exam 2

Question 1

income statement

Answer 1

gross profit
operating income
income before taxes
net income

Question 2

gross profit

Answer 2

sales/revenue

-COGS

Question 3

operating income

Answer 3

-operating expenses

Question 4

consolidated balance sheet

Answer 4

pr

Question 5

how to record gain/loss

Answer 5

debit loss

credit gain

Question 6

intangible assets

Answer 6

trademarks
patents
research
loyallty
innovation

Question 7

simple interest loan

Answer 7

interest is based off initial loan

Question 8

compounding interest

Answer 8

every second
Annual Interest rate:
that the loan is outstanding, there is
some new interest that is being accrued that you now owe,
based on ANNUAL RATE, divide /12 for monthly

Question 9

On January 1, 2015, you borrow $10,000 with an annual interest rate
of 10%
How much interest do you owe after 1 month?

Answer 9

12%/12= 1%

1% x 1 month x 10000=$100

Question 10

Annual interest rate equation

Answer 10

(rate/12) x months passed x $$

Question 11

ammortizing loan

Answer 11

fixed monthly payments to pay off interest and loan

Question 12

operating cash flows

Answer 12

• short term assets ( negative increase, positive decrease)
• depreciation (+)
• losses (+)
• gains (-)
• st liabilities (+ increase, negative decrease

Question 13

cash flows- investing

Answer 13

long term assets:
(-) purchase
(+)sale

Question 14

cash flows- financing

Answer 14

long term liabilities:
 - notes payable
Equity:
(+) increase
(-) decrease

Question 15

Company A:

Cash balance went up between 2014 and 2015

Cash Flow from Operations was positive

Cash Flow from Investing was negative

Cash Flow from Financing was negative

HEALTHY?

Answer 15

• operations are profitable
• investing in company
• not diluting assets
• healthy/mature

Question 16

Company C:

Cash balance went up between 2014 and 2015

Cash Flow from Operations was negative

Cash Flow from Investing was positive

Cash Flow from Financing was positive

Answer 16

• operations are not profitable
• liquidating assets
• raising money

_going bankrupt

Question 17

income statement

Answer 17

revenue,
cogs
expenses
income tax

Question 18

balance sheet

Answer 18

assets
liabilities
Equity + retained earnings

Question 19

statement of cash flows

Answer 19

operating
investing
financing

Question 20

when u buy a company, price =

FAIR VALUE PURCHASE CONSIDERATION

Answer 20

tangible assets - liabilities assumed + intangible assets (aka goodwill)

Question 21

4.	Which of the following is/are true about Goodwill? 
A)	It is an asset.
B)	It is a liability
C)	It is an equity account
D)	None of the above

Answer 21

A) It is an asset.

Question 22

13.	Fickle, Inc. purchased equipment for $1,200 on January 1, 2013, and uses straight-line depreciation. The equipment is expected to have a six-year life, with no residual value. The net book value at December 31, 2013 would be: 
A)	$1,000
B)	$1,200
C)	$200
D)	$100

Answer 22

1200/6 = 200 p/yr
1200-200=1000

A) 1000

Question 23

15. In 2017, Big Company purchased Small Company for $100,000 cash. At the time of purchase, Small Company’s assets had a fair value of $25,000 and the liabilities had a fair value of $20,000. What amount of goodwill should Big Company record?
    A) $100,000
    B) $55,000
    C) $95,000

Answer 23

C) $95,000

Question 24

12. If a company determines that an asset is impaired, income will:
    A) decrease
    B) increase
    C) not change

Answer 24

A) decrease

Question 25

non ammortizing loan

Answer 25

owing after completing all payments