B. fi nancing activities rather than operating activities

C. operating activities rather than fi nancing activities

7. With regard to its defi ned - benefi t pension plan, Passaic ’ s year - end 2008 balance sheet

most likely presents a

A. $621 million asset.

B. $621 million liability.

C. $1,699 million liability.

8. The pension expense reported on the Passaic Industries income statement for the year

ending 31 December 2008 is closest to

A. $908 million.

B. $1,050 million.

C. $2,331 million.

9. The Passaic Industries statement of cash fl ows for the year ended 31 December 2008

shows the reconciliation of net income to cash fl ows from operating activities for the

period. The associated adjustment to net income related to the DB plan is closest to

A. $526 million.

B. $2,331 million.

C. $4,239 million.

10. The estimated increase in the pension obligation due to benefi ts earned by current

employees in 2008 is closest to

A. $908 million.

B. $1,050 million.

C. $2,331 million.

11. Because of the changes in pension plan assets and benefi t obligations reported in the Funded

Status of Plan reported at 31 December 2007 and 31 December 2008, the 2008 Passaic

Industries balance sheet compared to the 2007 balance sheet will show a $2,320 increase in

A. assets.

B. liabilities.

C. shareholders ’ equity.

12. Compared to 2008 net income as reported, if Passaic Industries had used the same

expected volatility assumption for its 2008 option grants that it had used in 2007, its

2008 net income would have been

A. lower.

B. higher.

C. the same.

13. Compared to the 2008 reported fi nancial statements, if Stereo Warehouse had used the

same expected long - term rate of return on plan assets assumption in 2008 as it used in

2006, its year - end 2008 pension obligation would most likely have been

A. lower.

B. higher.

C. the same.

14. Compared to the reported 2008 fi nancial statements, if Stereo Warehouse had used the

same discount rate as it used in 2006, it would have most likely reported lower

A. net income.

B. total liabilities.

C. cash fl ow from operating activities.

15. Compared to the assumptions Stereo Warehouse used to compute its pension expense in

2007, earnings in 2008 were most favorably impacted by the change in the

A. discount rate.

B. expected salary increases.

C. expected long - term rate of return on plan assets.

16. The pension assumptions being used by Stereo Warehouse may be internally inconsistent

with respect to

A. asset returns only.

B. infl ation expectations only.

C. both infl ation expectations and asset returns.

17. Compared to the reported 2008 fi nancial statements, if Stereo Warehouse had used the

2006 expected volatility assumption to value its employee stock options it would have

most likely reported higher

A. net income.

B. compensation expense.

C. deferred compensation liability.

18. Compared to the assumptions Stereo Warehouse used to value stock options in 2007,

earnings in 2008 were most favorably impacted by the change in the

A. expected life.

B. risk - free rate.

C. dividend yield.

19. At year - end 2008, € 10,018 million represents the total present value of benefi ts Aero

Euro ’ s employees

Date: 2016-03-03; view: 662