Understanding Corporate Governance and Its Impact on Stakeholders
School
Indonesia University of Education**We aren't endorsed by this school
Course
BUSINESS 1
Subject
Accounting
Date
Dec 11, 2024
Pages
10
Uploaded by ProfessorDragon9617
2. Which of the following is often regarded as a sign of an ineffective corporate governancesystem?a.There is clear and measurable accountability for managers and directors in assumingtheir responsibilities.b.Three quarters of board members are independent.c.CEO also serves as chairman of the board of directorsd.Disclosure regarding operations and financial position are made with completetransparency and accuracy.e.Internal audit committee consists only of independent directors who have expertise infinancial and accounting matters.3. In contemporary corporate finance, it is usually assumed that a company works for thegreatest benefit of which stakeholders?a.Shareholderb.Creditorsc.Governmentd.Customerse.Suppliersf.The society as a whole5. Which of the following isleast likelyan approach that shareholders use to manage theprincipal agent problem?1)Participate in general meetings to discuss and vote on major corporate issues andtransactions2)Elect and delegate a boar directors with oversight of the company3)Choose a prestigious independent auditor to audit the company’s annual financialrecords.4)Regularly read and evaluate the company’s financial and non-financial information5)Build remuneration policies that align the interest of managers and directors with thoseof shareholders.6)Vote for corporate social responsibility policies and practices that promote laborwelfare, environmental protection and social good.6. Which group of stakeholders would be least affected when the company's liquidity andsolvency weaken?a.Creditors.b.Suppliersc.Customersd.Managers and employeese.No one would be affected7. On the income statement, a loss from destruction of property in a fire would most likely berecorded in:a.Cost of goods soldb.Selling, general and administrative expensec.Depreciation and and amortization
d.Other expenses8. Impairment write downs of fixed assets will most likely result ina.An increase the debt to equity ratiob.An increase in total asset turnoverc.A decrease in ROEd.A decrease in net incomee.A,B,C,D are all correct9. Stockholder’s equity reported on the balance sheet differs from stockholder’ market valuemost likely because:a.Some assets listed on the balance sheet are valued based on their historical cost.b.Many of the company’s valuable assets are not captured on the balance sheet, such asreputation and management skills.c.Market value of equity is updated continuously while the balance sheet is updated onlyseveral times a year.d.A,b,c are all correct10. Which of the following is the moststringentmeasure of a company’s capacity to meet itsnear term obligation?a.Receivable turnoverb.Payables turnoverc.Cash ratiod.Quick ratioe.Current ratio11. Which of the following is most likely associated with a cash outflow?a.An increase in working capitalb.An increase in liabilitiesc.An increase in equityd.A revenuee.Depreciation expense12. In 2017, nicolas inc brought in a new CEO to turn the company around from disappointingperformance in the previous years. In 2018, compared to 2017, Nicolas Inc reported thefollowing changesRevenue: +20%Net income: +25%Inventory: +60%Receivables: +40%CFO: -20%Which of the following statements about Nicolas Inc’s performance in 2018 is LEAST likelycorrect?a.The significant decline in operating cash flow despite increasing revenue and profitabilitymay indicate a problem with revenue and earnings quality, thus requiring furtherinvestigation.b.Receivables growing much faster than revenue can signal operational issues such lowerstandards for sales on credit, or aggressive accounting policies to accelerate revenuerecognition and net income.
c.Inventory growing much faster than revenue can indicate operational issues such asoverproduction to reduce fixed cost per unit, overstatement of inventory or potentialinventory write off in the future.d.It is desirable that inventory and receivables grow faster than revenue because itindicates more efficient management of inventory and receivables.e.A,b,c are all correct13. Pomme Inc and Lied Inc engage in manufacture and sale of personal computers and relatedproducts and services. The personal computer industry is mature and competition isincreasingly intense. In 2007, Pomme introduced PomPhone, a new line of innovative, stylishsmartphones. Extracts from the firm’s financial statement are shown in Exhibit 1.Exhibit 1 (billion euros)PommeLled200920082007200920082007Sales453525505760Grossprofit201510101315Operating profit151056810Which of the following statements is most likely correct?A.The numbers in Exhibit 1 are taken from the firms’ balance sheets.B.Pomme’s gross margin and operating margin decreased over the 3-year period becausecosts of sales increased faster than sales.C.Pomme’s financial results reflected the failure of PomPhone.D.That Lled’s products failed to compete with PomPhone was the direct cause of itssluggish performance.E.That Lled operates in a mature market with intense competition was the cause ofits decreasing profit margins.
