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You are trying to determine which of two companies is the most profitable. Which of the following would be the best indicator of relative profitability?
A) highest net income
B) highest retained earnings
C) highest return on equity
D) highest income from continuing operations

2. Which of the following would not be considered a source of financing?
A) notes receivable
B) common stockholders' equity
C) retained earnings
D) capital lease obligations

3. Will Company reports the following:
2009 2008
Retained Earnings $2,000,000 $ 1,300,000
Common Stock $ 500,000 $ 500,000
Paid-in Capital $3,000,000 $ 3,000,000
Net Income for year $ 900,000 $ 400,000

Dividend payout ratio for 2009 was:
A) 12%
B) 18.7%
C) 22.2%
D) 27%

4. If a company receives an unqualified audit opinion it means the auditors
A) did not complete a full audit and therefore do not feel qualified to give and opinion on financial statements.
B) are providing assurance that the company will remain financially viable for at least the next year.
C) are providing assurance that the company's financial statements fairly present company's financial performance and position.
D) are providing assurance that the company's financial statements are free from misstatement, fraudulent accounting and fairly indicate future performance.

5. The Management Discussion and Analysis Section of the annual report:
A) is required by the SEC
B) is optional but normally included in the annual report
C) is required by the SEC only if the company has suffered from unfavorable trends or there are significant uncertainty concerning liquidity of the company
D) is required by the SEC only if they have a qualified audit opinion

6. To estimate the intrinsic values of an equity or debt security using present value
theory you need to know
A) the yield to maturity.
B) a discount rate and the expected payoffs over the life of the security.
C) the probability of the expected future payoffs over the life of the security.
D) the current market value of the equity or debt security.

7. Which of the following is not a common tool used in financial statement analysis?
A) random walk analysis
B) ratio analysis
C) common size statement analysis
D) trend series analysis

8. A common size income statement would typically be prepared by dividing:
A) All items on income statement in Year t by their corresponding value in Year t-1
B) All items on income statement in Year t by their corresponding balance sheet account in Year t
C) All items on income statement in Year t by net income in Year t-1
D) All items on income statement in Year t by sales in Year t

9. You are examining the common size income statements of two companies, A and B, for 2011. This data is most likely to help you answer which of the following questions?
A) Which company had the largest net income.
B) Which company utilized its assets most efficiently.
C) Which company had the highest gross margin ratio.
D) Which company had the biggest increase in sales from the prior year.

10. Which of the following statements concerning financial ratios is incorrect?
A) accounting principles and methods used by a company will not affect financial ratios
B) the informational value of a ratio in isolation is limited
C) a ratio is one number expressed as a percentage or fraction of another number
D) calculation of financial ratios is not sufficient for a complete financial analysis of a company

11. Which of the following is (are) a change(s) in accounting principle?

I. a change from LIFO to FIFO
II. a change in estimated salvage value of depreciable asset
III. a change from straight line to sum-of-the-years digits
IV. recording depreciation for first time on machinery purchased five years

A) I, II, III and IV
B) I, II and III
C) I and II
D) I

12. If a company fails to record a material amount of depreciation in a previous year, this is considered:
A) a change in accounting principle
B) an unusual item
C) an accounting error
D) a change in estimate

13. Which of the following are examples of judgments made in the accounting reporting process?

I. Useful life of machinery
II. Allowance for doubtful accounts
III. Obsolescence of assets
IV. Classification of investments as available for sale or trading securities.

A) I, II, III and IV
B) I, II and III
C) II and III
D) I and III

14. Which of the following would affect the comparability of accounting information for a given company from one accounting period to the next?

I. Change in accounting principles
II. Disposition of segment of business
III. Restructuring expense
IV. Change in auditors

A) I and II
B) I and III
C) I, II and III
D) I, III and IV

15. When analyzing financial statements it is important to recognize that accounting distortions can arise. Accounting distortions are those things that cause deviations in accounting information from the underlying economics. Which of the following statements is not correct? Accounting distortions:
A) can arise as management may deliberately manipulate financial statements
B) arise often through application of (correct) accounting principles
C) can affect the quality of earnings
D) arise because the stock market is not efficient

16. The two secondary qualities of accounting information to make it useful for decision making are:
A) Consistency and Comparability
B) Relevance and Reliability
C) Materiality and Comparability
D) Full Disclosure and Relevance

17. When considering cash versus accrual accounting, which of the following statements is correct?
A) neither cash flows nor net income can be manipulated
B) net income cannot be manipulated but cash flows can
C) both cash flows and net income can be manipulated
D) cash flows cannot be manipulated but net income can be manipulated

18. Which one of the following is not an example of a red flag, used to evaluate earnings quality?
A) Qualified audit report
B) Net income this year is higher then net income last year
C) Poor financial performance
D) Frequent or unexplained changes in accounting policies

19. Which of the following is not considered part of GAAP?
A) Statements of Financial Accounting Standards (SFAS)
B) International Accounting Standards (IAS)
C) Accounting Research Bulletins (ARB).
D) Accounting Principles Board Opinions (APB).

