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ACC 573 Midterm Exam Guide 1. The two categories of shareholders' equity usually found on the balance sheet of a corporation are 2. When a firm attempting to create unique products or services for particular market niches, in order to achieve relatively high profit margins, this is best known as 3. Which of the following economic characteristics is consistent with a pharmaceutical company? 4. Which of the following economic characteristics is consistent with a commercial bank? 5.

Which of the following assets appears on the balance sheet at fair value?

6. The use of acquisition cost as a valuation method is justified on the basis that acquisition cost is: 7.

U.S. GAAP, IFRS, and other major accounting standards are best characterized as

8. Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010? 9. Free cash flows to all debt and common equity shareholders represents the excess of cash flows from 10. Normally, cash flows from financing will start using cash during which phase of the product life cycle?


11. When preparing the statement of cash flows using the indirect method, an increase in inventories would appear as 12. Which of the following scenarios is consistent with a increasing cost of goods sold to sales percentage and increasing inventory turnover 13. Which of the following industries would you expect to have, on average, high asset turnover and low profit margin? 14. One important difference between return on assets (ROA) and return on common shareholder’s equity (ROCE) is 15. Sustainable earnings represent 16. Non-U.S. companies that list securities in the United States typically include a risk factors item in the: 17. Economic theory teaches that differences in market returns must relate to differences in 18. One common problem with the current ratio is that it is susceptible to "window dressing." If prior to the end of the accounting period Saxon Company has a current ratio of 1.5 and management wishes to boost its current ratio it may decide to 19. Which kind of dividends have an interest-bearing promise to pay dividends? 20. Which of the following is the date on which a company determines the owners of the stock that will receive a dividend? 21. Which of the following is the typical tradeoff when issuing preferred stock? 22. An analyst can estimate the average total life of depreciable assets by 23. Which of the following is the least effective way for an analyst to understand whether existing long-lived assets must be replaced? 24. When a foreign entity has the U.S. dollar as its functional currency, it uses which exchange rate to translate monetary assets and liabilities? 25. The method used to account for oil and gas exploration costs that capitalizes the exploration costs of productive wells is the


Acc 573 midterm exam guide