Question 1

Which of the following is an approximation of a cash-based measure of pretax operating earnings?

Accepted Answer

A)  Net sales less income taxes 
B)  EBITDA 
C)  Net income 
D)  Gross profit 
A)  Net sales less income taxes 
B)  EBITDA 
C)  Net income 
D)  Gross profit

Question 2

Tinker Company reported sales revenue of $500,000 and total expenses of $450,000 (including depreciation) for the year ended December 31, 2010. During 2010, accounts receivable decreased by $5,000, merchandise inventory increased by $4,000, accounts payable increased by $6,000, and depreciation expense of $10,000 was recorded. Assuming no other data is needed and using the indirect method, the net cash inflow from operating activities for 2010 was

Accepted Answer

A)  $60,000 
B)  $67,000 
C)  $44,000 
D)  $51,000 
A)  $60,000 
B)  $67,000 
C)  $44,000 
D)  $51,000

Question 3

A firm's cash flows will differ from net income each period for all of the following reasons except:

Accepted Answer

A)  cash receipts from customers do not necessarily occur in the same period in which a firm recognizes revenues. 
B)  cash expenditures to employees, suppliers, and governments do not necessarily occur in the same period in which a firm recognizes expenses. 
C)  the company is sustaining losses each period. 
D)  cash inflows and outflows that pertain to investing and financing activities do not immediately flow through the income statement. 
A)  cash receipts from customers do not necessarily occur in the same period in which a firm recognizes revenues. 
B)  cash expenditures to employees, suppliers, and governments do not necessarily occur in the same period in which a firm recognizes expenses. 
C)  the company is sustaining losses each period. 
D)  cash inflows and outflows that pertain to investing and financing activities do not immediately flow through the income statement.

Question 4

____________________ activities relate to the normal operations of the firm, selling goods and providing services.

Accepted Answer

The answer of ____________________ activities relate to the normal operations...

Question 5

Which of the following companies would you expect to report significant amounts of cash provided by financing activities?

Accepted Answer

A)  A yet-to-be-profitable biotechnology company. 
B)  A mature company operating in the oil refinery industry. 
C)  A profitable established company in the retail industry. 
D)  A large multinational pharmaceutical company. 
A)  A yet-to-be-profitable biotechnology company. 
B)  A mature company operating in the oil refinery industry. 
C)  A profitable established company in the retail industry. 
D)  A large multinational pharmaceutical company.

Question 6

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be

Accepted Answer

A)  greater than net income 
B)  less than net income 
C)  greater than the change in working capital from operations 
D)  greater than the change in cash 
A)  greater than net income 
B)  less than net income 
C)  greater than the change in working capital from operations 
D)  greater than the change in cash

Question 7

The receipt of cash when employees exercise stock options is a (an) ____________________ activity.

Accepted Answer

The answer of The receipt of cash when employees exercise...

Question 8

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Accepted Answer

A)  lending activities. 
B)  operating activities. 
C)  investing activities. 
D)  financing activities. 
A)  lending activities. 
B)  operating activities. 
C)  investing activities. 
D)  financing activities.

Question 9

Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010?

Accepted Answer

A)  $655,000 
B)  $980,000 
C)  $560,000 
D)  $620,000 
A)  $655,000 
B)  $980,000 
C)  $560,000 
D)  $620,000

Question 10

Which of the following is the correct formula for calculating cash collections from customers?

Accepted Answer

A)  sales for the period plus accounts receivable at the beginning of the period 
B)  sales for the period plus accounts receivable at the beginning of the period minus accounts receivable at the end of the period 
C)  sales for the period plus accounts receivable at the end of the period 
D)  sales for the period plus accounts receivable at the end of the period minus accounts receivable at the beginning of the period 
A)  sales for the period plus accounts receivable at the beginning of the period 
B)  sales for the period plus accounts receivable at the beginning of the period minus accounts receivable at the end of the period 
C)  sales for the period plus accounts receivable at the end of the period 
D)  sales for the period plus accounts receivable at the end of the period minus accounts receivable at the beginning of the period

Question 11

A company in the growth phase of its product life cycle will normally have the following pattern of cash flows

Accepted Answer

A)  Negative cash flows from operations, negative cash flows from investing and positive cash flows from financing. 
B)  Negative or positive cash flows from operations, negative cash flows from investing and positive cash flows from financing. 
C)  Positive cash flows from operations, positive cash flows from investing and positive cash flows from financing. 
D)  Negative or positive cash flows from operations, negative cash flows from investing and negative cash flows from financing. 
A)  Negative cash flows from operations, negative cash flows from investing and positive cash flows from financing. 
B)  Negative or positive cash flows from operations, negative cash flows from investing and positive cash flows from financing. 
C)  Positive cash flows from operations, positive cash flows from investing and positive cash flows from financing. 
D)  Negative or positive cash flows from operations, negative cash flows from investing and negative cash flows from financing.

Question 12

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________.

Accepted Answer

investing

Question 13

Which of the following transactions would not create a cash flow?

