quiz1 by nuhman10

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									BADM622                         MMW06 – Spring 2005 - Quiz #1                      Page 1 of 10


Directions: This quiz has been made available to you on Thursday, March 3, 2005. This
cover page and the completed answer sheets (pages 2 and 3) are to be emailed to me no
latter than 4:00 p.m. on Tuesday March 8, 2005.

Please use your 4 digit PIN as the file name (example: 1234.doc). If you cannot
remember your PIN send me an email and I will refresh your memory.

DO NOT RETURN PAGES 4 THROUGH 10 OF THIS EXAM.

In addition to the emailed cover page and the answer sheets, you must submit a signed
cover page via either a PDF file or fax (304-293-0635).

DO NOT FAX YOUR ANSWER SHEETS.

Be sure that your name or PIN appears on each page that you submit.

There are 5 parts to the quiz. Each of the questions in Part 2 and Part 5 are worth 1 point
each. All of the remaining questions on the quiz are worth 2 points each. There are a
total of 90 possible points on the quiz.

You may use your textbooks, class notes, and the instructor lecture notes for this quiz.
You are not to discuss this exam with any of your classmates or any other person
other than your instructor.


I have zero tolerance with regards to academic dishonesty.


Name (Print) _____________________________________________________
              Last Name,   First Name                   4 digit PIN



I hereby certify that I have completed this examination entirely on my own and without
the assistance of any other person. I further certify that I did not received a copy of this
exam in any form prior to March 3, 2005, and that I have not used any improper
resources (including but not limited to exams from prior semesters or other classes) to
complete this exam.

Signature: _______________________________________________________



FAILURE TO FOLLOW THE ABOVE DIRECTIONS MAY RESULT IN A
DEDUCTION OF UP TO 5 POINTS FROM YOUR QUIZ SCORE.
BADM622                 MMW06 – Spring 2005 - Quiz #1                     Page 2 of 10


Answer Sheet. USE CAPITAL LETTERS FOR MULTIPLE CHOICE. PRINT ALL
OTHER ANSWERS AS CLEARLY AS POSSIBLE.

                 Part 2                                 Part 2
Part 1.            Fin. Stmt. Component                   Fin. Stmt.   Component

1) _____          9) _____    __________                15) _____      __________

2) _____         10) _____    __________                16) _____      __________

3) _____         11) _____    __________                17) _____      __________

4) _____         12) _____    __________                18) _____      __________

5) _____         13) _____    __________                19) _____      __________

6) _____         14) _____    __________                20) _____      __________

7) _____

8) _____




Part 3                                Part 4

21)__________    26)__________        31) ____________ 35) _______________

22) __________   27)__________        32) ____________ 36) _______________

23)__________    28)__________        33) ____________ 37) _______________

24)__________    29) __________       34) ____________

25)__________    30) __________




                       Name (Type or Print) ______________________________
BADM622              MMW06 – Spring 2005 - Quiz #1             Page 3 of 10


                     Answer sheet (continued)

Part 5.


38) ______________                 52)_______________

39)_______________                 53)_______________

40)_______________                 54)_______________

41)_______________                 55)_______________

42)_______________                 56)_______________

43)_______________                 57)_______________

44)_______________                 58)_______________

45)_______________                 59)_______________

46)_______________                 60)_______________

47)_______________                 61)_______________

48)_______________                 62)_______________

49)_______________                 63)_______________

50)_______________                 64)_______________

51)_______________                 65)_______________




                     Name (Type or Print) ______________________________
BADM622                       MMW06 – Spring 2005 - Quiz #1                    Page 4 of 10


Part 1. Multiple Choice - Select the best response for each of the following questions.
Indicate your response on the attached answer sheet.



1. Under which form of ownership structure would an individual owner be subject to the
   greatest financial risk with regards to the actions of the company?
   A. Sole proprietorship
   B. Partnership
   C. Corporation
   D. All of the above have equal risk.



2. Under which form of ownership structure would the owners of a company be most
   reliant on the financial statements of the company in understanding the results of
   operations and financial position of the company?
   A. Sole proprietorship
   B. Partnership
   C. Corporation
   D. All owners need financial statements to understand how a business is doing.



3. Which of the following equations accurately reflects the relationship between the
   components in each of the equations?
   A. Net Income = revenues less expenses plus gains less losses
   B. Assets = Liabilities + Owners Equity
   C. Owners Equity = Contributed Capital plus Retained Earnings plus Other
      Accumulated Comprehensive Income less Treasury Stock
   D. Retained Earnings = Retained Earnings at the beginning of the year plus net
      income earned during the year less dividends declared during the year.
   E. All of the above equations are correct.
   F. Only equations A and B above are correct.



