# Does the income statement (or related disclosure note) contain any separately reported items in any year presented? If it does, describe the event that caused them.

Topic 1: Accounting practices include a lot of choices. For instance, you could use LIFO, FIFO or weighted average methods for inventory valuation. You could use straight line or double declining balance methods for depreciation.

Question: With firms free to choose from multiple accounting methods for the same transaction, use of financial statements to assess business performance is subject to severe limitations. Do you agree or disagree? Why?

1. Convert the following decimal numbers to binary.

a. 82

b. 120

2. Convert the following binary numbers to decimal.

a. 00111011

b. 11101110111

3. Convert the following floating point numbers to binary.

a. 25

b. 0625

4. Convert the following binary numbers to hex:

a. 11011010

b. 10101110011100101011101

4. Convert the following decimal numbers to 8‐bit Signed Integer Representation

a. 9

b. 25

5. Add the following 8‐bit signed integers together

a. 01101010 + 01110111

b. 10011000 + 10000111

6. Add the following numbers together using 8‐bit one’s complement binary representations

a. 51 and ‐12

b. 104 and ‐64

7. Convert the following numbers to 8‐bit two’s complement binary representations

a. 89
=

b. 15 =

8. What is the range of numbers we can represent with the following number of bits in two’s complement format?

a. 8 =

b. 16 =

c. 32 =

d. 64 =

9. Convert the following floating point numbers to IEEE 32‐bit floating format

a. 65536

b. ‐93002

10. Convert the following floating point numbers to IEEE 32‐bit format

a. .125

b. ‐0.03125

c. ‐29.03125

d. 84.8

11. Convert the following IEEE 32‐bit format representations to their base 10 floating point format.

a. 0 1000 0011 10000000000000000000000

b. 0 1000 0011 10000000000000000000000

0 1001 0100 1010 0101 1011 0010 1000 111

0 1001 0100 1010 0101 1011 0010 1000 111

12. Complete the following problems, type your answers in a Word document and upload it in the drop box. Please show all work to get full credit. Convert the following Boolean expression to a circuit representation: (‘A+B) xor (C+A).

13. Write the truth table for the following Boolean expression: ‘AB + C’D

14. Create the Kmap and then simplify for the following function: F(x,y,z) = ‘x’y’z+’xy’z+x’y’z+xy’z.

15. Using a KMap, determine if the following circuit can be reduced, if it can, draw the equivalent circuit. Show your truth table and minterms in your solution:

1. Does the company use the single-step or multiple-step or a variation for income statement presentation?

2. How does the company classify its operating expenses in its income statement?

3. Does the income statement (or related disclosure note) contain any separately reported items in any year presented? If it does, describe the event that caused them.

4. What was the percentage increase or decrease in the company’s net income for financial year 2010/2011 to 2009/2010?

5. 5- Using 2010/2011 data, what is the company’s approximate income tax rate?

6- Compare revenues, operating expenses, net income, and net income as a percentage of revenue dollars with those in the 2009/2010 annual report included with the text. Are there any discernible trends? How might they be interpreted?

7- Has the company made any changes in its revenue recognition method?

8- Does the income statement contain any separately reported items?

9- What “other comprehensive income” did the company report in 2010/2011?

10- Explain the asset “prepayments” and how should it be classified

11- Explain the term “treasury shares” and how should it be classified?

12- What categories does the company use to classify its assets? Its liabilities?

13- Why are inventories shown as a current asset?

14- Explain the liability “deferred revenue”

15- What purpose do the disclosure notes serve?

16- What does “goodwill” mean and how is it accounted for?

17- What intangible assets does the company have?

18- What major types of PPE does the company have?

19- What does impairment mean? Did the company disclose any impairment in its income statement

and how did they classify it?

20- What method does the company use to depreciate its property, plant and equipment?

21- Determine if the company reported any subsequent events in the disclosure note

22- How does the company classify interest paid, interest received, dividends paid and dividends received in its statement of cash flows?

23- Compare cash flows from operating, investing, and financing activities with those in the 2009/2010 report. Are there any discernible trends? How might they be interpreted?

1. Suppose the return on portfolio P has the following probability distribution:

Bear Market Normal market Bull market

Probability 0.2 0.5 0.3

Return on P -20% 18% 50%

Assume that the risk-free rate is 9%, and the expected return and standard deviation on the market portfolio M is 0.19 and 0.20, respectively. The correlation coefficient between portfolio P and the market portfolio M is 0.6.

Answer the following questions:

1. Is P efficient?

2. What is the beta of portfolio P?

3. What is the alpha of portfolio P? Is P overpriced or underpriced?

2.Consider a two factor economy. Assume the risk-free rate = 3%, and the risk premiums are

RP1 = 10%, RP2 = 8%. The return on stock ABC is generated according to the following equation:

rABC=0.08-0.55F1+1.2F2+eABC

Assume that the stock is currently priced at $50 per share.

1. What is the expected return for stock ABC using the APT?

2. Is stock ABC underpriced or overvalued?

3. If the expected price next year will be $55, what is the stock price now that will not allow for

4. Assume that the risk free rate increases to 4%, with the other variables remaining unchanged. Would you recommend to buy or sell stock ABC?

3.Suppose that the index model for two Canadian stocks HD and ML is estimated with the following results:

RHD =0.02+0.80RM+eHD

R-squared =0.6

RML =-0.03+1.50RM+eML

R-squared =0.4

σM =0.20

where M is S&P/TSX Comp Index, RX is the excess return of stock X.

1. What is the standard deviation of each stock?

2. What is the systematic risk of each stock?

The systematic risk of a stock is measured by its beta

The beta is determined by regressing the returns of stock against the returns on the market

The slope of the regression is the beta

3. What are the covariance and correlation coefficient between HD and ML?

4. For portfolio P with investment proportion of 0.3 in HD and 0.7 in ML, calculate the systematic risk, non-systematic risk and total risk of P.

1. Janine has controlled extraneous variables in her study. Therefore, Janine’s study exhibits high ___________ validity.

a. external

b. internal

c. construct

d. content

2. Bess has conducted a pretest-posttest control-group study to raise math scores among fifth-grade students who have failed math. She has controlled the potential problem of __________ because she has selected participants for the experimental and control groups from the same pool of extremely low-scoring participants.

a. diffusion of treatment

b. instrumentation

c. selection

d. statistical regression

3. Bess has conducted a pretest-posttest control-group study to raise math scores among fifth-grade students who have failed math. She has controlled the potential problem of _________ because she has randomly assigned the students to the experimental and control groups.

a. instrumentation

b. statistical regression

c. selection

d. history