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Finance Homework Help

Question 16.

16. (TCO 3) The most popular depreciation method for financial reporting is (Points : 5)

       straight line.

       double declining.

       units of production.

       sum of the years.

Question 17.

17. (TCO 7) Smith Company had retained earnings of $60,000 at the end of the current year. For the current year, income was $30,000, and dividends were $10,000. What was the balance in retained earnings at the end of the prior year? (Points : 5)

       $40,000

       $20,000

       $60,000

       $20,000

Question 18.

18. (TCO 5) Company A uses LIFO and Company B uses FIFO for inventory valuation. Otherwise, the firms are of similar size and have the same revenue and expense. Assume inflation. In analyzing liquidity and profitability of the two firms, which of the following will hold true? (Points : 5)

       It is impossible to compare two firms with different inventory methods.

       Company B will have relatively higher profit and higher inventory turnover.

       Company B will have relatively higher profit and lower inventory turnover.

       Company A will have a higher current ratio and acid test ratio, with the same profit.

       Company B will have relatively higher profit and a higher current ratio.