Accepted Answer

A)  Payment of a cash dividend. 
B)  The company purchased some of its own stock from a stockholder. 
C)  Amortization of patent for the period. 
D)  Sale of equipment at book value (i.e. no gain or loss). 
A)  Payment of a cash dividend. 
B)  The company purchased some of its own stock from a stockholder. 
C)  Amortization of patent for the period. 
D)  Sale of equipment at book value (i.e. no gain or loss).

Question 14

Which of the following statements is true?

Accepted Answer

A)  A cash dividend is an operating cash outflow. 
B)  Cash paid to repurchase treasury stock is an investing cash outflow. 
C)  Cash paid to acquire stock in another company is a financing outflow. 
D)  Purchase of a patent is an investing cash outflow. 
A)  A cash dividend is an operating cash outflow. 
B)  Cash paid to repurchase treasury stock is an investing cash outflow. 
C)  Cash paid to acquire stock in another company is a financing outflow. 
D)  Purchase of a patent is an investing cash outflow.

Question 15

The period in which a firm commences the manufacture of its product to the time it receives cash is called the ______________________________.

Accepted Answer

The answer of The period in which a firm commences...

Question 16

Discuss operating, investing, and financing cash flows in relation to the various stages of the product life cycle.

Accepted Answer

1. Operating cash flows begin neg

Question 17

Interest expense and interest revenue would be classified as ____________________ activities in the statement of cash flows.

Accepted Answer

The answer of Interest expense and interest revenue would be...

Question 18

Free cash flows to all debt and common equity shareholders represents the excess of cash flow from operations over cash flows from ___________________________________.

Accepted Answer

investing

Question 19

Cash flows from ____________________ activities will normally be positive during the introduction and growth phases of the product life cycle.

Accepted Answer

The answer of Cash flows from ____________________ activities will normally...

Question 20

When preparing the statement of cash flows using the indirect method, an increase in accounts payable would appear as

Accepted Answer

A)  a decrease in the operating activities section 
B)  an increase in the operating activities section 
C)  a use of cash in the investing activities section 
D)  a source of cash in the investing activities section 
A)  a decrease in the operating activities section 
B)  an increase in the operating activities section 
C)  a use of cash in the investing activities section 
D)  a source of cash in the investing activities section

Which of the following is an approximation of a cash-based measure of pretax operating earnings?

A firm's cash flows will differ from net income each period for all of the following reasons except:

____________________ activities relate to the normal operations of the firm, selling goods and providing services.

Which of the following companies would you expect to report significant amounts of cash provided by financing activities?

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be

The receipt of cash when employees exercise stock options is a (an) ____________________ activity.

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010?

Which of the following is the correct formula for calculating cash collections from customers?

A company in the growth phase of its product life cycle will normally have the following pattern of cash flows

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________.

Which of the following transactions would not create a cash flow?

Which of the following statements is true?

The period in which a firm commences the manufacture of its product to the time it receives cash is called the ______________________________.

Discuss operating, investing, and financing cash flows in relation to the various stages of the product life cycle.

Interest expense and interest revenue would be classified as ____________________ activities in the statement of cash flows.

Free cash flows to all debt and common equity shareholders represents the excess of cash flow from operations over cash flows from ___________________________________.

Cash flows from ____________________ activities will normally be positive during the introduction and growth phases of the product life cycle.

When preparing the statement of cash flows using the indirect method, an increase in accounts payable would appear as

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

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Exam 3: Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Which of the following is an approximation of a cash-based measure of pretax operating earnings?

A firm's cash flows will differ from net income each period for all of the following reasons except:

____________________ activities relate to the normal operations of the firm, selling goods and providing services.

Which of the following companies would you expect to report significant amounts of cash provided by financing activities?

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be

The receipt of cash when employees exercise stock options is a (an) ____________________ activity.

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Toro Company recognized $655,000 of cost of goods sold in 2010, in addition its implementation of a just-in-time inventory system allowed it to reduce its inventory from $325,000 at the beginning of the year to $230,000 at the end of 2010. How much cash did Toro spend for inventory in 2010?

Which of the following is the correct formula for calculating cash collections from customers?

A company in the growth phase of its product life cycle will normally have the following pattern of cash flows

Cash flow from operations should include none of the cash flows associated with marketable securities if such transactions are viewed as ___________________________________.

Which of the following transactions would not create a cash flow?

Which of the following statements is true?

The period in which a firm commences the manufacture of its product to the time it receives cash is called the ______________________________.

Discuss operating, investing, and financing cash flows in relation to the various stages of the product life cycle.

Interest expense and interest revenue would be classified as ____________________ activities in the statement of cash flows.

Free cash flows to all debt and common equity shareholders represents the excess of cash flow from operations over cash flows from ___________________________________.

Cash flows from ____________________ activities will normally be positive during the introduction and growth phases of the product life cycle.

When preparing the statement of cash flows using the indirect method, an increase in accounts payable would appear as

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters