QUESTION: 1797

Which of the following is used to calculate the actual adjustment for bad debt expense for the period?

aging
percent of accounts receivable
percent of net sales
all of these answers are correct

Answer(s): C

Explanation:

The aging and percent of Accounts Receivable methods calculate what the balance of the allowance account should be, however, percent of net sales method calculates the actual expense for the period.

Reveal Solution Next Question

QUESTION: 1798

Ratios are best interpreted when compared to which of the following?

Predetermined standards.
The ratios of prior periods.
All of these answers are correct.
Ratios of competitors.

Answer(s): C

Explanation:

Ratios are best interpreted when compared to, the ratios of prior periods, predetermined standards, and the ratios of competitors.

Reveal Solution Next Question

New Gestalt, Inc., a software firm had a net income of 1.7 million last year. It has 200,000 common shares and 300,000 convertible bonds with face value of 100 outstanding. The convertible bonds carry a coupon of 4% and can be converted one-for-one. The average stock price last year was 39 and the maximum price was 57. The effective interest rate on the convertible debt is 8%. New Gestalt issued 100,000 preferred shares with face value 100 and a coupon of 5% on March 31st of last year. Assume the convertible bonds are dilutive and that New Gestalt faces a 30% tax rate. Given the above, the number of shares used in Diluted EPS equals ________.

575,000
500,000
600,000
200,000

Answer(s): B

Explanation:

With dilution, there are 300,000 additional shares from the convertible bonds. Preferred equity does not count.
Therefore, the number of shares used in Diluted EPS equals 200,000 + 300,000 = 500,000.

Reveal Solution Next Question

QUESTION: 1800

The ROE equals:

profit margin times equity turnover.
II. profit margin times asset turnover times financial leverage.
III. financial leverage times sales-to-debt ratio.
none of these answers
II & III
I & II
I, II & III

Answer(s): C

Explanation:

ROE = Net income/Equity
= (Net income/sales)*(sales/equity)
= (profit margin)*(equity turnover).
You can also express this as:
ROE = Net income/Equity
= (Net income/sales)*(sales/total assets)*(total assets/equity) = (profit margin)*(asset turnover)*(financial leverage)

Reveal Solution Next Question

Free CFA-Level-I Exam Braindumps (page: 450)

QUESTION: 1797

Explanation:

QUESTION: 1798

Explanation:

QUESTION: 1799

Explanation:

QUESTION: 1800

Explanation: