81 Domain 2 - General Accounting (Key Industry Metrics) 1 / 62 What "earnings" belong to the common stock shareholders? A. All earnings after preferred stock dividends B. All dividends C. All earnings D. Common stock dividends, only when declared Reference: Managerial Accounting and Economics Review Guide (2-5) 2 / 62 Which statement(s) is (are) true? A. Individually comparative statistics have limited value. B. Depending on circumstance, individual comparative statistics may have no value. C. Comparative statistics are most useful in conjunction with Peer Group analysis. D. All of the above. Reference: Guidelines in Determining Finding/Acquisition Costs-COPAS AG-12, Managerial Accounting and Economics Review Guide (2-5) 3 / 62 What reserves should be used to determine finding costs? A. Total proved reserves added B. Proved reserves discovered C. All reserves added except reserves purchased D. Proved & probable reserves discovered Reference: Guidelines in Determining Finding/Acquisition Costs-COPAS AG-12, Managerial Accounting and Economics Review Guide (2-5) 4 / 62 Which costs should be excluded in determining finding costs? A. Allocated general administrative exploration cost B. Exploration staff expense C. Development cos D. G&G expense Reference: Guidelines in Determining Finding/Acquisition Costs-COPAS AG-12, Managerial Accounting and Economics Review Guide, (2-5) 5 / 62 What is the yield to call of a preferred stock with a cumulative annual dividend of $8.00, a current market price of $100 and is redeemable in four years at $90? A. 5.8% B. 13.2% C. 7.5% D. 8.0% Reference: Managerial Accounting and Economics Review Guide (2-5) 6 / 62 Why should stock repurchase plans be undertaken cautiously? A. It sends strong signals to raiders that the company stock is undervalued B. The financial strength of the company may be reduced C. Only excess cash can be used to purchase stock D. The market many times responds unfavorably to stock repurchase plans Reference: Managerial Accounting and Ecnomics Study Guide (2-5) 7 / 62 At which of the following percentages do analysts commonly evaluate undeveloped reserves? A. 33 1/3% B. 50% C. 100% D. 75% Reference: Managerial Accounting and Economics Review Guide (2-5) 8 / 62 What is the most appropriate method for evaluating oil and gas properties? A. Multiple of book value B. Multiple of reported earnings C. Multiple of cash flow D. Discounted cash flow analysis Reference: Managerial Accounting and Economics Review Guide (2-5) 9 / 62 What is the most common basis for converting gas reserves to equivalent oil reserves? A. Energy equivalent (6 Mcf = 1 barrel of oil) B. Energy equivalent (10 Mcf = 1 barrel of oil) C. Revenue equivalent (13 Mcf = 1 barrel of oil) D. Revenue equivalent (based on current prices) Managerial (2-5 10 / 62 What are oil reserves in the ground commonly valued at in comparison to the posted wellhead price? A. 33.33% B. 50% C. 66.66% D. 75% Reference: Managerial Accounting and Economics Review Guide Page 39 (2-5) 11 / 62 Which term refers to the estimated costs associated with the future dismantlement and removal of production equipment and the reclamation of land at the end of an asset’s useful life? A. Salvage value B. Refurbishment costs C. Asset impairment costs D. Asset retirement obligation Reference: Petroleum Accounting Principles, Procedures and Issues, 7th ed 12 / 62 Which of the following statements is correct if Alpha company has a loan with an interest rate of 7%, its cost of equity is 5.5% and its Federal tax rate is 40%? A. Its cost of debt is 2.8% and is lower than its cost of equity of 5.5% B. Its cost of debt is 4.2% and is lower than its cost of equity of 5.5% C. Its cost of debt is 7.0% and is higher than its cost of equity of 5.5% D. Its cost of debt is 4.2% and is higher than its cost of equity of 3.3% Reference: Managerial Accounting and Economics Review Guide (2-5) 13 / 62 What is a simple