Subject: Global Financial Statement Analysis

Multiple-choice questions. Complete all questions presented.

Both questions 1 & 2 pertain to the following information:

During the current year, a firm sells inventory on account for $1,000. The inventory (which was purchased in a prior period) originally cost $700. An additional $50 was spent (in the current year) sending the goods to a customer.

1. Based solely on these transactions, the increase to retained earnings would be:

a. $1,000

b. $ 950

c. $ 300

d. $ 250

2. The firm's net cash flows from these transactions would equate to:

a. $1,000 increase in cash.

b. $700 decrease in cash.

c. a $300 increase in cash.

d. a $50 decrease in cash.

3. Other things equal, increasing the useful life of an asset will:

a. increase annual operating income.

b. decrease annual operating income.

c. increase annual expenses.

d. increase annual sales revenue.

4. In 2020, Nokia reported (EURm) net sales of 30,376, operating profit of 5,776, net profit of 3,938. In that year, Nokia's gross margin percentage was 37.2%. What was Nokia's cost of goods sold in 2020?

a. 11,300

b. 19,076

c. 24,600

d. 26,438

5. A company has 20,000 shares authorized, 18,000 shares issued and 15,000 shares of its common stock outstanding. The number of shares held in treasury is:

a. 2,000

b. 3,000

c. 5,000

d. 7,000

6. The beginning balance of Motorola's retained earnings account was $9,727. The ending balance was $5,434. During that year, Motorola incurred a net loss of $3,937 (amounts are presented in millions). During that year Motorola declared and paid a dividend of:

a. $ 356

b. $1,497

c. $4,293

d. $5,790

7. Under U.S. GAAP, other comprehensive income includes all of the following except:

a. retained earnings.

b. foreign currency translation adjustments.

c. adjustments related to the market value of available-for-sale securities.

d. adjustments related to underfunded defined pension plans.

8. Which of the following is a recorded intangible asset?

a. Internally generated goodwill.

b. The costs incurred by Motorola in developing Iridium.

c. Legal fees associated with filing a patent.

d. Contributions made to the Red Cross to support flood victims.

9. Other things equal, when a merchandising firm decides to extend payment terms to its customers, current:

a. sales will increase.

b. sales will decrease.

c. cash flows will increase.

d. cash flows will decrease.

10. Regal Company purchased a machine with a 4-year estimated useful life and an estimated 10% salvage value for $80,000 on January 1, Year 6. In its income statement, what should Regal report as the depreciation expense for Year 8 using the double-declining-balance (DDB) method?

a. $ 9,000.

b. $10,000.

c. $18,000.

d. $20,000.

11. The statement of cash flows would disclose the payment of a dividend

a. nowhere on the statement.

b. in the operating activities section.

c. in the investing activities section.

d. in the financing activities section.

12. Gibson Company recorded the following cash transactions for the year:

Paid $180,000 for salaries.

Paid $80,000 to purchase office equipment.

Paid $20,000 for utilities.

Paid $8,000 in dividends.

Collected $310,000 from customers.

What was Gibson's net cash provided by operating activities?

a. $110,000

b. $30,000

c. $130,000

d. $102,000

13. If a company fails to incorporate an estimate of uncollectible accounts into its measure of accounts receivable, at the end of the period:

a. equity will be understated.

b. accounts receivable will be overstated.

c. total assets will be understated.

d. liabilities will be understated.

14. The following information was gathered for Trio Company for the fiscal year ended 12/31/19:

On 1/1/19, shares authorized amounted to 1,000,000 shares

On 1/1/19, shares issued amounted to 550,000 shares

On 1/1/19, shares outstanding amounted to 500,000 shares

On 4/1/19, additional shares issued amounted to 200,000 shares

Trio Company paid preferred stock dividends of $50,000 and paid common stock dividends of $100,000.Trio has no dilutive securities in its capital structure and earned $250,000 of net income for the year ended 12/31/19. Trio Company's earnings per share (for 2009) is closest to:

a. $0.39 per share.

b. $0.31 per share.

c. $0.15 per share.

d. $0.27 per share.

15. Pinson Company began the year with retained earnings of $570,000. During the year, the company recorded revenues of $600,000, expenses of $380,000, and paid dividends of $140,000. What was Pinson's retained earnings at the end of the year?

a. $930,000 b.$650,000

c. $1,030,000 d.$500,000