Question1. The convention of consistency refers t

1. The convention of consistency refers to consistent use of accounting principles:

among firms
within industries
among accounting periods
throughout the accounting period

2. Jayadev Athreya has started his first job. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years?

$2,667,904
$3,594,524
$1,745,600
$5,233,442

3. Variance reports are:

SEC financial reports
internal reports for management
external financial reports
all of these

4. Horizontal analysis is also known as:

linear analysis
vertical analysis
common size analysis
trend analysis

5. Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.

What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.

$1,787 million
$1,344 million
$1,315 million
$453.6 million

6. Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)

$1,066
$923
$1014
$972

7. How firms estimate their cost of capital: The WACC for a firm is 13.00 percent. You know that the firm’s cost of debt capital is 10 percent and the cost of equity capital is 20% What proportion of the firm is financed with debt?

33%
50%
70%
30%

8. The cash conversion cycle?

estimates how long it takes on average for the firm to collect its outstanding accounts receivables balance.

begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.

begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.

shows how long the firm keeps its inventory before selling it.

9. The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called:

responsibility accounting
flexible accounting
master budgeting
static reporting

10. Which of the following financial statements is concerned with the company at a point in time

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