Question 1

Common equity includes all of the following except:

Accepted Answer

A)  common stock. 
B)  preferred stock. 
C)  retained earnings. 
D)  capital in excess of par. 
A)  common stock. 
B)  preferred stock. 
C)  retained earnings. 
D)  capital in excess of par.

Question 2

Amortization is:

Accepted Answer

A)  the new value assigned to historically priced assets. 
B)  a balance sheet item that results in lower cash flow. 
C)  another term for bad debts profision. 
D)  the allocation of an asset's initial cost over time. 
A)  the new value assigned to historically priced assets. 
B)  a balance sheet item that results in lower cash flow. 
C)  another term for bad debts profision. 
D)  the allocation of an asset's initial cost over time.

Question 3

Earnings per share are:

Accepted Answer

A)  are those earnings that belong to the common shareholders divided by the number of shares outstanding. 
B)  are those earnings calculated before preferred stock dividends are deducted divided by the number of shares outstanding. 
C)  are the change in retained earnings divided by the number of shareholders. 
D)  are earnings available to all shareholders divided by the number of preferred shares outstanding. 
A)  are those earnings that belong to the common shareholders divided by the number of shares outstanding. 
B)  are those earnings calculated before preferred stock dividends are deducted divided by the number of shares outstanding. 
C)  are the change in retained earnings divided by the number of shareholders. 
D)  are earnings available to all shareholders divided by the number of preferred shares outstanding.

Question 4

Company A has increased its yearly amortization expense by $13,000 resulting in a yearly $4,810 increase in cash flow. Company B has also increased its amortization expense by $13,000 but their yearly increase in cash flow is only $3,770. Assume in both cases that all non- amortization related cash flows are unchanged year over year. Why would this happen?

Accepted Answer

The only thing that could account for th

Question 5

Which of the following items on the income statement and balance sheet is MOST likely to vary spontaneously with sales?

Accepted Answer

A)  accrued expenses 
B)  long term debt 
C)  common stock 
D)  amortization expense 
A)  accrued expenses 
B)  long term debt 
C)  common stock 
D)  amortization expense

Question 6

A significantly higher average collection period than the industry average might suggest:

Accepted Answer

A)  poor credit decisions. 
B)  high profit levels. 
C)  rapid collection of accounts. 
D)  low liquidity levels. 
A)  poor credit decisions. 
B)  high profit levels. 
C)  rapid collection of accounts. 
D)  low liquidity levels.

Question 7

Which of the following statements is true of the statement of cash flows?

Accepted Answer

A)  It is very similar to the income statement. 
B)  It includes changes in net working capital only. 
C)  It includes dividends paid. 
D)  It measures changes in profit from one year to the next year. 
A)  It is very similar to the income statement. 
B)  It includes changes in net working capital only. 
C)  It includes dividends paid. 
D)  It measures changes in profit from one year to the next year.

Question 8

Use the following information below to answer the question:
  Sales are projected for $20,000 for 2000. COGS varies directly with sales.
Projected Net income for 2000 is:

Accepted Answer

A)  $6,600 
B)  $5,000 
C)  $4,000 
D)  $6,000 
A)  $6,600 
B)  $5,000 
C)  $4,000 
D)  $6,000

Question 9

Which of the following items will most likely vary spontaneously with sales

Accepted Answer

A)  accounts receivable 
B)  long- term bonds 
C)  administrative expenses 
D)  preferred stock 
A)  accounts receivable 
B)  long- term bonds 
C)  administrative expenses 
D)  preferred stock

Question 10

Why is forecasting importantg

Accepted Answer

Forecasts determine which new

Question 11

Explain the difference between debt and equity. Why must the two equal total assets?

Accepted Answer

Debt is an obligation owed to

Question 12

When Canadian corporations are calculating their amortization expenses for income tax purposes:

Accepted Answer

A)  they must use the Capital Cost Allowance Rate. 
B)  any method may be used if it qualifies under generally accepted accounting principles. 
C)  they must use straight line amortization. 
D)  they must use the declining balance method. 
A)  they must use the Capital Cost Allowance Rate. 
B)  any method may be used if it qualifies under generally accepted accounting principles. 
C)  they must use straight line amortization. 
D)  they must use the declining balance method.

Question 13

a. Prepare a cash flow statement for the following information.
b. Include a cash reconciliation statement.

Accepted Answer

The answer of a. Prepare a cash flow statement for...

Question 14

Use the following information to answer the question:
    
-If selling expenses remain a constant percentage of sales, what is their forecast for next year?

Accepted Answer

A)  $3,750 
B)  $4,950 
C)  $4,350 
D)  $3,150 
A)  $3,750 
B)  $4,950 
C)  $4,350 
D)  $3,150

Question 15

Which of the following statements are true

Accepted Answer

A)  When comparing ratios to industry average, a ratio equal to the industry average is not necessarily good. 
B)  Trend analysis compares the firm to other same- industry firms. 
C)  It is easy to find competitors to use as benchmarks. 
D)  There are standards for acceptable ratios that apply to all industries. 
A)  When comparing ratios to industry average, a ratio equal to the industry average is not necessarily good. 
B)  Trend analysis compares the firm to other same- industry firms. 
C)  It is easy to find competitors to use as benchmarks. 
D)  There are standards for acceptable ratios that apply to all industries.