4. Under which form of ownership structure would the distribution of profits of a
   company to the owners be considered an expense for the company?
   A. Sole proprietorship
   B. Partnership
   C. Corporation
   D. All of the above
   E. None of the above
BADM622                       MMW06 – Spring 2005 - Quiz #1                     Page 5 of 10




5. In order for a set of financial statements to be complete in accordance with U.S.
   generally accepted accounting principles, the financial statements must include a
   balance sheet, an income statement, a statement of cash flows, a statement of changes
   in owners’ equity (or retained earnings) and which of the following:
   A. A narrative description by management of the results of operations and financial
       position of the company focusing on forward-looking information.
   B. Explanatory notes to the financial statements.
   C. A color glossy picture of the chairman of the board and chief executive officer of
       the company.
   D. A proxy statement
   E. A report from the independent accountants for the company.
   F. More than one of the above items is required.

6. By an Act of Congress, which of the following groups or agencies has the
   responsibility for establishing accounting standards in the United States?
   A. The American Institute of Certified Public Accountants.
   B. The Securities and Exchange Commission.
   C. The Financial Accounting Standards Board.
   D. The Generally Accepted Accounting Principles Board.
   E. The American Accounting Association.



7. Which of the following items would be included in current assets?
   A. Assets that are expected to be consumed in the operations of the company within
      the next six months.
   B. Assets that are expected to be converted to cash within the next 9 months.
   C. Assets that are expected to be converted to cash fifteen months after the balance
      sheet date.
   D. Assets that will be used by the company in many future fiscal years.
   E. A and B would be included as current assets.
   F. C and D would be included as current assets.



8. Transactions in which cash is exchanged after the earning process or economic
   substance occurs are referred to as which of the following?
   A. A cash basis transaction
   B. An accrued transaction
   C. A deferred transaction
   D. An adjusting entry transaction
BADM622                        MMW06 – Spring 2005 - Quiz #1                  Page 6 of 10


Part 2. For each of the items listed below, first indicate on which of the financial
statements the item will appear (BS for balance sheet, IS for Income Statement, OE for
Statement of Changes in Owners’ Equity or CF for Statement of Cash Flows), and
second for balance sheet and income statement items only, indicate if the item is a
component of assets, liabilities, owners equity, revenues or expenses.

                                             Financial
                                             Statement            Component
Example: Cash                                BS                   Asset

9. Accounts receivable                       _____                __________

10. Accounts payable                         _____                __________

11. Inventory                                _____                __________

12. Cost of goods sold                       _____                __________

13. Dividends Paid                           _____                __________

14. Treasury stock                           _____                __________

15. Income taxes payable                     _____                __________

16. Accumulated depreciation                 _____                __________

17. Unearned (deferred) revenue              _____                __________

18. Accrued salaries payable                 _____                __________

19. Property, plant & equipment              _____                __________

20. Dividends payable                        _____                __________


Be sure to record all of you answers on the answer sheet.
BADM622                        MMW06 – Spring 2005 - Quiz #1                    Page 7 of 10


Part 3. Indicate the amount of revenue and/or expense that will be recognized in each of
the following situations. Note that each of the situations are independent of the anothers
unless specifically stated in the question.

Your answers should be based solely on the information presented in each situation.

Example: During the month of June a company provided $60,000 of consulting services
and collected cash of $20,000 from customers. How much revenue should be recognized
during the month of June?           Answer. $60,000 revenue
                                Or Answer. $20,000 revenue
                                Or Answer. $40,000 revenue

Note: record all of your answers on the answer sheet.

21. During the month of January, a newly formed company received capital
contributions of $100,000 from investors, with a promise to receive an additional
$200,000 in February. How much revenue should be recognized in January?

22. During the month of March a company purchased $85,000 of inventory paying cash,
and purchased another $40,000 worth of inventory on account. How much expense
should the company recognize in March as a direct result of these transactions.

23. At the beginning of the fiscal year a company had $150,000 of accounts receivable.
During the fiscal year the company made cash sales of $1,500,000 and sales on account
of $1,200,000. Accounts receivable at the end of the year was $250,000. How much
sales revenue should be reported on the income statement for the fiscal year?

24. On March 31, 2002 a company paid $48,000 for a 12-month insurance policy
covering the period April 1, 2002 through March 31, 2003. How much expense should
the company recognize during the fiscal year ended December 31, 2002?

25. A company began the fiscal year with $68,000 of office supplies on hand. During
the year the company purchased $270,000 of office supplies, paying cash of $245,000.
The remaining $25,000 was still payable at the end of the fiscal year. Also at the end of
the fiscal year, the company determined that there was only $30,000 of office supplies
still on hand. How much Office Supplies Expense should the company recognize for the
fiscal year?

26. In December of 2001, a company’s Board of Directors declared a $40,000 dividend
payable to shareholders. $20,000 was paid in December and the remaining $20,000 was
to be paid in June of 2002. How much expense will be recognized in December?
BADM622                        MMW06 – Spring 2005 - Quiz #1                     Page 8 of 10


Part 3 Continued (use instructions from the previous page)

    Use the following for questions 27 and 28.
During the month of July, a law firm provided $250,000 worth of legal services to clients
at a cost to the firm of $100,000. The firm mailed invoices to the clients for these
services in early August and received $200,000 in payments during August. The
remaining $50,000 was received in early September.