20. Which of the following is not considered a monitoring mechanism?
A) The Securities and Exchange Commission (SEC)
B) Top level management
C) The board of director's audit committee
D) The external auditors

Use the following to answer questions 21 and 22:

Cleveland Company reports the following information as of 12/31/2012:

-10% cumulative preferred stock, par value
$100, One-year of dividends in arrears; 20,000
shares authorized; issued, 10,000 shares;

-Common stock - authorized 500,000; 40,000
outstanding; $2 par value - $80,000

Additional paid-in-capital - $450,000
-Retained Earnings - $2,000,000

21. The book value per share of common stock is:
A) $57.75
B) $60.25
C) $60.75
D) $63.25

22. The book value per share of preferred stock is:
A) $ 100
B) $ 110
C) $ 112
D) $ 116

23. Hurt Corporation acquired a capital lease that is carried on its books at a present value of $100,000 (discounted at 12%). Its' annual lease payment is $15,000. What is the amount of interest expense from this lease?
First Year Second Year
A) 12,000 10,200
B) 12,000 11,640
C) 12,000 12,350
D) 15,000 15,000

24. Recording a long-term lease as an operating lease, as opposed to a capital lease, for a lessee will cause the following ratios to be:
Debt/Equity Total Asset Turnover
A) Higher Lower
B) Higher Higher
C) Lower Higher
D) Lower Lower

25. If a company leases equipment to other companies and records these leases as operating leases rather than a capital leases, its (the lessor's):

I. recorded liabilities will be lower
II. recorded assets will be higher
III. total cash flows will be higher
IV. leverage ratios will be higher

A) I and III
B) II and IV
C) I only
D) II, III and IV

26. After the adoption of SFAS 158, the pension asset/liability on a company's books will be equal to
A) The difference between the projected benefit obligation and the fair value of
the plan assets.
B) The difference between the pension expense and the amount funded during
the current year.
C) The pension expense and the projected benefit obligation for any given year,
less the amount funded.
D) The fair value of the plan assets less the unamortized prior service cost, plus
any unamortized gains minus any unamortized losses.

27. Capitalizing interest costs will have which of the following effects on a company's financial statements after the initial period?
A) Net earnings will be lower.
B) Current ratio will increase.
C) Total debt will be lower.
D) Pretax cash flow will be lower.

28. Which of the following is not a component of pension expense under defined benefit plans?
A) Service cost
B) Amortization of prior service costs
C) Interest cost
D) Amortization of prior interest costs

29. For a company with a current ratio of less than 1.0, which of the following accounting actions is most likely to increase its current ratio?
A) Sell property, plant, or equipment for cash.
B) Making cash payments on accounts payable.
C) Paying off long-term debt.
D) Leasing equipment under a long-term capital lease agreement.

30. A company's current assets are $150 and its' current liabilities are $100. If the company uses cash to retire notes payable due within one year, would this transaction increase or decrease the current ratio and return on assets ratio?
A) Current Ratio: Increase; Return on Assets: Increase
B) Current Ratio: Increase; Return on Assets: Decrease
C) Current Ratio: Decrease; Return on Assets: Increase
D) Current Ratio: Decrease; Return on Assets: Decrease

Use the following information to answer questions 31 and 32

Control Furniture Company
Annual Report Excerpts
(Figures in thousands of dollars)

December 31 2015 2016

Inventories at FIFO Cost 846.3 852.6
Excess of FIFO Cost over LIFO Cost (231.4) (257.2)
Inventories at LIFO Cost 614.9 595.4

Income Tax rate is 34%
Answers are rounded to the nearest decimal point.

31. Given the financial information presented above what would be the effect on cash in 2015 of converting the company from LIFO to FIFO:
A) Increase of 78.7
B) Decrease of 78.7
C) Decrease of 152.7
D) Increase of 152.7

32. Given the financial information presented above what would be the effect on net income before taxes in 2016 of converting the company from LIFO to FIFO:
A) Increase of 257.2
B) Decrease of 257.2
C) Increase of 174.9
D) Decrease of 174.9

33. HTGT Inc. has a defined contribution pension plan for its employees. Under this type of plan which best describes the contingent liability associated with the plan?
A) HTGT has a contingent liability until the employee retires.
B) HTGT has a contingent liability until the employee dies.
C) HTGT has no contingent liability.
D) The employee has a contingent liability.

