Higher variability in inventory balances C) Grater expected tax savings D) Larger in size11. Financial Statements of ABC Corp. indicates that ending inventory levels in 2004 and 2005 were $200,000 and $350,000 respectively. Cost of Goods Sold for 2004 and 2005 were $1,900,000 and $2,200,000 respectively. Purchases in 2005 were: A) $1,950,000 B) $2,150,000 C) $2,350,000 D) $1,850,00012. The inventory costing method used by a company (LIFO, FIFO, etc) will affect: Asset Turnover Debt/Equity RationA) Yes YesB) Yes NoC) No NoD) No Yes13. Which of the following steps are required to adjust LIFO to FIFO? A) Inventory needs to be calculated as reported LIFO inventory plus LIFO reserve B) Increase deferred tax payable by LIFO reserve times Tax rate C) Retained earnings need to be calculated as reported retained earnings plus LIFO reserve times (1 - Tax rate) D) All of the above14. One advantage of LIFO over FIFO under normal conditions is that: A) It reports higher retained earnings B) It results in higher cash flows C) It results in higher current ratios D) It results in higher gross margins15. Which of the following is not an effect capitalization? A) Capitalization usually reduces net income B) Capitalization usually yields a smoother net income C) Capitalization usually decreases the volatility of the return on investment D) Capitalization usually increases net income>16. Companies are supposed to write-down value of assets if a permanent impairment of value of loss of utility occurs. If a company writes down its assets this year the effect on: This year's ROA Next year's ROAA) Increased No ChangeB) Decreased No ChangeC) Decreased DecreasedD) Decreased Increased17. A write-down in asset value is: A) A very rare occurrence B) Not allowed under GAAP C) Results in a direct debit to stockholders' equity D) Required if an asset is deemed to have permanent impairment of value18. Which of the following is not considered an intangible asset? A) Goodwill B) Customer lists C) Prepaid advertising expenses D) Membership9. Which of the following is correct?I. If a company uses straight-line depreciation for financial reporting purposes, it is very likely they have deferred tax liability with respect to its depreciable assets.II. Straight-line depreciation yields an increasing rate of return on book value over the life of the asset.III. Straight-line depreciation results in lower tax payments than accelerated depreciation methods over the life of an assets.IV. If a company revises its estimate of the useful life of an assets this will decrease annual depreciation expense.10. Which of the following of the following statements concerning deferred taxes is correct?A) Deferred taxes will no be found in asset section of the balance sheet.B) Deferred taxes arise from permanent differences in GAAP and tax accountingC) Deferred taxes will only decrease when a cash payment is made.D) Deferred taxes arising from the depreciation of a specific asset will ultimately reduce to zero as the item is depreciated.10. Which of the following is not a common characteristic of a companychoosing to use LIFO rather than FIFO?A) Larger inventory balancesB) Higher variability in inventory balancesC) Grater expected tax savingsD) Larger in size11. Financial Statements of ABC Corp. indicates that ending inventorylevels in 2004 and 2005 were $200,000 and $350,000 respectively. Cost ofGoods Sold for 2004 and 2005 were $1,900,000 and $2,200,000respectively. Purchases in 2005 were:A) $1,950,000B) $2,150,000C) $2,350,000D) $1,850,00012. The inventory costing method used by a company (LIFO, FIFO, etc)will affect:                                            Asset Turnover                  Debt/Equity RationA)                                           Yes                                      YesB)                                           Yes                                      NoC)                                            No                                       NoD)                                           No                                      Yes13. Which of the following steps are required to adjust LIFO to FIFO?A) Inventory needs to be calculated as reported LIFO inventory plus LIFOreserveB) Increase deferred tax payable by LIFO reserve times Tax rate C) Retained earnings need to be calculated as reported retained earningsplus LIFO reserve times (1 - Tax rate) D) All of the above14. One advantage of LIFO over FIFO under normal conditions is that:A) It reports higher retained earningsB) It results in higher cash flowsC) It results in higher current ratiosD) It results in higher gross margins15. Which of the following is not an effect capitalization?A) Capitalization usually reduces net incomeB) Capitalization usually yields a smoother net incomeC) Capitalization usually decreases the volatility of the return oninvestmentD) Capitalization usually increases net income>16. Companies are supposed to write-down value of assets if a permanentimpairment of value of loss of utility occurs. If a company writes downits assets this year the effect on:                                           This year's ROA                Nextyear's ROAA)                                        Increased                         No ChangeB)                                      No ChangeC)                                    DecreasedD)                                        Decreased                    Increased17. A write-down in asset value is:A) A very rare occurrenceB) Not allowed under GAAPC) Results in a direct debit to stockholders' equityD) Required if an asset is deemed to have permanent impairment of value18. Which of the following is not considered an intangible asset?A) GoodwillB) Customer listsC) Prepaid advertising expensesD) Membership
