Accounting 300Lesson 15 of 1515 min

Accounting 300 — Comprehensive Assessment

This assessment synthesizes all 14 lessons of Accounting 300: long-term debt and bonds, equity section mechanics, EPS computation, investment accounting methods, consolidation, cash flow statement construction, free cash flow analysis, ratio interpretation, and DuPont decomposition. These questions require multi-step reasoning, cross-concept integration, and the same analytical depth demanded in CFA Level 1–2 financial statement analysis.

What you'll learn
  • Synthesize bond accounting (effective interest method, premium/discount, early retirement) with financial ratios
  • Connect equity structure mechanics (treasury stock, dividends, splits) to EPS computation
  • Apply investment accounting (AFS, equity method, consolidation) to multi-scenario analysis
  • Construct cash flow statement sections and derive FCF from combined statement information
  • Perform and interpret a DuPont decomposition from raw financial data

Assessment Overview

This assessment covers all 14 topics in Accounting 300. Each question requires synthesis across multiple lessons. Work through the full calculation before selecting an answer — most distractors contain plausible partial calculations.

Accounting 300 — Course Map

Libby Ch10–14 · 15 lessons · Advanced financial analysis

L01–03Long-Term Debt & Bonds
  • ·Effective interest method
  • ·Discount & premium amortization
  • ·Early retirement gain/loss
L04–06Equity & EPS
  • ·Authorized / Issued / Outstanding
  • ·Treasury stock & dividends
  • ·Basic & diluted EPS (TSM)
L07–08Investments & Consolidation
  • ·Trading / AFS / Equity method
  • ·OCI vs. net income routing
  • ·NCI & 100% consolidation
L09–11Cash Flow Statement
  • ·Indirect method (CFO)
  • ·Investing & financing sections
  • ·FCFF / FCFE / FCF yield
L12–13Ratio Analysis
  • ·Liquidity: current, quick, cash
  • ·Efficiency: DSO, DIO, DPO, CCC
  • ·Profitability & leverage ratios
L14DuPont Analysis
  • ·ROE = Margin × Turnover × Multiplier
  • ·5-factor decomposition
  • ·ROIC vs. WACC value creation
Key Formulas at a Glance
Bond interest expense:Carrying value × Market rate × Period
FCF (basic):CFO − CapEx
FCFF:NOPAT + D&A − CapEx − ΔNWC
CCC:DSO + DIO − DPO
DuPont ROE:Net margin × Asset turnover × Equity multiplier
ROIC:NOPAT ÷ (Equity + Debt − Cash)
This assessment tests synthesis across all 14 lessons — not individual recall.

The quiz below contains 12 comprehensive questions. Questions 1–4 test bonds and equity structure. Questions 5–6 test EPS and investment accounting. Questions 7–8 test consolidation and SCF construction. Questions 9–10 test FCF and ratio analysis. Questions 11–12 test DuPont decomposition with multi-year diagnosis.

Key Takeaways

  • Bond carrying value = face value ± unamortized premium/discount; always moves toward face value at maturity via the effective interest method
  • EPS dilution comes from options (TSM: net new shares = options − proceeds/market price), convertible bonds (if-converted: add after-tax interest to numerator, conversion shares to denominator), and convertible preferred
  • Investment accounting: trading → P&L; AFS → OCI until sold; equity method → proportional income/loss, dividends reduce investment; consolidation → 100% combination + NCI carve-out
  • Indirect method SCF: net income → add non-cash → adjust working capital; FCF = CFO − CapEx; ROIC vs. WACC is the value creation test
  • DuPont: ROE = margin × turnover × leverage multiplier; rising ROE driven solely by leverage is financial engineering, not operational improvement

Quiz — 12 Questions

Answer one at a time
Question 1 of 120 answered

A company issues $1,000,000 of 5-year bonds with a 6% coupon (semi-annual), when the market rate is 8%. The bonds are issued at $918,891. In the first semi-annual period, what is interest expense, the amortization of discount, and the new carrying value?

AInterest expense = $60,000; Amortization = $0; Carrying value = $918,891
BInterest expense = $36,756 (6%/2 × $918,891... wait — market rate applies: $918,891 × 8%/2 = $36,756); Cash paid = $30,000 (6%/2 × $1,000,000); Discount amortized = $6,756 ($36,756 − $30,000); New carrying value = $925,647 ($918,891 + $6,756)
CInterest expense = $30,000; Amortization = $6,756; Carrying value = $925,647
DInterest expense = $36,756; Cash paid = $30,000; Discount amortized = $6,756; New carrying value = $925,647