11 Lease payments are classified as a. capital improvements b. financing cash flows c. investing cash flows d operating cash flows 12 The amount reported on the balance sheet for pension and other post-employment obligations, also known as funded status a. is the future value of all expected cash flows from the pension funds b. is a net amount consting of projected benefit obligations less pension plan assets c. is the non-risk adjusted sum of all expected cash flow disbursements from pension contributions d the adjusted market value of current pension fund cash holdings 13 A stock recently paid its quarterly dividend of .30 cents. If the required rate of return for this stock is 10.25%, and the growth rate is 5%, value this stock. Value this stock. a. 19.92 b. 21.00 c. 24.00 Page 12-19 (Chapter 12) Watch quarterly - See Gordon Model d. 299.93 14 Companies that use LIFO a. will not show any material difference on financial statements than if they had used FIFO b. should prepare parallel statements using FIFO c. are not required to report their LIFO reserve 6-10 d must report their LIFO reserve 15 Gross profit would be highest using (under inflationary conditions) a. any inventory costing method, it is all the same b. Averge Cost (AC) c. LIFO d FIFO 16 Tax liability would be lowest in a reporting period using (under inflationary conditions) a. any inventory costing method, it is all the same b. Averge Cost (AC) c. LIFO d FIFO 17 One would most likely use the Equity Method in valuing intercorporate investments a. if the investment had less than one year to maturity b. if ownership of the security was designated as Held to Maturity (HTM) c. if ownership of the security exhibited evidence of significant influence d if ownership of the security does not exhibit evidence of significant influence 18 When a company has control (over 50% of outstanding stock in investee company) a. than the Fair Value Method of reporting is required b. than the Equity Method of reporting is required c. than the Consolidation Method of reporting is required d than the Sum-of-the-Years' Digits Method of reporting is required 19 Asset that exhibit little or no influence are described as a. Property Plant and Equipment (PPE) b. long-term investments c. passive investments d Level 3 valued investments