Delta Air Lines Investor Document - PowerPoint

							• 1. The 2003 records of Thomasville
  Company showed beginning inventory,
  $50,000; cost of goods sold, $100,000;
  and ending inventory, $60,000. The
  purchases for 2003 equal
•    a. $100,000
•    b. $90,000
•    c. $110,000
•    d. $120,000
• 2. Which of the following is an example of a
  typical institutional investor.
•     a.     The officers of Callaway Golf who own
             shares of stock in the company
•     b.     Employees who participate in a stock
             option plan and own shares of
             Callaway Golf
•     c.     The mutual funds managed by Fidelity
             Management and Research
•     d.     All of the above are institutional
             investors
• 3. On December 31, 2003, the end of the accounting
  period, Dunn Company has on hand 5,000 units of a
  resale item which cost $21 per unit when purchased on
  June 15, 2003. The selling price is $35 per unit. On
  December 30, 2003, the cost had dropped to $20 per
  unit. In view of the large quantity of units on hand, no
  purchases are anticipated in the next six to nine months.
  At what inventory amount should the 5,000 units be
  reported?
•      a.     $175,000.
•      b.     $110,000.
•      c.     $105,000.
•      d.     $100,000
• 4. The Securities and Exchange
  Commission's (SEC report that is required
  to be filed if any special event occurs that
  is material in amount is the
•     a. Form 10K
•     b. Form 8K
•     c. Form 10Q
•     d. Prospectus
• 5. On March 1, Chapine Company purchased a
  new stamping machine for $5,000. Chapine paid
  cash for the machine. Other costs associated
  with the machine were: transportation costs,
  $300; sales tax paid $200; and installation cost,
  $100. The cost recorded for the machine was
•     a.    $5,200.
•     b.    $5,600.
•     c.    $5,500.
•     d.    $5,000.
• 6. Johnstone Co. uses the periodic inventory system.
  The following information about their inventory of Model
  ZZ Mountain Bicycles is available:
• Date
• TransactionNumber of UnitsCost per Unit1/1Beginning
  Inventory50$8004/12Purchase80$8207/8Purchase75$8
  409/22Purchase90$850
•     During the year, 235 bicycles were sold at a price of
  $1,500 each. Round final answers to the nearest dollar.
  What was ending inventory and cost of goods sold on
  12/31 under the FIFO cost flow assumption? Round final
  answers to the nearest dollar.
•     a.     $51,000 and $194,100
•     b.     $48,200 and $196,900
•     c.     $49,851 and $195,249
•     d.     None of the above.
• 7. The primary qualities of accounting
  information that increase the usefulness to
  decision makers are
•     a. relevance and cost-benefit.
•     b. reliability and comparability.
•     c. materiality and relevance.
•     d. reliability and relevance.
• 8. Which of the following condition(s)
  must be met for an item to be disclosed as
  extraordinary on the income statement?
•    a. It must be unusual in nature.
•    b. Extraordinarily large in
          comparison to other items on the
          income statement.
•    c. Infrequent in occurrence.
•    d. Both A and C.
9. Which of the following statements is true?
a. Depreciation expense is added to net income in
   the operating activities section of the statement
   of cash flows because it had no cash effect on
   net income under the indirect method.
b. Depreciation is a non-cash expense that
   reduces net income but involves no outflow of
   cash.
c. The only cash effect for depreciation is the tax
   savings provided by its deduction to derive
   taxable income.
d. All of the above are true.
• 10. Which of the following describes the
  conservatism constraint?
•      a.   Avoid overstating assets and revenues
  and avoid understating expenses and liabilities.
•      b.   The benefits of accounting for and
  reporting information should outweigh the costs.
•      c.   Amounts that are large enough to
  influence a user's decisions.
•      d.   Differences due to long-standing and
  accepted accounting and reporting in a
  particular industry.
11.In 1998, Delta Air Lines had a fixed asset turnover of
   1.63 compared to Southwest Airlines of 1.10. What is
   the most likely cause of Delta's higher ratio? (FATO =
   Sales / Average Net Fixed Assets)
a. Delta is less efficient in generating net sales from its
   operational assets.
b. Delta is more efficient at generating net income from
   employing its operational assets.
c. Delta is able to generate greater sales from its
   operational assets.
d. Delta is able to generate less net income from its
   operational assets.
12.Under the FIFO cost flow assumption during a
   period of inflation, which of the following is false?
a. Income tax expense will be higher than under
   LIFO.
b. Gross margin will be higher than under LIFO.
c. Ending inventory will be lower than under LIFO.
d. Cost of goods sold will be lower than under
   LIFO.
13.Waves Inc. issues 100,000 shares of its $.10
  par stock for $20 per share. Which of the
  following would NOT be an effect of that sale?
