Free Access CFA.CFA-Level-I.v2022-03-06.q736 Practice Test (Page 24)

Question 111

All of the following are examples of "accrued expense" types of liabilities except the liability for:

A.short-term notes taken out at a bank during the year.

B.property taxes owed to local governments for the year.

C.estimated product warranty costs on products sold during the year.

Question 112

Which of the following represents the correct method of constructing common-sized financial statements?

A.All balance sheet items are indexed to total equity while income statement items are indexed to net sales.

B.All balance sheet items are indexed to the total of liabilities and owner's equity while income statement items are indexed to net sales.

C.All balance sheet items are indexed to total assets while income statement items are indexed to gross sales.

Question 113

A company is considering making material adaptations to its warehouse and equipment. These costs will be $25,000,000 and will have a benefit period of 10 years. The income tax rate during this period will be 30%. The company is considering the effects of capitalizing the costs versus expensing the cost.
Which of the following effects will occur if the costs are expensed rather than capitalized?

A.Expensing will cause income to be greater in the years after the first year by $1,750,000 per year

B.Expensing will cause the return on assets in later years to be lower

C.Expensing will cause the return on equity to be lower in later years

Question 114

The main reason for dollarization is:

A.to improve the credit-worthiness of the central bank.

B.greater stability in the value of the foreign currency over domestic currency.

C.to follow the foreign country's monetary policy.

Question 115

A coin is tossed five times. What is the probability of obtaining exactly three heads?

A.3/16

B.1/4

C.5/16

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Question 111

Question 112

Question 113

Question 114

Question 115

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