definition of finding cost? A. Cost of drilling a well B. Cost to find reserves divided by the reserves found C. Cost to purchase oil and gas reserves D. Exploration cost divided by total reserves Reference: Guidelines in Determining Finding/Acquisition Costs-COPAS AG-12, Managerial Accounting and Economics Review Guide (2-5) 14 / 62 Which of the following factors affects the valuation of preferred stock? A. Prime interest rate, price/earnings ratio, and cost of capital B. Cumulative rights, voting rights, and callable C. Cumulative rights, voting rights, and cost of capital D. Prime interest rate, price/earnings ratio, and callable Reference: Managerial Accounting and Economics Study Guide (2-5) 15 / 62 What limitations does ratio analysis have? A. Differences between companies caused by differences in accounting practices B. Window dressing which may be practices by some companies C. Differences in definitions of financial ratios D. All of the above Managerial (2-5) 16 / 62 Where can the funds required for capital projects come from? A. Debt B. Preferred stock C. Equity D. All of the above Reference: Managerial Accounting and Economics Review Guide (2-5) 17 / 62 What is the discount rate generally based on? A. The company's cost of capital plus a premium for investment risk and profit B. The prime interest rate multiplied by the company's stocks' Beta rate C. The project's internal rate of return plus a premium for investment risk and profit D. A flat 15% rate of return Reference: Managerial Accounting and Economics Review Guide (2-5) 18 / 62 What is the internal rate of return (IRR)? A. Rate at which the discounted cash flow equals zero B. Rate used for market capitalization C. Rate at which the project will be approved D. Rate used in the pay-out calculation Reference: Managerial Accounting and Economics Review Guide (2-5) 19 / 62 What does the weighted average cost of capital include? A. Cost of expenses incurred to sell common stock, the discount rate and inventory B. Cost of debt, preferred stock and inventory C. Cost of debt, preferred stock and equity D. Cost of expenses incurred to sell common stock, the discount rate and equity Reference: Managerial Accounting and Economics Review Guide (2-5) 20 / 62 Which of the following calculations is the cornerstone for the time value of money, i.e. cost of capital? A. Net Present Value B. Pay Out C. Working Capital D. Debt to Equity Ratio Reference: TR 34 - Managerial Accounting and Economics Review Guide Page 17 (2-5) 21 / 62 Which of the following is NOT a method for evaluating Oil & Gas Companies? A. The balance sheet approach B. The market capitalization approach C. The proved reserves approach D. The income statement approach Reference: Managerial Accounting and Economics Review Guide Page 37 (2-5) 22 / 62 What are Liquidity ratios used for? A. Evaluation of liquid assets B. To measure the reliance on debt to finance the capital structure C. To indicate the ability to meet current obligations as they come due D. To measure profits relative to liquid assets Reference: Managerial Accounting and Economics Review Guide (2-5) 23 / 62 Which of the following is true about payouts? A. It only looks at cash flow B. It is not used for evaluating capital projects. C. It includes the time value of money D. It includes depreciation costs. Reference: TR-34: Managerial Accounting and Economics Review Guide Page 16 (2-5) 24 / 62 How are financial ratios used? A. To benchmark against competing industries (oil vs. coal) B. For SEC reporting purposes only C. For reviewing the results of current operations only D. To benchmark against peer companies Reference: Managerial Accounting and Economics Review Guide (2-5) 25 / 62 Which of the following amounts is used in calculating the interest coverage ratio? A. Net income before tax, excluding any preferred dividends B. Net income after tax C. Net income after tax, excluding any preferred dividends D. Net income before tax Reference: Managerial Accounting and Economics Review Guide P. 31 - 32 (2-5) 26 / 62 The higher the times interest ratio, the greater the likelihood of: A. The conversion of bonds to stock B. The reduction in the company's bond rating C. A default on the interest payments D. None of the above Reference: Managerial Accounting and Economics Review Guide (2-5) 27 / 62 What do leverage ratios measure? A. The liquidity of the company B. The relative risk of a loan default C. The use of equity D. All of the above Reference: Managerial Accounting and Economics Review Guide (2-5) 28 / 62 When does payout occur? A. A company recovers its initial investment B. A project or wells can cover its overhead allocations C. A company's long term debt is paid off D. All partners have paid their share of the cost Reference: Managerial Accounting and Economics Study Guide (2-5) 29 / 62 Why are exploration expenses added back to net income for the purpose of calculating cash flow? A. To eliminate income variances created by the different accounting treatments between full cost and successful efforts B. To exclude all non-cash transactions for the current accounting period C. To show current operating cash flow, excluding extraordinary items or auxiliary activities D. To report only capital expenditures and workover expenses required to maintain the production network Reference: Managerial Accounting and Economics Review Guide (2-5) 30 / 62 What is the mcf equivalent reserves at period end? Unevaluated leaseholds $10,000,000 Proved leaseholds $8,000,000 Wells and facilities $50,000,000 Unsuccessful exploration costs $5,000,000 Exploratory wells in progress $3,000,000 Accumulated amortization ($12,000,000) Estimated future development costs of proved reserves $6,000,000 End of period oil reserves 10,000,000 bbls End of period gas reserves 30,000,000 mcf Oil production during period 1,500,000 bbls Gas production during period 3,000,000 mcf A. 90,000,000 mcf B. 15,000,000 mcf C. 78,000,000 mcf D. 31,666,667 mcf Reference: Petroleum Accounting - Principles, Procedures, & Issues; 5th Edition; Brock etal; Ch 17 pgs 421-424 (2-5) 31 / 62 What is the barrels equivalent of production for the period? Unevaluated leaseholds $10,000,000 Proved leaseholds $8,000,000 Wells and facilities $50,000,000 Unsuccessful exploration costs $5,000,000 Exploratory wells in progress $3,000,000 Accumulated amortization ($12,000,000) Estimated future development costs of proved reserves $6,000,000 End of period oil reserves 10,000,000 bbls End of period gas reserves 30,000,000 mcf Oil production during period 1,500,000 bbls Gas production during period 3,000,000 mcf A. 2,000,000 bbls B. 4,500,000 bbls C. 750,000 bbls D. 3,250,000 bbls Reference: Petroleum Accounting - Principles, Procedures, & Issues; 6th Edition; Brock etal; Chapter 17 pgs 289-290 (2-5) 32 / 62 What is the present value of the cash flow at 15%? Investment $20,000 Net Present Value Factor Year Cash Flow 14% 15% 16% 17% 18% 1 $8,000 0.8772 0.8696 0.8621 0.8547 0.8475 2 $7,000 0.7695 0.7561 0.7432 0.7305 0.7182 3 $6,000 0.675 0.6575 0.6407 0.66244 0.6086 4 $5,000 0.5921 0.5718 0.5523 0.5337 0.5158 5 $4,000 0.5194 0.4972 0.4761 0.4561 0.4371 Total $30,000 A. $24,061.70 B. $21,042.30 C. $1,042.30 D. $42.30 Reference: Managerial Accounting and Economics Review Guide (2-5) 33 / 62 A company has the following Current Assets and Current Liabilities on 12/31/XX: Current Assets Current Liabilities Cash $2,000 Notes Payable $1,200 Accounts Receivable $1,500 Accounts Payable $1,200 Inventories $500 Taxes Payable $800 Prepaid Expenses $200 Current Long-Term Debt $400 What is the working capital for this company? A. $4,200 B. $3,600 C. $600 D. $200 Reference: Managerial Accounting and Economics Study Guide (3-5) 34 / 62 Using the formula, RRR = RF + BI (RM-RF), what would the cost of equity capital for XYZ Corporation under the capital asset pricing model be? RRR=RF + BI (RM - RF) Where: Risk free rate of return 6.00% Market rate of return 14.00% Beta Factor 1.4 A. 0.196 B. 0.184 C. 0.178 D. 0.172 Reference: Managerial Accounting and Economics Review Guide (2-5) 35 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 What is the working capital? A. $180 B. $980 C. $210 D. $230 Reference: Managerial Accounting and Economics Review Guide (2-5) 36 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 What is the current ratio? A. 1.31 B. .51 C. 1.59 D. .31 Reference: Managerial Accounting and Economics Review Guide Page 28 (2-5) 37 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 What is the quick ratio? A. .40 B. .73 C. 1.28 D. .76 Reference: Managerial Accounting and Economics Review Guide (2-5) 38 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 What is the debt to equity ratio? A. 1.30 B. 1.68 C. 1.18 D. 2.68 Reference: Managerial Accounting and Economics Review Guide (2-5) 39 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 What is the debt to total capitalization? A. 62.7% B. 56.4% C. 59.5% D. 48.3% Reference: Managerial Accounting and Economics Review Guide (2-5) 40 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 What is the profit margin? A. 6.0% B. 5.7% C. 10.0% D. 9.5% Reference: Managerial Accounting and Economics Review Guide (2-5) 41 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 A. 43.5% B. 56.0% C. 72.5% D. 33.6% Reference: Managerial Accounting and Economics Review Guide (2-5) 42 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 What would be the return on assets? A. 11.7% B. 16.2% C. 27.00 D. 19.5% Reference: Managerial Accounting and Economics Review Guide, (2-5) 43 / 62 Average Company 20XX Consolidated Balance Sheet Income Statement Assets Revenues Current Assets Sales and Other Operating Revenue $14,000 Cash and Cash Equivalents $100 Income from Equity Investments $200 Short Term Investments $200 Interest $400 Accounts Receivable $250 Other Revenue $100 Inventories $410 Total Revenue $14,700 Prepaid Expenses $20 Total Current Assets $980 Expenses Fixed Assets Cost of Goods Sold $9,000 Property and Pland Equipment $6,000 Selling, General & Administrative Expense $1,000 Less Accumulated Data $2,000 Taxes Other than Incom Tax $1,200 Total Fixed Assets $4,000 Depreciation, Depletion & Amortization $1,300 Deferrec Charges and Other Assets $200 Interest Expense $800 Total Assets $5,180 Total Expenses $13,300 Liabilities and Stockholder Equity Net Income Before Tax $1,400 Current Liabilities Provision for Taxes on Income $560 Accounts Payable $400 Net Income $840 Notes Payable Within One Year $200 Taxes Payable $100 Accrued Current Liabilities $50 Total Current Liabilities $750 Long Term Debt $2,500 Stockholder Equity $1,930 Total Liabilities & Stockholder Equity $5,180 What is the interest coverage? A. 2.75 B. 2.05 C. 1.05 D. 1.75 Reference: Managerial Accounting and Economics Review Guide (2-5) 44 / 62 Using the following data, what is the debt-adjusted book value multiple? Stock Price/Share $25 Debt/Share $12 Book Value/Share $20 A. 1.25 B. .78 C. 1.91 D. 1.16 Reference: Managerial Accounting and Economics Review Guide (2-5) 45 / 62 Using the following data, what would be the present value of the dividend stream under the Gordon Dividend Model? A. $12.50 B. $10.00 C. $14.29 D. $6.67 Reference: Managerial Accounting and Economics Review Guide (2-5) 46 / 62 What is the approximate price earnings ratio the ABC Company should trade at using the Graham & Dodd P/E formula and the following data? Stock Price/Share $20 Estimated growth rate 7% Interest rate on Aaa bonds 6% Dividends as a % of earnings 40% Discount rate 15% A. 14.3 B. 5.0 C. 16.5 D. 16.7 Reference: Managerial Accounting and Economics Review Guide (2-5) 47 / 62 Using the following data, what would be the cash flow as calculated using the simplest, most frequently quoted formula? Net Income $5,000 Production Expense $6,000 Exploration Expense $4,000 D D & A $5,000 Deferred Taxes ($2,000) A. $10,000 B. $8,000 C. $12,000 D. $18,000 Reference: Managerial Accounting and Economics Review Guide (2-5) 48 / 62 Assuming the following information, if XYZ had cash flow of $50 Million, what would be the capitalized cash flow? Discount Rate 15% Growth Rate 5% Debt (Million) $40 Equity (Million) $120 A. $340 million B. $500 million C. $173 million D. $460 million Reference: Managerial Accounting and Economics Review Guide (2-5) 49 / 62 Using the following data, what is the debt-adjusted cash flow multiple? Stock Price/Share $50 Debt/Share $15 Book Value/Share $20 Cash Flow/Share $10 Net Income/Share $8 A. 5.0 B. 6.5 C. 4.5 D. 3.5 Reference: Managerial Accounting and Economics Review Guide (2-5) 50 / 62 Using the following data, what is the Cost of Reserves Added for the XYZ Oil Reserve Additions Oil MM bbls Extension & New Discoveries 50.0 Revisions to previous estimates (2.0) Purchase of reserves in place 6.3 Improved recovery 1.7 Total Additions 56.0 Sale of reserves in place (4.0) Production (48.0) Net Increase/Decrease in reserves 4.0 $ In Million Expenditures Lease acquisitions Capital $15.0 Expense Exploration Cost $63.0 $31.0 Development $12.0 Reserve acquisitions $31.0 Totals $121.0 $31.0 A. $2.58 B. $2.18 C. $1.96 D. $2.71 Reference: Guidelines in Determining Finding/Acquisition Costs-COPAS AG-12, Managerial Accounting and Economics Review Guide (2-5) 51 / 62 Given the following data for the XYZ Oil Company, what would be the production per employee? Production Oil 30,000 Barrels/Day NGL's 5,000 Barrels/Day Gas 60,000 MCF/Day Employees Exploration and Production 1,500 Refining and Marketing 2,800 Corporate Headquarters 200 Total Employees 4,500 A. 2,433 B. 10,950 C. 7,300 D. 2,839 Reference: Guidelines in Determining Finding/Acquisition Costs-COPAS AG-12, Managerial Accounting and Economics Review Guide (2-5) 52 / 62 Using the following data, what is the equivalent production per well for the XYZ Company? Number of Wells Oil Production MMBLS Gas Production MMCF Gross Net Gross Net Gross Net 2,500 1,200 15,000 8,000 18,000 10,000 A. 7,200 BOE B. 6,000 BBLS C. 6,667 BBLS D. 8,056 BOE Reference: Guidelines in Determining Finding/Acquisition Costs-COPAS AG-12, Managerial Accounting and Economics Review Guide (2-5) 53 / 62 Using the following data, what is the reserve replacement ratio for the ABC Petroleum Additions MMBLs Extensions and new discoveries 30 Improved Recovery 3 Total Additions 33 Reductions - Production (25) Revisions to previous estimates (2) Total Reductions (27) Net Changes in Reserves 6 A. .18 B. 1.22 C. 1.32 D. 1.24 Reference: Guidelines in Determining Finding/Acquisition Costs-COPAS AG-12, Managerial Accounting and Economics Review Guide (2-5) 54 / 62 The Main Oil Company produces oil and gas from the Gusher Lease in West Texas. Production and prices for the following two months were: (Note: Combine the combination volume/price variance with the price variance.) February March Oil Production BDP 20,000 18,000 Gas Production MCF/Day 10,000 12,000 Oil Price $/BBL $17.00 $18.00 Gas Price $/MCF $1.60 $1.55 What is the variance in revenue caused by the change in oil production volume? A. $(36,000) B. $36,000 C. $34,000 D. $(34,000) Reference: Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 (2-5) 55 / 62 The Main Oil Company produces oil and gas from the Gusher Lease in West Texas. Production and prices for the following two months were: (Note: Combine the combination volume/price variance with the price variance.) February March Oil Production BDP 20,000 18,000 Gas Production MCF/Day 10,000 12,000 Oil Price $/BBL $17.00 $18.00 Gas Price $/MCF $1.60 $1.55 What is the variance in revenue caused by the change in oil prices? A. $560,000 B. $(560,000) C. $(558,000) D. $558,000 Reference: Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 (2-5) 56 / 62 The