Final Review

Question 0

Calculate return on investment

Answer 0

Rate of Return x probability of Outcome = [add all % up]

Question 1

Calculate annuities

Answer 1

Find r, c, period, n

- Factor x annuity

Question 2

Weighted average cost of capital

Answer 2

% Debt x (total debt/ total debt + total OE)
+% Equity x (total OE/ total debt + total OE)
_________________________________
weighted average cost of capital

Question 3

Net after tax cash flows

Answer 3

1) Sales - Operating Cost = profit
2) 1-tax rate x profit
3) profit + depreciation = net after tax

Question 4

Tax Shield

Answer 4

depreciation x tax rate

Question 5

Installment notes

Answer 5

Payment x PVA factor

Question 6

Net present value analysis

Answer 6

PVA - cost

Question 7

Interest Expense

Answer 7

Carrying value x market rate

Question 8

The first payments of an installment note will cover ______ than the later payments.

Answer 8

more interest expense

Question 9

The total amount of interest expense over the life of a note is:

Answer 9

total cash outflows - proceeds of the note

Question 10

When the cash proceeds of a note is less than the face value of a note the difference is called the :

Answer 10

discount on the note

Question 11

A non-interest bearing note is always issued:

Answer 11

at a discount

Question 12

Calculate the proceeds on a periodic lump sum note.

Answer 12

1) payment = face value x face rate
2) carrying value x market rate factor [PV$]
3) payment x market rate factor [PVA]
4) Add present values together

Question 13

Payments on an installment note

Answer 13

Payment = PV/PVA factor

Question 14

Calculate the proceeds on a periodic lump sum note.

Answer 14

1) payment = face value x face rate
2) carrying value x market rate factor [PV$]
3) payment x market rate factor [PVA]
4) Add present values together

Question 15

Payments on an installment note

Answer 15

Payment = PV/PVA factor

Question 16

Accounting equation

Answer 16

Assets = Liabilities + Owner’s Equity

Question 17

Assets _____ with debit and ______ with credit.

Answer 17

increase; decrease

Question 18

Liabilities _____ with debit and ______ with credit.

Answer 18

decrease; increase

Question 19

Calculate the carrying value from depreciation

Answer 19

Carrying value = cost - accumulated depreciation

Question 20

Retained Earinings Conciliation

Answer 20

RE = Begging Balance + Net Income - Dividends

Question 21

Calculate Prior Period Adjustments

Answer 21

Pre-tax Error x (1 - Tax Rate)

Question 22

Retained Earinings Conciliation

Answer 22

RE = Begging Balance + Net Income - Dividends

Question 23

Calculate Prior Period Adjustments

Answer 23

Pre-tax Error x (1 - Tax Rate)

Question 24

Financial statements should provide information that is:

Answer 24

1) useful for making investment and credit decisions, 2) useful for assessing prospective cash flows, and 3) relevant to evaluating company assets, claims to assets, and changes in those assets.

Question 25

Calculate operating income from an income statement

Answer 25

1) Net Sales - Cost of goods sold = gross margin | 2) gross margin - operating expenses = net income

Question 26

Calculate change reflected in the extraordinary item section of the Income Statement:

Answer 26

$ x (1-tax rate) - loss = reduction - gain = increase

Question 27

What is the statement of shareholder's equity?

Answer 27

summary in changes in equity

Question 28

Items that are cash or expected to be cash within a year are called:

Answer 28

total current assets

Question 29

Partner's new capital balance after income distribution

Answer 29

1) partnership earnings - allowances = remains 2) remains/# of partners = equal partner earnings 3) Add specific partner earnings = new capital balance

Question 30

Calculate how many shares are issued/outstanding

Answer 30

- outstanding = issued - held | - Treasury shares are issued but not outstanding

Question 31

Calculate how much is the dividends payable created by declaration

Answer 31

1) issued - held = outstanding | 2) outstanding x $ per par = payable dividends

Question 32

Calculate the Net Income

Answer 32

``` Revenue - Expenses + Gains - Losses _________ = Net Income (Loss) ```

Question 33

What are extraordinary items?

Answer 33

Unusual and infrequent

Question 34

Calculate the value of earnings per share

Answer 34

(Net Income - Preferred Stock Dividends)/# common shares outstnading

Question 35

Return of Return

Answer 35

Return ON Investment/Investment Amount

Question 36

journal entry to record the declaration of a stock dividend would include:

Answer 36

Debit to Retained Earnings

Question 37

Calculate the carrying value of the note immediately after the first payment

Answer 37

Carrying = Face Value - Discount

Question 38

Calcualte Indirect Method of Statement of Cash Flows

Answer 38

1) Operating 2) Investing 3) Financing

Question 39

Cash Flows from Operating Activities

Answer 39

1) Net Income + Depreciation Expense = Adjusted Income | 2) Adjusted Income + or - Account Changes = CF from operating activities

Question 40

Account Changes rules:

Answer 40

Assets: increase = subtract,decrease means add (not cash) Liabilities: increase = add, decrease = subtract ( not notes payable)