C. fi xed - asset turnover will be higher.

20. If the U.S. dollar were chosen as the functional currency for Acceletron in 2007, Redline

could reduce its balance sheet exposure to exchange rates by

A. selling SGD 30 of fi xed - assets for cash.

B. issuing SGD 30 of long - term debt to buy fi xed assets.

C. issuing SGD 30 in short - term debt to purchase marketable securities.

21. Redline ’ s consolidated gross profi t margin for 2007 would be highest if Acceletron

accounted for inventory using

A. FIFO and its functional currency were the U.S. dollar.

B. LIFO and its functional currency were the U.S. dollar.

C. FIFO and its functional currency were the Singapore dollar.

22. If the current rate method is used to translate Acceletron ’ s fi nancial statements into U.S.

dollars, Redline ’ s consolidated fi nancial statements will most likely include Acceletron ’ s

A. $3,178 in revenues.

B. $118 in long - term debt.

C. negative translation adjustment to shareholder equity.

23. If Acceletron ’ s fi nancial statements are translated into U.S. dollars using the temporal

method, Redline ’ s consolidated fi nancial statements will most likely include Acceletron ’ s

A. $336 in inventory.

B. $956 in fi xed assets.

C. $152 in accounts receivable.

24. When translating Acceletron ’ s fi nancial statements into U.S. dollars, Redline is least likely

to use an exchange rate of USD per SGD

A. 0.671.

B. 0.588.

C. 0.654.

Chapter 17

1. Which of the following mechanisms is least likely to discourage management manipulation

of earnings?

A. Debt covenants.

B. Securities regulators.

C. Class action lawsuits.

2. High earnings quality is most likely to

A. Result in steady earnings growth.

B. Improve the ability to predict future earnings.

C. Be based on conservative accounting choices.

3. The best justifi cation for using accrual - based accounting is that it

A. Refl ects the company ’ s underlying cash fl ows.

B. Refl ects the economic nature of a company ’ s transactions.

C. Limits management ’ s discretion in reporting fi nancial results.

4. The best justifi cation for using cash - based accounting is that it

A. Is more conservative.

B. Limits management ’ s discretion in reporting fi nancial results.

C. Matches the timing of revenue recognition with that of associated expenses.

5. Which of the following is not a measure of aggregate accruals?

A. The change in net operating assets.

B. The difference between operating income and net operating assets.

C. The difference between net income and operating and investing cash fl ows.

6. Consider the following balance sheet information for Profi le, Inc.:

Year ended 31 December 2007 2006

Cash and short - term investments 14,000 13,200

Total current assets 21,000 20,500

Total assets 97,250 88,000

Current liabilities 31,000 29,000

Total debt 50,000 45,000

Total liabilities 87,000 79,000

Profi le ’ s balance - sheet - based accruals ratio in 2007 was closest to

A. 12.5%.

B. 13.0%.

C. 16.2%.

7. Rodrigue SA reported the following fi nancial statement data for the year ended 2007:

Average net operating assets 39,000

Net income 14,000

Cash fl ow from operating activity 17,300

Cash fl ow from investing activity (12,400)

Rodrigue ’ s cash - fl ow - based accruals ratio in 2007 was closest to

A. – 8.5%.

B. – 19.1%.

C. 23.3%.

8. Cash collected from customers is least likely to differ from sales due to changes in

A. Inventory.

B. Deferred revenue.

C. Accounts receivable.

9. Reported revenue is most likely to have been reduced by management ’ s discretionary

estimate of

Date: 2016-03-03; view: 849