•      a.   Cash would increase by $2,000,000
•      b.   Total stockholders’ equity would
  increase by $2,000,000
•      c.   Common stock would increase by
  $10,000
•      d.   Capital paid in excess of par (Paid in
  Capital) would increase by $2,000,000
• 14. Bethany Company plans to depreciate a new
  building using declining-balance depreciation with 200
  percent acceleration rate. The building cost $400,000.
  The estimated residual value of the building is $50,000
  and it has an expected useful life of 25 years. Assuming
  the first year's depreciation expense was recorded
  properly, what would be the amount of depreciation
  expense for the second year?
•      a.     $15,360.
•      b.     $16,000.
•      c.     $29,440.
•      d.     $32,000.
• 15. If a company increases their inventory
   turnover ratio from last year to the current year,
   which of the following would cause that
   increase? (ITO= COGS/ Average Inventory)
a. Reduction of inventory levels
b. Speedier production processes
c. Increasing sales at a faster rate than the growth
   in inventory while maintaining a constant gross
   profit percentage
d. All of the above
• 16. When preparing the monthly bank
   reconciliation, the accountant for Tiffany Toys
   noted that a check received from a customer last
   month for $89 was marked NSF and returned
   along with the bank statement. In reconciling
   the bank balance with the company's cash
   account, the $89 should be
a. deducted from the company's cash balance.
b. added to the bank balance.
c. deducted from the bank balance.
d. added to the company's cash balance.
17. Intangible assets include
a.Natural resources, patents, and
  trademarks.
b.Accounts receivable, franchises, and
  trademarks.
c.Copyrights, licenses, and land.
d.Leaseholds, patents and copyrights.
• 18. Bangor Industries purchased a car for $35,000 on
  January 1, 2003. The car had an estimated useful life of
  80,000 miles and an estimated residual value of $8,000.
  In the second year of ownership (2004), the car was
  driven 25,000 miles. Using the units of production
  method, the amount of depreciation expense for 2004
  was
•      a.    $10,938.
•      b.    $ 8,438.
•      c.    $ 9,538.
•      d.    $11,238.
• 19. When goods are sold to a customer with
   credit terms of 2/15, n/30, the customer will
a. receive a 15% discount if they pay within 2 days.
b. receive a 2% discount if they pay 15% of the
   amount due within 30 days.
c. receive a 15% discount if they pay within 30
   days.
d. receive a 2% discount if they pay within 15 days.
• 20. In 2001, Toys “ R” Us had an accounts payable
   turnover ratio of 5.65; in 2000, 5.49 and 6.08 in 1999.
   Which statement is true about what the ratios indicate?
   (PTO = COGS / Average Accounts Payable)
a. Toys “R” Us is taking longer to pay its vendors in 2001
   versus 2000.
b. Toys “R” Us is taking more time to pay vendors in 2001
   than in 1999.
c. Toys “R” Us appears to be paying off their accounts
   payable in about 30 days on average.
d. Both B and C are true.
• 21. Amgen and Genentech are competitors in the
   biotechnology market. In 2000, Amgen reported a gross
   profit percentage of 87.2% while Genentech's
   percentage was 71.5%. What is the most likely cause of
   Amgen's higher gross profit percentage? (GP% = Gross
   Profit/ Net Sales)
a. Lower product selling prices for Amgen.
b. Lower product costs for Amgen.
c. Genentech's inability to control selling and administrative
   expenses.
d. Both B and C led to a higher gross profit percentage for
   Amgen
• 22. A company recorded net purchases of $20.3
  billion for 2004. In 2003, ending accounts
  payable was $1.2 billion and in 2004, it was $1.6
  billion. How much cash was paid to suppliers in
  2004?
•      a.     $18.7 billion
•      b.     $19.9 billion
•      c.     $21.9 billion
•      d.     $20.7 billion
• 23. On January 31, 2004, Low Company wrote
  off an uncollectible account of $2,000. The
  allowance method is used. The write-off would
  cause bad debt expense to
•     a.    decrease $2,000.
•     b.    increase $2,000.
•     c.    be unchanged.
•    d.    None of the above is correct.
• 24. A contingent liability that is “reasonably
   possible” but “cannot reasonably be estimated”
a. must be recorded and reported as a liability.
b. does not need to be recorded or reported as a
   liability.
c. must only be disclosed as a note to the financial
   statements.
d. must be reported as a liability, but not recorded.
• 25. On September 30, 2003, Mixx Inc. sold a used
  industrial crane for $800,000 cash. The original cost of
  the crane was $5.0 million and its accumulated
  depreciation equaled $3.8 million on December 31,
  2002; they had been using the straight-line depreciation
  method. The estimated residual value was zero and its
  useful life was 25 years. What is the gain or loss on the
  equipment on September 30, 2003? (Hint: remember to
  depreciate up to the date of sale)
•     a.       $250,000 loss
•     b.       $400,000 gain
•     c.       $200,000 loss
•     d.       $200,000 gain
26. A company had credit sales of $5.0 million for the year and
   estimates their bad debts to be 1% of net credit sales.