Question 16

The income statement:

Accepted Answer

A)  details the firm's assets and liabilities over a period of time. 
B)  is a financial statement that summarizes a firm's revenues and expenses over a period of time. 
C)  is a financial statement that shows the firm's financial position at a particular point in time. 
D)  is a financial statement that summarizes a firm's revenues and expenses at a particular point in time. 
A)  details the firm's assets and liabilities over a period of time. 
B)  is a financial statement that summarizes a firm's revenues and expenses over a period of time. 
C)  is a financial statement that shows the firm's financial position at a particular point in time. 
D)  is a financial statement that summarizes a firm's revenues and expenses at a particular point in time.

Question 17

Shares outstanding of common stock = 1,000,000 
Shares outstanding of preferred stock = 500,000 
Market price of common stock = $18.
-The Times Interest Earned ratio is:

Accepted Answer

A)  3.7 
B)  2.7 
C)  0.27 
D)  0.62 
A)  3.7 
B)  2.7 
C)  0.27 
D)  0.62

Question 18

Explain what could cause a low net profit margin relative to the industry.

Accepted Answer

Operating expenses may be too high - poo

Question 19

According to accounting principles:

Accepted Answer

A)  operating expenses during the year are tied to revenues they helped to generate. 
B)  net working capital should equal zero. 
C)  current assets should equal current liabilities. 
D)  depreciation is a cash expense. 
A)  operating expenses during the year are tied to revenues they helped to generate. 
B)  net working capital should equal zero. 
C)  current assets should equal current liabilities. 
D)  depreciation is a cash expense.

Question 20

Last year Company A earned $2.00 per share and Company B earned only $1.00 per share. Which company appears to be the best managed? Why?

Accepted Answer

There is no way to tell with the informa

Common equity includes all of the following except:

Amortization is:

Earnings per share are:

Which of the following items on the income statement and balance sheet is MOST likely to vary spontaneously with sales?

A significantly higher average collection period than the industry average might suggest:

Which of the following statements is true of the statement of cash flows?

Use the following information below to answer the question: Sales are projected for $20,000 for 2000. COGS varies directly with sales. Projected Net income for 2000 is:

Which of the following items will most likely vary spontaneously with sales

Why is forecasting importantg

Explain the difference between debt and equity. Why must the two equal total assets?

When Canadian corporations are calculating their amortization expenses for income tax purposes:

a. Prepare a cash flow statement for the following information. b. Include a cash reconciliation statement.

Use the following information to answer the question: -If selling expenses remain a constant percentage of sales, what is their forecast for next year?

Which of the following statements are true

The income statement:

Shares outstanding of common stock = 1,000,000 Shares outstanding of preferred stock = 500,000 Market price of common stock = $18. -The Times Interest Earned ratio is:

Explain what could cause a low net profit margin relative to the industry.

According to accounting principles:

Last year Company A earned $2.00 per share and Company B earned only $1.00 per share. Which company appears to be the best managed? Why?

The World of Finance

Essential Concepts in Finance: Part B

Capital Budgeting and Business Valuation

Long-Term Financing Decisions

Short-Term Financing Decisions

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Exam 2: Essential Concepts in Finance: Part A

Common equity includes all of the following except:

Amortization is:

Earnings per share are:

Which of the following items on the income statement and balance sheet is MOST likely to vary spontaneously with sales?

A significantly higher average collection period than the industry average might suggest:

Which of the following statements is true of the statement of cash flows?

Use the following information below to answer the question: Sales are projected for $20,000 for 2000. COGS varies directly with sales. Projected Net income for 2000 is:

Which of the following items will most likely vary spontaneously with sales

Why is forecasting importantg

Explain the difference between debt and equity. Why must the two equal total assets?

When Canadian corporations are calculating their amortization expenses for income tax purposes:

a. Prepare a cash flow statement for the following information. b. Include a cash reconciliation statement.

Use the following information to answer the question: -If selling expenses remain a constant percentage of sales, what is their forecast for next year?

Which of the following statements are true

The income statement:

Shares outstanding of common stock = 1,000,000 Shares outstanding of preferred stock = 500,000 Market price of common stock = $18. -The Times Interest Earned ratio is:

Explain what could cause a low net profit margin relative to the industry.

According to accounting principles:

Last year Company A earned $2.00 per share and Company B earned only $1.00 per share. Which company appears to be the best managed? Why?

The World of Finance

Essential Concepts in Finance: Part B

Capital Budgeting and Business Valuation

Long-Term Financing Decisions

Short-Term Financing Decisions

Filters