FRA 1.6 31.07

• A. has more financial leverage than the industry.
• B. has made significant acquisitions in the past.
• C. is an electric utility.

• A. €500,000.
• B. €2,000,000.
• C. €1,500,000.

An example of an expense classification by function is:

• A. tax expense.
• B. interest expense.
• C. cost of goods sold.

• A. LB’s basic EPS is $1.12.
• B. LB’s diluted EPS is equal to or less than its basic EPS.
• C. The weighted average number of shares outstanding is 2,210,000.

A company chooses to change an accounting policy. This change requires that, if practical, the company restate its financial statements for:

• A. all prior periods.
• B. current and future periods.
• C. prior periods shown in a report.

• A. $85,000.
• B. $25,000.
• C. $45,000.

What does the P/E ratio measure?

• A. The “multiple” that the stock market places on a company’s EPS.
• B. The relationship between dividends and market prices.
• C. The earnings for one common share of stock.

• A. $89,000.
• B. $105,000.
• C. $111,000.

An analyst notes that a company’s most recent financial statements show £65 million in net income, £7 million in dividends paid to common shareholders, and £5 million of other net expense items excluded from the net income calculation. The company’s comprehensive income is:

• A. £60 million.
• B. £65 million.
• C. £53 million.

White Flag, a women’s clothing manufacturer, reported salaries expense of $20 million. The beginning balance of salaries payable was $3 million, and the ending balance of salaries payable was $1 million. How much cash did the company pay in salaries?

• A. $18 million.
• B. $21 million.
• C. $22 million.