4.6: Chapter 4- Review Questions

1. 1What are some of the critical differences between Accounting and Finance?
2. 2In what ways can Accounting d ata be managed?
3. 3What are the critical differences between the Balance Sheet and the Income Statement?
4. 4Identify the correct choices : Assets are dr / cr balance accounts while Liabilities and Equity are dr / cr balance accounts.
5. 5How are the Addition to Retained Earnings and Retained Earnings different from one another ?
6. 6Who takes the most risk in order to earn the highest return?
7. 7Give an example where it is permissible to use different accounting methods for reporting versus tax accounting .
8. 8What are some problems pursuant to using LIFO-based accounting?
9. 9True or False: Operating Profits include interest paid.
10. 10If the company does not pay its dividends on Preferred Stock, has it defaulted?
11. 11True or False: Interest is not tax-deductible whereas Dividends are tax-deductible.
12. 12What are some of the differences between what the accountant and financial analyst do?
13. 13If there is some inflation, which will produce higher gross profits – FIFO or LIFO?
14. 14List, provide some examples of, and discuss each of the four interpretive problems read e rs of financial statements may encounter.
15. 15Solve the following Calculation Problems:

What are the second year’s depreciation expenses and asset balances under each of the three reporting methods?

What is the company’s Cost of Goods Sold?