10. Considering a long-term construction contract, which of the followingstatements is most likely incorrect?a.When the outcome of the contract could be measured reliably, revenue can berecognized using the percentage of completion method and costs for theperiod are capitalized.b.When the outcome of the contract could not be measured reliably, costs areexpensed in the period incurred and revenue may be recognized to the extent ofcontract cost incurred.c.Under US GAAP, when the outcome of the contract could not be measuredreliably, revenue and costs may be recognized using the completed contractmethod.d.The percentage of completion method results in better matching of revenuerecognition with the accounting period in which it was earned.14. Which of the following methods can be used to report lower earnings?a.Overproductionb.Accelerating salec.Postponing R&D or advertising expendituresd.Overly aggressive recognition of provisions17. Which type of audit opinion is preferred when analyzing financial statements?a.Qualifiedb. Unqualifiedc.Adversed. Disclaimer
18. Which of the following statements about staggered boards is most likelyinaccurate?a.In a staggered board, directors are typically divided into three classes with onlyone class standing for reelection each year.b.Some believe that staggered board encourage shirking, empire building, andprivate benefits extraction.c.Sone holds that a staggered board could help mitigate managers’ shorttermismd.Staggered boards have become increasingly unpopular.e.One of the other options is incorrect.BAN CHUAN NHAT1.Which of the following is least likely an approach that shareholders use tomanage the principal agent problem?A.Participate in general meetings to discuss and vote on major corporate issues andtransactionsB.Elect and delegate a boar directors with oversight of the companyC.Choose a prestigious independent auditor to audit the company’s annual financialrecords.D.Regularly read and evaluate the company’s financial and non-financial informationE.Build remuneration policies that align the interest of managers and directors withthose of shareholders.F.Vote for corporate social responsibility policies and practices that promotelabor welfare, environmental protection and social good.2. Which of the following methods can be used to report lower earnings?a.Overproductionb.Accelerating salesc.Postponing R&D or advertising expendituresd.Overly aggressive recognition of provisions
3. Which of the following statements about goodwill is most accurate?A.Goodwill is recorded in acquisitions and is the amount by which the amountof net identifiable assets acquired exceeds the price to purchase the entity.B.Goodwill is an expenseC.Under VAS (Vietnam accounting standards), goodwill is amortized in no morethan 10 years.D.Under IFRS, goodwill is amortized in no more than 10 years.4, which type of audit opinion is preferred when analyzing financial statements?a.Qualifiedb. Unqualifiedc.Adverse → Most unfavorabled. Disclaimer5. In 2017, nicolas inc brough in a new CEO to turn the company around fromdisappointing performance in the previous years. In 2018, compared to 2017,Nicolas Inc reported the following changesRevenue: +20%Net income: +25%Inventory: +60%Receivables: +40%CFO: -20%Which of the following statements about Nicolas Inc’s performance in 2018 is leastlikely correct?a.The significant decline in operating cash flow despite increasing revenue andprofitability may indicate a problem with revenue and earnings quality, thusrequiring further investigation.b.Receivables growing much faster than revenue can signal operational issues suchlower standards for sales on credit, or aggressive accounting policies to acceleraterevenue recognition and net income.c.Inventory growing much faster than revenue can indicate operational issues suchas overproduction to reduce fixed cost per unit, overstatement of inventory orpotential inventory write off in the future.d.It is desirable that inventory and receivables grow faster than revenuebecause it indicates more efficient management of inventory and receivables.