27. How much revenue should the firm recognize in July?

28. How much expense should the firm recognize in July?




29. On September 1, 2002 a company borrowed $300,000 from a bank to provide needed
working capital. The loan requires semi-annual payments of $50,000 plus interest at a
rate of 5% per year. The first payment is due on March 1, 2003. How much interest
expense will the company recognize during the fiscal year ended December 31, 2002?

30. In an effort to ensure satisfactory net income for the shareholders, the chief executive
officer of a company decided that the company would not pay any bills that were
received after December 15, 2002 until the following month. The Company’s fiscal year
ends on December 31, 2002. As of December 31, 2002, a total of $80,000 of bills for
services received in December was unpaid. In January the company received bills for an
additional $20,000 worth of services received in December. Of the $100,000 in question,
how much expense should be recognized in the fiscal year ended December 31, 2002?
BADM622                       MMW06 – Spring 2005 - Quiz #1                    Page 9 of 10




Part 4. Use the following information to answer questions 31 through 37.

Sandra’s Soccer Balls Inc. was founded on February 22, 2004, with a capital contribution
of $5,000. The owners did not invest any additional funds in to the company. As of
December 31, 2004, the Company had total assets of $35,000 and total liabilities of
$18,000. Expenses from the date of incorporation through December 31, 2004 were
$65,000 and the firm recognized net income of $12,000. (Answer questions 31 - 33)

For the year ended December 31, 2005, the Company, recognized total revenues of
$385,000. There were no additional capital contributions to the company by the owners
during the year ended December 31, 2005. In December of 2005, the company made its
first and only distribution of earnings to the owners, which amounted to $50,000. As of
December 31, 2005 the Company had total assets of $325,000 and total retained earnings
of $42,000. (Be sure to consider your answers for 31-33 when you attempt questions 34-
37)

Note: You need not consider non-operating gains or losses, Treasury Stock or Other
Accumulated Comprehensive Income/(Loss) for this problem. There were none.


31. What was the amount of total owners’ equity as of December 31, 2004?

32. What was the amount of retained earnings as of December 31, 2004?

33. What was the amount of total revenues recognized during the period ended
December 31, 2004?



34. What was the amount of total owners’ equity as of December 31, 2005?

35. What was the amount of total liabilities as of December 31, 2005?

36. What was the net income recognized during the year ended December 31, 2005?

37. What was the total amount of expenses recognized during the year ended December
31, 2005?
BADM622                        MMW06 – Spring 2005 - Quiz #1                     Page 10 of 10


Part 5 – Questions 38 through 65 relate to the Mylan Laboratories Inc. 2004 Annual
Report to Shareholders, which can be downloaded from the course web sight or can be
access on-line at http://www.mylan.com/shareholder/annuals/

Unless stated to the contrary, the questions relate to balances as of the end of the most
recent fiscal year and/or activity for the year then ended.

38. Who are the independent auditors for Mylan?
39. On what pages of the annual report do Mylan’s complete US GAAP financial
statements appear?
40. What is the last day of Mylan’s fiscal year?
41. What was the amount of total assets?
42. What was the amount of total liabilities?
43. How much working capital does Mylan have?
44. What is Mylan’s current ratio?
45. Compared to an industry norm current ratio of 2.5 to 1 is Mylan proportionately
more liquid or less liquid?
46. What is Mylan’s debt to equity ratio?
47. Compared to the previous fiscal year does Mylan appear to have more or less
financial flexibility as of the end of the most recent fiscal year?
48. Was Mylan’s comprehensive income more or less than its Net Income?
49. What was the percentage increase or decrease in Net Revenues from the previous
fiscal year to the current fiscal year?
50. What was the gross profit as a percentage of net revenues?
51. Compared to the industry norm gross profit percentage of 72%, do Mylan’s products
appear to be more or less valuable than those of the industry as a whole?
52. For every $1 of total revenue earned, how much did the company spend on selling
and marketing?
53. What was Mylan’s effective tax rate?
54. What was Mylan’s profit margin?
55. What was the percentage change in diluted earnings per share from the prior year?
56. What was the return on equity for the most recent fiscal year?
57. What was the return on assets for the most recent fiscal year?
58. Did Mylan’s operating activities provide more or less cash flow than the previous
year?
59. Did Mylan borrow any new amounts during the most recent fiscal year?
60. Did Mylan repurchase any shares of stock from investors during the most recent
fiscal year?
61. What percentage of Mylan’s operating cash flows were used to pay dividends?
62. What percentage of Mylan’s operating cash flows were used to acquire capital
assets?
63. Of Mylan’s total inventory how much was classified as finished goods?
64. Does Mylan have any “Goodwill” included in its financial statements? If yes is this
an asset, liability or component of owners’ equity?
65. Does Mylan provide post-retirement medical benefits to its employees?

								
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