Income Statement and Stockholders Equity

True/Falseto the left of each statement T or F (1 point each)

 

_____1.           Annual reports of public and non-public companies can be found on the SEC’s                              EDGAR database

 

_____2.           The SEC requires all companies, both public and private, to file a Form 10-K                                 report annually.

 

_____3.           Financial statements are currently prepared in the U.S. according to International              Financial Reporting Standards.

 

_____4.           A multiple-step income statement presents several intermediate profit measures                          that investors and analysts may find useful.

 

_____5.           The common size income statement expresses each income statement item as a                       percentage of net sales.

 

_____6.           Selling and administrative expenses include such items as advertising, salaries,                           and interest expense.

 

_____7.           Pro forma income has a standard definition issued by the SEC that is followed by                         all companies reporting pro forma numbers.

 

_____8.           Regulation G requires companies to follow certain rules when recording     non-                             GAAP earnings numbers.

 

_____9.           Companies have incentive to make one-time losses look recurring and one-time                           gains look non-recurring

 

_____10.         Extraordinary items are no longer required to be disclosed separately as a “below                         the line item” for fiscal periods after Dec 31, 2015.

 

_____11.         An AAER (Accounting and Auditing Enforcement Release) was issued for                          Diamond Foods after the company manipulated their financial statements to hide                              the increasing             cost of walnuts.

 

_____12.         Details for many selling, general, and administrative expenses are only shown in                           the notes to the financial statements, not on the financial statements themselves.

 

_____13.         A minority interest appears on an income statement when a parent has less than                          100%   ownership of a subsidiary.

 

_____14.         The equity method of accounting is used for investments in other companies                                 when no controlling interest exists but the investing company has significant                                  influence over the investee.

 

Multiple Choice Record your answers on the Scantron Answer Sheet (1 point each)

 

_____15.         Under which link on a corporation’s website is the financial information most `                                likely found?

1. About Us
2. Careers
3. Investor Relations
4. Contact Us

 

 

_____16.         What information can be found on an income statement?

1. The financing and investing activities during an accounting period.
2. Cash inflows and cash outflows.
3. A reconciliation of the beginning and ending balances of all revenue accounts.
4. Revenues, expenditures, net profit or loss and net profit or loss per share.

 

_____17.        What document is required by the SEC to solicit shareholder votes?

1. Proxy statement.
2. Five-year summary.
3. Shareholders’ letter.
4. Prospectus.

 

_____18.         Which items below would be classified as operating expenses?

1. Depreciation, capital leases, operating profit.
2. Interest expense, interest income, rent expense.
3. Accounts payable, lease payments, depreciation.
4. Advertising, selling and administrative, repairs and maintenance.

 

 

 

Continue Below

 

 

 

Matching

For each of the following items indicate where you would most likely find the information.  Indicate your answers on the exam. (1 point each)

 

1. Balance sheet.
2. Income statement.
3. Statement of stockholders’ equity.
4. Statement of cash flows.
5. Notes to the financial statements.
6. Auditor’s report.
7. Management’s discussion and analysis.

 

_____1.  Revenues.

 

_____2.  Detailed information about the term, cost and maturity of debt.

 

_____3.  Changes to the company’s equity accounts.

 

_____4.  An unqualified opinion.

 

_____5.  Assets.

 

_____6.  Attestation to the fairness of financial statements.

 

_____7.  Discussion of the company’s liquidity.

 

_____8.  Cash inflows from investing activities.

 

_____9.  A breakdown of sales increases into price and volume components.

 

_____10.  Summary of significant accounting policies