34. Captain Inc. purchases a depreciable asset for $100,000. The life of the asset is 10
years and it has an estimated salvage value of $10,000. Captain Inc. takes a full
year of depreciation expense in the year the asset is acquired. Which of the
following statements is true?
A) In year three using straight-line depreciation the amount will be $10,000.
B) Changing depreciation methods in year four will be considered a change in accounting principle.
C) Depreciation under the double-declining method (200%) in year one will be equal to $18,000.
D) Changing depreciation methods in year two will require prospective application.

35. Which of the following is not an effect of 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

36. Companies are supposed to write-down value of assets if a permanent impairment of value or loss of utility occurs. If a company writes down its assets this year the effect on:
This year's ROA Next year's ROA
A) Increased No change
B) Decreased No change
C) Decreased Decreased
D) Decreased Increased

37. Under current US GAAP, goodwill is:
I. amortized over a period not to exceed 40 years
II. tested annually for impairment
III. exclusive of separately identifiable intangible assets
IV. recorded only upon purchase of another entity

A) I, II, III and IV
B) II, III and IV
C) I, II and III
D) II and IV

38. Which of the following scenarios reflects the correct application of U.S. GAAP for capitalization of certain expenditures as intangible assets?
A) A company's marketing department researches, develops and promotes a completely new name, packaging and design for its main product line, capitalizing $1.8 million in related costs. Previously, the brand had remained unchanged for 45 years.
B) A pharmaceutical company capitalizes cost of $47 million after 5 years of researching and developing a new hair growth pill.
C) A company capitalizes $12 million of research and development costs incurred during the most recent operating cycle.
D) A software company capitalizes $3.9 million in development costs after a working model of its newest product is completed. It is beyond the beta testing stage.

39. AVPR Company sets up a qualifying SPE to sell their accounts receivable (A/R) to the SPE. The SPE meets the unconsolidated requirement under GAAP. The most likely outcome of using the SPE by AVPR will be to
A) improve operating performance ratios of AVPR.
B) have AVPR recognize gains on the sale of their A/R to the SPE.
C) have the SPE issue debentures.
D) be a greater cost of financing to AVPR than borrowing funds from the credit markets.

40. Financial Statements of ABC Corp. indicates that ending inventory levels in 2010 and 2011 were $200,000 and $350,000 respectively. Net Sales for 2010 and 2011 were $5,000,000 and $5,500,000 respectively. Cost of Goods sold for 2010 and 2011 were $1,900,000 and $2,200,000 respectively. Purchases are recorded using the net method and purchase discounts lost are expensed. Purchase discounts lost in 2010 and 2011 were $50,000 and $75,000 respectively. Purchases in 2011 were:
A) $2,225,000
B) $2,275,000
C) $2,350,000
D) $2,425,000

41. The YC Company is having liquidity problems. Their current ratio is .80. Which of the following will improve their current ratio in the short-term?
A) Establish a petty cash fund.
B) Selling inventory at less than cost to raise cash.
C) Borrowing money, payable in three years.
D) Offering sales discounts on their current accounts receivable for faster receipt of cash.

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The solution explains some multiple choice questions in accounting

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Amino acids multiple choice questions

Which statement is incorrect about the classification of amino acids?
a. Alanine and valine are neutral, nonpolar amino acids.
b. Lysine and arginine are basic amino acids.
c. Tryptophan and phenylalanine are aromatic amino acids.
d. Aspartic acid and aspargine are acidic amino acids.

Which of the following amino acids is the least water soluble at pH 7.0?
a. Tryptophan
b. Glutamic acid
c. Cysteine
d. Histidine

Which amino acid would migrate the furthest toward the anode (positive electrode) during paper electrophoresis at pH 7.0?
a. Aspartic acid
b. Alanine
c. Lysin
d. Glutamine

Which of the following functional groups, attached to an inert matrix, could function as a cation exchanger?
a. Diethylaminoethyl-
b. p-aminobenzyl-
c. Carboxymethyl-
d. Trimethylammonium-

Which of the following amino acids would make the best buffer at pH 4.5?
a. Histidine
b. Alanine
c. Glutamine
d. Aspartic acid

Which fact is incorrect about stereoisomers?
a. A diastereomer is a nonsuperimposable non-mirror image.
b. An enantiomer is a nonsuperimposible mirror image.
c. Diastereomers have different melting points.
d. Diastereomers rotate plane polarized light in equal but opposite direction.

