ACC 573 WEEK 5 MIDTERM EXAM Midterm Exam • Question 1 Current assets are defined as • Question 2 What is the principal activity of security analysts? • Question 3 On a common size basis, which of the following assets is normally largest for a commercial bank? • Question 4 Which financial statement would you look at to determine whether a company will be able to pay for the goods when payment is due in 30 days? • Question 5 Current replacement cost represents • Question 6 Approximately what percentage of assets reported under fair value by S&P 500 companies currently incorporate Level 3 inputs for fair value estimation? • Question 7 At origination which of the following temporary differences would create a deferred tax asset? • Question 8 An example of an item that is deducted from net income when preparing the operating activities section of the statement of cash using the indirect method is • Question 9 The expense incurred by issuing stock options should be • Question 10 When net income is low relative to operating cash flows, we describe the firm as having recorded • Question 11 Fizzzle Inc. sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale. How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method? • Question 12 Which of the following might an analyst not want to eliminate from past earnings when using past earnings to forecast future earnings? • Question 13 Which of the following is not a way a company can achieve a low-cost position • Question 14 Asset turnover represents • Question 15 Which factor does not explain differences or changes in ROA? • Question 16 Non-U.S. companies that list securities in the United States typically include a risk factors item in the: • Question 17 All of the following are common industry risks faced by companies except: • Question 18 Bankruptcy prediction research has identified three broad factors influencing long-term solvency risk, which of the following is not one of the factors? • Question 19 Graham Corporation accounts for its investment in the common stock of Luke Company under the equity method. Graham Corporation should ordinarily record a cash dividend received from Luke as • Question 20 In some countries the account Reserve for Contingencies may be most comparable to which of the following accounts for a company reporting under U.S. GAAP? • Question 21 Which of the following is an acceptable method of accounting for employee stock options? • Question 22 The term used to describe the amount of a company’s annual interest cost that should be capitalized is known as: • Question 23 Which one of the following is an example of the expected benefit approach for valuing long-lived assets? • Question 24 When dividends from an investment are recognized as a reduction of the investment account, the investment must have been of which type? • Question 25 Which of the following is the least effective way for an analyst to understand whether existing long-lived assets must be replaced?



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