Question

1. In most business organizations, the chief financial officer reports to the controller.

True or False

2. The account Investment in Bonds is reported

a. at cost as a long-term asset

b. at cost as a long-term liability along with the current portion reported as a current liability

c. at fair market value because that is all that is required

d. at cost as a long-term asset less discount on Bond Investments or Plus Premium on Bond Investments

3. on the income statement, net sales are indicated as 100% using vertical analysis.

True or False

4. an analysis in which all the figures of an income statement are expressed as percentage with no dollar values shown

a. vertical analysis

b. percentage analysis

c. common-size analysis

d. horizontal analysis

5. Dividend yield is not computed on

a. only stock sold above par

b. preferred stock

c. common stock

d. either common or preferred stock

6. Cash dividends of $50,000 were declared during the year. Cash dividends payable were $20,000.00 and $10,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is

a. 60,000

b. 70,000

c. 40,000

d.50,000

7. Temporary investments are reported at their cost which would exclude brokers comissions.

True or False

There is a clear advantage of using the indirect method when reporting cash flows from investing activities versus using the direct method.

True or False

Any help would be wonderful

Answer 1

1. FALSE, because CFO is responsible for analyzing the financial data, reviewing it and reporting financial performance. He is also responsible for budgetary control. So, the controller reports to the CFO, not the other way round.

2. Investment in Bonds should be reported at cost as a long-term asset because it represents the company's investment and should always appear on the asset side of the Balance Sheet.

3. TRUE, net sales are indicated as 100% using vertical analysis in Income Statement.

4. Vertical analysis, is an analysis in which all the figures of an income statement are expressed as a percentage with no dollar values shown.

5. Preferred stock, the Dividend Yield is not computed on preferred stock.

6. The formula is: Opening Cash dividends + Cash dividends declared during the year - Closing Cash dividends; ie, 20000+50000-10000= $60000

7. TRUE, Temporary investments are reported at their cost excluding brokerage.

8. FALSE, because the only differnece in direct and indirect method is in Cash Flows from Operating activities, rest all remains same under both the methods.