6. Which of the following statements about staggered boards is most likelyinaccurate?a.In a staggered board, directors are typically divided into three classes with onlyone class standing for reelection each year.b.Some believe that a staggered board encourages shirking, empire building andprivate benefits extraction.c.Some holds that a staggered board could help mitigate managers’ shorttermismd.Stagger boards have become increasingly unpopular.e.One of the other options is incorrect7. On the income statement, a loss from destruction of property in a fire would mostlikely be recorded in which of the following?a.Cost of goods soldb.Selling expensesc.Administrative expensesd.Depreciation and amortizatione.Other expenses (non operating)8. Which group of stakeholders would be least affected when the company’sliquidity and solvency weaken?a.Creditors.b. Suppliersc.Customersd.Managers and employeese.No one would be affected9. In contemporary corporate finance, it is usually assumed that a company worksfor the greatest benefit of which stakeholders?a. Shareholdersb. Creditorsc.Customersd. Supplierse.The society at large10.Considering a long term construction contract, which of the following statementsis most likely incorrect?
a.When the outcome of the contract could be measured reliably, revenue can berecognized using percentage of completion method and costs for the periodare capitalizedb.When the outcome of the contract could not be measured reliably, costs areexpenses in the period incurred and revenue may be recognized to be the extent ofcontract costs incurred.c.Under US GAAP, when the outcome of the contract could not be measuredreliably, revenue and costs may be recognized using the completed contractmethod.d.The percentage of completion method results in better matching of revenuerecognition with the accounting period in which it was earned.11.In Vietnam, listed public companies are not required to publish which of thefollowing financial reports?a. Monthlyb. Quarterlyc.Annuald. Semi-annual12. Which of the following statements is least likely correct?a.The primary goal of shareholder activism is to increase shareholder valueb.Institutional investors such as hedge funds are predominant shareholder activists.c.Regulator play an role in setting rules and regulations for shareholder activists’strategies and tactics, such as proxy fights, shareholder resolutions, and lawsuitsd.None of the other options are incorrect.13. assuming rising prices and stable or increasing inventory levels, which of thefollowing costing methods results in higher cost of goods sold?a.FIFOb. LIFOc.Weighted average cost14. In which type of firms no owner may have limited liability?a.Sole proprietorshipsb. Partnershipsc.Limited liability companies
d. Corporation15.Which of the following is most likely a component of working capital?a.Saleb.Cost of goods soldc.Excess cashd. Inventorye.Goodwill16. Which of the following is most likely associated with a cash outflow?a.An increase in working capitalb.An increase in liabilitiesc.An increase in equityd.A revenuee.Depreciation expense17.Which of the following statements about the conflicts between Kusto andCoteccons is most accurate?A. Kusto owned the majority of shares in Coteccons.B. Kusto managed to oust Coteccons’ directors and managers through aproxy fight. (Trận chiến uỷ quyền)C. Coteccons’ directors and managers are not conflicted and always acted in theinterest of the shareholders.D. Proxy wars like that initiated by Kusto should not be encouraged and should bereigned in by regulators because they destroy shareholder value.18. Which of the following is often regarded as a sign of an ineffective corporategovernance system?a.There is clear and measurable accountability for managers and directors inassuming their responsibilities.b.Three quarters of board members are female and LGBT + peoplec.Three quarters of board members are CEO’s family members.d.Disclosure regarding operations and financial position are made with completetransparency and accuracy.e.Internal audit committee consists only of independent directors who have expertisein financial and accounting matters.
19. Tuba Company reported net income of đ750 billion for the year ended 31December 2020. The company had a weighted average of đ690 million shares ofcommon stock outstanding. In addition, the company has only one potentiallydilutive security: đ50 billion of 10 percent convertible bonds, convertible into a totalof 5 million shares. Assuming a tax rate of 20 percent calculate Tuba Company basicand diluted EPSa.đ1087 and đ1085b.đ1087 and đ1091c.đ1139 and đ1139d.đ1139 and đ1085e.All the other options areincorrectBasic EPS: Net income - preferred share / outstanding = 750 - 0 / 690 = 1087Diluted EPS: Net income + Bond Interest * (1-t) / (outstanding + additionalstock) = (750 + 5*(1-0.2)) / (690 + 5) = 1085Nếu Diluted lớn hơn basic → Diluted = BasicDiluted ko được lớn hơn basic20. Stockholders’ equity reported on the balance sheet differs from stockholder’market value most likely because:e.Some assets listed on the balance sheet are valued based on their historical cost.f.Many of the company’s valuable assets are not captured on the balance sheet, suchas reputation and management skills.g.Market value of equity is updated continuously while the balance sheet is updatedonly several times a year.h.A,b,c are all correct