1. Refer to the following selected financial information from McCormik, LLC. Compute the company’s working capital for Year 2. $257,000. $178,000. $270,500. $142,500. $166,500. 2. If cash flow prediction is a company’s primary reporting objective, this would likely result in: Fewer accruals and deferrals. Lower earnings. Higher earnings. Poor matching. 3. Refer to the following selected financial information from McCormik, LLC. Compute the company’s inventory turnover for Year 2. 5.80. 3.09. 3.19. 3.14. 3.54. Year 2: $392,000 / [($123,000 + $127,000) / 2] = 3.14 4. Selected current year company information follows: The total asset turnover is (Do not round intermediate calculations.): 3.11 times. 2.49 times. 6.25 times. 2.26 times. 2.77 times. 5. Choose the correct statement about audits of corporations: Outside auditors are paid by the government for auditing the financial statements of corporations. Revenue Canada performs audits of corporations’ financial statements. It is the employees of the firm being audited who perform the annual audit of the financial statements of that firm. Public corporations (those whose stock are traded on exchanges) are subject to annual audit as to their compliance with GAAP. 6. Refer to the following selected financial information from McCormik, LLC. Compute the company’s accounts receivable turnover for Year 2. 7.98. 5.59. 6.84. 7.73. 7. A corporation reported cash of $28,400 and total assets of $468,000 on its balance sheet. Its common-size percent for cash equals: 60.70%. 6.07%. 1648%. 100.00%. 16.48%. 8. General-purpose financial statements report financial information relevant to: investors only. creditors only. investors, creditors and government users. government users only. 9. A corporation reports the following year-end balance sheet data. The company’s current ratio equals: 2.14 0.57 1.32 0.36 10. Which of the following statements regarding cash flows is not accurate? Information about the balances of current liabilities, long-term debt and stockholders’ equity can be found in the statement of cash flows. Before the present cash flow statement standard became effective, companies had a choice of whether to report cash flow from operating activities or working capital from operating activities. Information about past cash flows is useful in predicting an entity’s future cash flows. The reported cash flow from operating activities has been found useful in evaluating a firm’s ability to make interest payments and repay debt. Studies have shown that a cash flows report is more relevant to investor decisions than a working capital report.
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