Exam 3: The Financial System and the Level of Interest Rates

Which of the following is a cash flow from investing activities?

What is the firm's net cash flow from operating activities?

Cash flows from operating activities involve buying and selling of long-term assets.

The going concern assumption implies that:

The matching principle calls for the accountant of a firm to:

Preparing a marked-to-market balance sheet is rather straightforward because it is easy to obtain market values for all assets and liabilities.

The key financial statement that ties the other three statements together is the statement of cash flows, which summarizes changes in the balance sheet from the beginning of the year to the end.

Tumbling Haven, a gymnastic equipment manufacturer, provided the following information to its accountant. The company had current assets of $145,332, net fixed assets of $356,190, and other assets of $4,176. The firm had long-term debt of $76,445, common stock of $200,000, and retained earnings of $134,461. What amount of current liabilities did this firm have?

Maddux, Inc., has completed its fiscal year and reported the following information. The company had current assets of $153,413, net fixed assets of $412,331, and other assets of $7,822. The firm also has current liabilities worth $65,314, long-term debt of $178,334, and common stock of $162,000. What is the amount of retained earnings?

Generally accepted accounting principles (GAAP) are a set of authoritative guidelines that define accounting practice at a particular point in time.

Which of the following sections do annual reports typically contain?

Identify the noncash items that a firm may have on its financial statements and explain their impact on the shareholders of the firm.

Generally accepted accounting principles determine the rules for how a company can issue equity to raise money.

Natural Lite, Inc. reported the following items during fiscal 2010. The firm purchased marketable securities of $87,500, paid down a long-term loan in the amount of $650,000, purchased $4,250,000 of new equipment. The firm also issued $6,250,000 of common stock, paid $350,225 in dividends to its common shareholders, and repurchased $1,250,000 of common stock in the open market. What is the net cash provided by financing activities?

Trident Corporation had the following cash flows in the current year. Which of the following will be categorized under the financing activities section of the statement of cash flows?

During 2008, Towson Recording Company increased its investment in marketable securities by $36,845, funded fixed assets acquisition by $109,455, and had marketable securities of $14,215 mature. What is the net cash provided by (used in) investing activities?

Cash flows from financing activities include all but one of the following:

Explain the differences from using FIFO versus LIFO method of valuation in accounting for inventory.

Which of the following is NOT true about goodwill?

Making and collecting loans, issuing and paying out on insurance contracts, and buying and selling debt or equity instruments of other firms are examples of financing activities.