Main Oil Company produces oil and gas from the Gusher Lease in West Texas. Production and prices for the following two months were: (Note: Combine the combination volume/price variance with the price variance.) February March Oil Production BDP 20,000 18,000 Gas Production MCF/Day 10,000 12,000 Oil Price $/BBL $17.00 $18.00 Gas Price $/MCF $1.60 $1.55 What is the variance in revenue caused by the change in gas price? A. $14,000 B. $(18,600) C. $(14,000) D. $18,600 Reference: Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 p. 1 (2-5) 57 / 62 The Main Oil Company produces oil and gas from the Gusher Lease in West Texas. Production and prices for the following two months were: (Note: Combine the combination volume/price variance with the price variance.) February March Oil Production BDP 20,000 18,000 Gas Production MCF/Day 10,000 12,000 Oil Price $/BBL $17.00 $18.00 Gas Price $/MCF $1.60 $1.55 Using the following information, what is the variance in revenue caused by the change in gas volumes? A. $(142,600) B. $147,200 C. $(147,200) D. $142,600 Reference: Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 (2-5) 58 / 62 The Main Oil Company produces oil and gas from the Gusher Lease in West Texas. Production and prices for the following two months were: (Note: Combine the combination volume/price variance with the price variance.) February March Oil Production BDP 20,000 18,000 Gas Production MCF/Day 10,000 12,000 Oil Price $/BBL $17.00 $18.00 Gas Price $/MCF $1.60 $1.55 Using the following information, how much of the gas volume variance is caused by the difference in production days? A. $55,800 B. $(57,600) C. $(55,800) D. $57,600 Reference: Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 p. 5 (2-5) 59 / 62 Volume November December Gas (mcf/day) 30,000 35,000 Condensate (bpd) 2,000 2,500 Prices Gas ($/mcf) $2.10 $2.30 Condensate ($/bbl) $18.00 $17.50 Revenue Gas $1,890,000 $2,495,500 Condensate $1,080,000 $1,356,250 Total $2,970,000 $3,851,750 Note: Include the price combination Volume/Price variance with the price variance. What was the gas volume variance for December versus November? A. $(425,500) B. $425,500 C. $388,500 D. $(388,500) Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 (2-5) 60 / 62 Volume November December Gas (mcf/day) 30,000 35,000 Condensate (bpd) 2,000 2,500 Prices Gas ($/mcf) $2.10 $2.30 Condensate ($/bbl) $18.00 $17.50 Revenue Gas $1,890,000 $2,495,500 Condensate $1,080,000 $1,356,250 Total $2,970,000 $3,851,750 Note: Include the price combination Volume/Price variance with the price variance. What was the gas price variance for December versus November? A. $180,000 B. $(180,000) C. $217,000 D. $(217,000) Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 (2-5) 61 / 62 Volume November December Gas (mcf/day) 30,000 35,000 Condensate (bpd) 2,000 2,500 Prices Gas ($/mcf) $2.10 $2.30 Condensate ($/bbl) $18.00 $17.50 Revenue Gas $1,890,000 $2,495,500 Condensate $1,080,000 $1,356,250 Total $2,970,000 $3,851,750 Note: Include the price combination Volume/Price variance with the price variance. What is the oil volume variance for December versus November? A. $(38,750) B. $38,750 C. $30,000 D. $(30,000) Reference: Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 p. 1 (2-5) 62 / 62 Volume November December Gas (mcf/day) 30,000 35,000 Condensate (bpd) 2,000 2,500 Prices Gas ($/mcf) $2.10 $2.30 Condensate ($/bbl) $18.00 $17.50 Revenue Gas $1,890,000 $2,495,500 Condensate $1,080,000 $1,356,250 Total $2,970,000 $3,851,750 Note: Include the price combination Volume/Price variance with the price variance. What was the gas volume variance for December versus November attributable to changes in the number of producing days? A. $69,000 B. $63,000 C. $80,500 D. $73,500 Reference: Managerial Accounting and Economics Review Guide, Variance Analysis in the Oil & Gas Industry-COPAS AG-18 (2-5) Your score isThe average score is 43% 0% Restart quiz