   Accounts receivable has a $450,000 balance and the
   allowance for doubtful accounts has a credit balance of
   $3,000 prior to adjustment. The transaction analysis entry to
   adjust the books when the net credit sales method is used to
   account for bad debts will be:
a. An increase to the bad debts expense account for $50,000
   and an increase to accounts receivable for $50,000.
b. An increase to bad debts expense for $47,000 and a
   decrease to the allowance for doubtful accounts for $47,000.
c. An increase to bad debts expense for $50,000 and an
   increase to the allowance for doubtful accounts for $50,000.
d. An increase to bad debts expense for $47,000 and a
   decrease to accounts receivable for $47,000.
• - Use the following Time Value of
  Money tables to complete the next two
  questions--
Present Value Factor of $1, i=6%, t=5………………….0.7473
Present Value Factor of a $1 Annuity, i=6%, t=5………4.2124
Future Value Factor of $1, i=6%, t=5…………………..1.3382
Future Value Factor of a $1 Annuity, i=6%, t=5……….5.6371
• 27. How much would Jordan have to deposit in
   the bank today if she will be earning a 6%
   annual rate of return and wants to have $5,000
   in the bank at the end of five years? (Round to
   the nearest dollar).
a. $3,737.
b. $4,212.
c. $4,737.
d. $5,637.
• 28. How much would Jordan have to deposit in
   the bank at the end of each of the next five
   years if she wishes to have $5,000 in the bank at
   the end of that time period, assuming she will be
   earning 6% annual rate of return? (Round to the
   nearest dollar).
a. $ 887.
b. $ 943.
c. $1,000.
d. $1,187.
• 29. In 2000, Timberland reported a receivables turnover
   ratio of 11.8 and their competitor, Wolverine World Wide,
   reported a ratio of 4.2. Which of the following is false?
   (RTO = Sales / Average Accounts Receivable)
a. Wolverine needs to increase their ratio in order to
   improve collection time.
b. Wolverine needs to focus on improving their credit and
   collection process.
c. Wolverine has done a better job of collecting their
   receivables than Timberland.
d. All of the above are true.
30.Goodman Company borrowed $100,000 cash on September 1, 2004, and
   signed a one-year 12%, interest-bearing note payable. The required
   adjusting entry at the end of the accounting period, December 31, 2004,
   would be:
a.Interest expense                4,000
     Interest payable                      4,000
b.Interest expense                12,000
     Interest payable                    12,000
c.Notes payable                   100,000
  Interest expense                 12,000
     Cash                                112,000
d.Interest payable                4,000
     Interest expense                      4,000
Sunny Corporation reports a gross profit of $3,500,000 and
a gross profit percentage of 35%. What amount of cost of
goods sold did Sunny report for the period? (Hint: Gross
Profit Percentage = Gross Profit ÷ Net Sales
a.    $ 1,225,000
b.    $ 3,750,000
c.    $ 6,500,000
d.    $10,000,000
When a company writes off an uncollectible account, bad
   debt expense
a. increases.
b. decreases.
c. is equal to the amount in the allowance for doubtful
   accounts.
d. is unaffected.
Kelley’s TV Corporation had the following information in its inventory
     records for the month of March 2005.
3/1/05 Beginning Inventory               5000 units @ $200 per unit
3/4/05 Sale                              4000 units @ $500 per unit
3/10/05 Purchase                         3500 units @ $210 per unit
3/20/05 Sale                             3000 units @ $500 per unit
3/29/05 Purchase                         2500 units @ $220 per unit
     Assuming Kelley’s uses the LIFO method, what amount of cost of
     goods sold and ending inventory should Kelley’s report in its
     financial statements for the month ended March 31, 2005?
•    Cost of goods sold          Ending inventory
•    a.          $1,420,000      $865,000
•    b.          $1,470,000      $815,000
•    c.          $1,485,000      $800,000
•    d.          $2,285,000      $545,000
•    Harris Company issued 10,000 shares of its $1 par
     common stock for $25 per share. When Harris records
     this transaction,
a.   paid in capital will increase by $240,000
b.   common stock will increase by $250,000
c.   total stockholders equity will increase by $10,000
d.   cash will increase by $10,000
•    The 2005 records of Tom Company showed beginning
     inventory of $6,000; purchases of $16,000; and cost
     of goods sold of $14,000. What amount of ending
     inventory was reported for 2005?
a.   $8,000
b.   $10,000
c.   $12,000
d.   $14,000