St.

Marys College of Meycauayan

Meycauayan City, Bulacan
Business and Accountancy Program
Managerial Accounting Final Examination

Name: ______________________________________________
______________________

Score:

Year and Course: ______________________________________Date:

______________________
Part 1: Basic Financial Statements Users and Theories
Instruction: Select the best answer to the following multiple choice
questions.
1. The management of ABC Corporation is analyzing the financial statements of
XYZ Corporation because ABC is strongly considering purchasing a block of
XYZ common stock that would give ABC significant influence over XYZ. Which
financial statement should ABC primarily use to assess the amounts, timing,
and uncertainty of future cash flows of XYZ Company?
A. Income statement.
B. Statement of cash flows.
C. Statement of retained earnings.
D. Balance sheet.
2. Financial statement users with a direct economic interest in a specific business
include
A. Financial advisers.
B. Stock markets.
C. Suppliers.
D. Regulatory bodies.
3. A companys pre-closing trial balance and other pertinent information at
December 31 are as follows. The opening balance of inventory was $140,000. The
long-term debt pays interest at a rate of 10% per annum, payable every 12 months.
The debt was issued on July 1 of the current year and originally had 5 years to
maturity. The fixed assets have a 10-year estimated useful life and were 1 year old
at the start of the current year. Straight-line depreciation is used by the company.
Dr.
Cr.
Cash
$ 80,000
Accounts receivable
100,000
Inventory
230,000
Gross fixed assets
600,000
Accumulated depreciation
60,000
Accounts payable
180,000
Long-term debt
1,000,000
Common stock
210,000
Retained earnings (Jan. 1)
500,000
Sales revenue
750,000
Purchases
530,000
Administrative expenses 200,000

The company will report year-end total assets of

A. $950,000
B. $800,000
C. $890,000
D. $1,010,000
4. Perry Mansfield Corporation has the following accounts included in its December
31 trial balance:
Accounts receivable
$110,000
Inventories
250,000
Patents
90,000
Prepaid insurance
19,500
Accounts payable
72,000
Cash
28,000
What amount of current assets should Perry Mansfield include in its statement of
financial position at December 31?
A. $479,500
B. $407,500
C. $335,500
D. $388,000
5. Which of the following assets is normally considered the most liquid?
A. Goodwill.
B. Accounts receivable.
C. Land.
D. Inventory.
6. A financial statement includes all of the following items: net income,
depreciation, operating activities, and financing activities. What financial statement
is this?
A. Statement of cash flows.
B. Balance sheet.
C. Statement of changes in equity.
D. Income statement.

Part 2: Basic Financial Statement Analysis Financial Ratios

A. Starbucks Corporation is the leading retailer and roaster of specialty coffee in
North America selling freshly brewed coffee, pastries, coffee beans. Data
from the companys financial statements are as follows:

Required:
I. Compute for the following
financial ratios:
1. Compute the return on total assets.

2. Compute the return on common stockholders equity.

3. Compute the current ratio.

4. Compute the acid-test ratio.

5. Compute the inventory turnover.

6. Compute the average sale period.

7. Compute the debt-to-equity ratio.

II. Express the years balance sheet and income statement in common-size
percentages. Carry computations to one decimal place.
III. Comment briefly on the common-size percentages.

B. Kervin Optronics, ALS, of Bergen, Norway, had a current ratio of 2.5 on June
30 of the current year. On the date, the companys assets were:

The Norwegian currency is the krone, denoted here by the symbol KR.
Required:
1. What was the companys working capital on June 30?
2. What was the companys acid-test ratio on June 30?