(1) ABC Company had purchased a land 2 years ago by paying $3 million. The company sold the land at the price of $2 million this year. Which of the following answers is correct?

1. The loss does not occur from this transaction but the cash position declines.
2. The loss occurs from this transaction and the cash position also declines.
3. Although the loss occurs from this transaction, the cash position increases.

(2) Mr. Bill Gatess ownership in Microsoft is about 4%. If Microsoft issues new shares and Mr. X purchases all the new shares, which of the following answers is wrong?

1. Microsoft receives cash from Mr. X.
2. Mr. Bill Gatess ownership declines.
3. Mr. Bill Gates receives cash from Mr. X.

(3) You purchased Toyota Motors stocks and bonds in year 2015. The maturity of the bond is in year 2025. Now in year 2021, you are thinking whether you can sell the stocks and bonds to Toyota. Which answer is correct?

1. Toyota does not have to buy the stocks nor bonds from you.
2. Toyota should buy both stocks and bonds from you.
3. Toyota should buy the bonds from you but not stocks.

(4) In which case will the asset turnover decline?

1. The rate of sales increase is lower than the rate of asset increase.
2. The rate of sales increase is higher than the rate of asset increase.
3. The company lowered inventory level but sales increased.

(5) In order to lower the level of debt, you have proposed the following 3 options. Which is wrong?

1. To raise turnover of account payable
2. To raise turnover of inventories
3. To raise turnover of account receivable

(6) Which explanation is wrong?

1. Balance sheet shows a companys assets, liabilities and net assets at one point of time.
2. Balance sheet explains the reasons which have caused the changes in cash position.
3. Income statement shows a profit (or loss) but does not show the changes of cash position.

(7) You compared three companies in terms of ROA and ROE.

The ranking of ROA is: A company B company C company. The ranking of ROE is: A B C.

Which company has the lowest leverage among the three companies?

1. Company A
2. Company B
3. Company C

(8) Company Xs sales in year 2014 and year 2015 were the same. Total asset turnover of each year was also the same. The company realized a profit but did not pay dividend in year 2015. Which opinion is wrong?

1. The amount of total liabilities at the end of 2015 is higher than that of year 2014.
2. The amount of equity at the end of 2015 is higher than that of year 2014.
3. The amounts of total assets at the end of year 2014 and year 2015 are the same.

(9) Generally speaking, which opinion is correct?

1. Business risk of game soft companies is considered higher than companies which lend office buildings.
2. Game soft companies can have higher leverage than companies which lend office buildings.
3. Company A and Company B belong to the same industry. ROE of A is higher than B. Therefore, it can be concluded that Company As performance is better than Company B.

(10) Company A wants to raise the level of ROE (Return on equity). Which opinion is wrong?

1. To increase the amount of equity through issuing new shares
2. To raise total asset turnover.
3. To raise profit margin.

(11) Company A purchased a machine and paid 200 million yen at the beginning of year 2021. The machine will be used for 10 years and will be disposed at the end of year 2030. Which opinion is wrong?

1. According to the straight line depreciation method, the book value of this machine at the end of year 2022 is 160 million yen.
2. Both the payment and expense of this machine in year 2021 is 200 million yen.
3. According to the straight line depreciation method, the depreciation expense in the year 2021 is 20 million yen.

(12) ABC Company showed the following financial result in year 2020:

Net profit margin was 5.5% and total asset turnover was 1.2 times.

The company expects the performance of year 2021 as follows:

Net profit margin will be 5.8% and total asset turnover will be 1.1 times.

Which analysis is correct?

1. ROA (return on assets) will be higher in year 2021 than in year 2020.
2. ROA (return on assets) will be the same in year 2021 and in year 2020.
3. ROA (return on assets) will be lower in year 2021 than in year 2020.