Which statement is incorrect about L-isoleucine?
a. Its enantiomer is named O-isoleucine.
b. It contains a total of two asymmetric or chiral carbons.
c. It can also be named as (28, 38)-isoleucine using the (R,8) system.
d. Its diastereomer would be named O-alloisoleucine.

An isoelectric amino acid was dissolved in water and the resulting pH was approximately 7.6. What amino acid would possess this property?
a. Alanine
b. Glutamic acid
c. Histidine
d. Lysine

What volume of NaOH is required to adjust the solution of monosodium aspartate to pH 9.8?
a. 1 ml
b. 2 ml
c. 3 ml
d. 6 ml or more

What volume of 2 N Hel is required to completely titrate the 4 mmol of monosodium aspartate?
a. 2 ml
b. 3ml
c. Aml
d. 6 ml or more

Which statement is correct about the peptide ala-ser?
a. Alanine is at the N-terminal of the peptide.
b. There are a total six atoms that lie in the plane of the peptide bond linking alanine to serine.
c. The alpha-carbon of alanine is sp3 hybridized d All the above are correct statements.

What is the product formed from the acid hydrolysis of a simple amide?
a. Acid & base
b. Aldehyde & alcohol
c. Acid & amine
d. Ester & alcohol

The complete acid hydrolysis of the peptide ala-gln-trp-ser would yield:
a. Ala, gin, trp, ser
b. Ala, glu, ser
c. Ala, glu, trp, ser
d. Ala. ser

Fibrous proteins, such as collagen, have which of the following properties?
a. Highly soluble in water
b. Their hydrophilic residues are directed into the interior of the protein
c. Exhibit enzymatic activity
d. Serve structural roles in the cell

Quaternary structure is associated with:
a. The overall shape of a polypeptide chain
b. The sum of the secondary and tertiary interactions
c. Simple proteins with only one subunit
d. The relative orientation of one polypeptide to another polypeptide in a multi-subunit protein.

The information needed to define the structure of a protein is essentially contained in:
a. Amino acid composition
b. Amino acid sequence
c. Secondary structure
d. Tertiary structure.

Insulin is a polypeptide hormone that contains two short polypeptide chains linked by two interstrand disulfide bonds. The most logical order of events to perform in order to sequence this protein would be:
A: The peptides are reduced with mercaptoethanol.
B: The peptides are sequenced using Edman chemistry .
C: The peptides are separated by chromatography techniques. 0: The peptides are alkylated with iodoacetamide.
a. A, D,C, B b.C,A, 0, B
c. C, B, A, 0
d. A, B, C, 0

Which statement is incorrect about the peptide val-asp-trp-asn-ser?
a. This peptide would show a strong absorption band at 280 nm.
b. Reaction with chymotrypsin would yield two peptides.
c. To synthesize this peptide using the solid phase method of Merrifield, the amino acid directly attached to the resin would be serine.
d. After the second round of Edman chemistry using the reagent PITC, the PTH -amino acid residue released would be PTH-asn.

Which statement is incorrect about the reaction of the peptide ser-Iys-asp-trp-cys-metasn-phe-ala with the following reagents?
a. Reaction with cyanogens bromide would yield two peptides.
b. Reaction with trypsin would result in three peptides. The smallest of three peptides would have the highest pi of the three.
c. Reaciton with chymotrypsin would result in the peptides ser-Iys-asp & try-cys-met-Iysasn-phe-ala .
d. Reaction with chymotrypsin would yield a different set of peptides that overlap those obtained with tryspsin

Determine the amino acid sequence of the following oligopeptide from the experimental data below:
The amino acid composition is found the be ala, Iys, phe, met, cys plus some
decompsition products.
2. The peptide has a molecular weight around 700 Da and absorbs at 280 nm.
3. Treatment with carboxypeptidase results in tryptophan and a peptide.
4. CNBr treatment yields a tetrapeptide and a dipeptide.
5. Trypsine digestion produces an amino acid and a pentapeptide with met on the amino end.
6. Chymotrypsin digestion yields a dipeptide and a tetrapeptide.
a. trp-Iys-met-cys-met-ala
b. Iys-met-cys-phe-ala-trp
c. trp-ala-phe-cys-met-Iys
d. Iys-ala-cys-phe-met -trp

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