Managerial Accounting Acct 505

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These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below.| Date Taken:| 8/3/2013| Time Spent:| 24 min , 43 secs|

Points Received:| 90 / 100  (90%)|
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Question Type:| # Of Questions:| # Correct:|
Multiple Choice| 10| 9|
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Grade Details - All Questions|

 1.| Question :| (TCO A) Which of the following statements is CORRECT?|
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 | Student Answer:| |  One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes bankrupt.|  | | |  Sole proprietorships are subject to more regulations than corporations.|  | | |  In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner.|  | | |  Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones.|  | | |  Corporations of all types are subject to the corporate income tax.|  | Instructor Explanation:| Chapter 1Explanation:  Ch 1:  d is correct, all others are incorrecta: incorporating provides owners limited liabilityb: sole proprietorship has less regulation than corporationc: In limited partnerships certain partners can be designated general partners and others limited partners with differences in control and liabilityd.  sole proprietorships and partnerships are taxed just once at owner level (pass-through of income to owners) whereas corporation earnings can be double or triple taxed depending on individual or corporate ownership of stocke.  S-corps can elect to be taxed as proprietorship  or partnership| |

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 | Points Received:| 10 of 10|
 | Comments:| |
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 2.| Question :| (TCO G) A security analyst obtained the following information from Prestopino Products’ financial statements:

• Retained earnings at the end of 2009 were $700,000, but retained earnings at the end of 2010 had declined to $320,000. • The company does not pay dividends.
• The company’s depreciation expense is its only non-cash expense; it has no amortization charges. • The company has no non-cash revenues.
• The company’s net cash flow (NCF) for 2010 was $150,000.                                                                                                  On the basis of this information, which of the following statements is CORRECT?|

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 | Student Answer:| |  Prestopino had negative net income in 2010.|  | | |  Prestopino’s depreciation expense in 2010 was less than $150,000.|  | | |  Prestopino had positive net income in 2010, but its income was less than its 2009 income.|  | | |  Prestopino's NCF in 2010 must be higher than its NCF in 2009.|  | | |  Prestopino’s cash on the balance sheet at the end of 2010 must be lower than the cash it had on the balance sheet at the end of 2009.|  | Instructor Explanation:|  Ch 2:  a is true all others are falsea.  True: As the company pays no dividends, the decrease in retained earnings is from negative earnings or losses.b:  Does not explain change in retained earnings value.c:  Does not explain change in retained earnings value.d.  Cash flow does not relate to retained earningsd.  Cash flow does not relate to retained earnings| |

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 | Points Received:| 0 of 10|
 | Comments:| |
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 3.| Question :| (TCO G) LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620,000, and its net income after taxes was $24,655. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant?|

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 | Student Answer:| |  7.57%|
 | | |  7.95%|
 | | |  8.35%|
 | | |  8.76%|
 | | |...