Business Performance
Understanding Accounting Concepts and Business Performance Evaluation
1. The principle or assumption dictating that efforts (expenses) be matched with accomplishments (revenues) is called? Matching Principle
2. One of the following statements about the accrual basis of accounting is false. That statement is: Expense is recorded before the sales has been carried out.
3. In periods of rising prices, LIFO will produce following effect on net income:
1. Lower ending inventory and lower income
4. Rickety Company purchased 1,000 widgets and has 200 widgets in its ending inventory at a cost of $91 each and a current replacement cost of $80 each. What is the ending inventory under lower of cost or market?200*80=16000,
5. Atlantis Company's ending inventory is understated $4,000. The effects of this error on the current year's cost of goods sold and net income, respectively, are understated(overstated)/overstated(understate).
6. When there is a change in estimated depreciation when is correction made?
Current and future
7. For 2007, FP Ltd had net income of Rs1,000,000. At 1January 2007, there were 1,000,000 shares outstanding. On 1July 2007, the company issued 100,000 new shares for Rs20 per share. The company paid Rs200, 000 in dividends to common shareholders. What is FP Ltd’s basic earnings per share for 2007?
8. CSI Ltd had 1,000,000 average shares outstanding during all of 2007. During 2007, CSI also had 10,000 options outstanding with exercise prices of Rs10 each. The average stock price of CSI during 2007 was Rs15. For purposes of computing diluted earnings per share, how many shares would be used in the denominator?
9. Nutmeg, Inc. uses the LIFO method to account for inventory. During years in which inventory unit costs are generally rising and in which the company purchases more inventory than it sells to customers. What is the impact on gross profit compared with FIFO method?
10. SC Ltd reported 2007
1. The principle or assumption dictating that efforts (expenses) be matched with accomplishments (revenues) is called? Matching Principle
2. One of the following statements about the accrual basis of accounting is false. That statement is: Expense is recorded before the sales has been carried out.
3. In periods of rising prices, LIFO will produce following effect on net income:
1. Lower ending inventory and lower income
4. Rickety Company purchased 1,000 widgets and has 200 widgets in its ending inventory at a cost of $91 each and a current replacement cost of $80 each. What is the ending inventory under lower of cost or market?200*80=16000,
5. Atlantis Company's ending inventory is understated $4,000. The effects of this error on the current year's cost of goods sold and net income, respectively, are understated(overstated)/overstated(understate).
6. When there is a change in estimated depreciation when is correction made?
Current and future
7. For 2007, FP Ltd had net income of Rs1,000,000. At 1January 2007, there were 1,000,000 shares outstanding. On 1July 2007, the company issued 100,000 new shares for Rs20 per share. The company paid Rs200, 000 in dividends to common shareholders. What is FP Ltd’s basic earnings per share for 2007?
8. CSI Ltd had 1,000,000 average shares outstanding during all of 2007. During 2007, CSI also had 10,000 options outstanding with exercise prices of Rs10 each. The average stock price of CSI during 2007 was Rs15. For purposes of computing diluted earnings per share, how many shares would be used in the denominator?
9. Nutmeg, Inc. uses the LIFO method to account for inventory. During years in which inventory unit costs are generally rising and in which the company purchases more inventory than it sells to customers. What is the impact on gross profit compared with FIFO method?
10. SC Ltd reported 2007