The following are True and False questions.

1. Earnings management is manipulation of earnings and includes channel stuffing and engaging in big bath accounting.

2. Impairment of an asset is when the Book Value of an asset is less than its fair value.

The following are multiple Choice questions:

- Use the following information to answer questions 1 & 2:

The following inventory and sales data are available for the current year for Dylan Company, which uses a 365-day year when computing ratios.

November 30 November 30

2017 2018

Net credit sales $6,205,000

Gross Receivables 350,000 $320,000

Inventory 960,000 780,000

Cost of goods sold 4,380,000

1. Dylan Companys average number of days to collect accounts receivable for the current year is:

a- 18.82 days.

B- 19.43 days.

C- 19.71 days.

D- 20.59 days.

2. Dylan Companys operating cycle for the current year is:

A- 70.61 days.

B- 93.09 days.

C- 92.21 days.

D- 99.71 days.

3. Alexander Company purchased a five-year certificate of deposit for its building fund in the amount of $220,000. How much should the certificate of deposit be worth at the end of five years if interest is compounded at an annual rate of 9%?

A. $855,723.

B. $142,985.

C. $319,000.

D. $338,496.

4. Under U.S. GAAP, cash flows from investing activities do not include:

A. Proceeds from issuing bonds.

B. Payment for the purchase of equipment.

C. Proceeds from the sale of marketable securities.

D. Cash outflows from acquiring land.

5. A new machine with an expected useful life of 4 years is expected to generate annual net cash flows of $15,000. What are the (rounded) cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation?

A. $13,327.

B. $39,982.

C. $55,757.

D. $38,100.

6. Other Comprehensive Income includes all of the following except::

A. Gains and losses from amendments to postretirement benefit plans (net of tax).

B. Gains and losses from foreign currency translation (net of tax).

C. Net unrealized holding gains and losses on investments accounted for as securities available for sale (net of tax).

D. Gains or losses from sale of equipment (net of tax).