Question 1

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

Accepted Answer

A)  Cash payment of dividends to shareholders. 
B)  Cash from sale of products. 
C)  Purchase of plant, and equipment. 
D)  Rent received from industrial property owned. 
A)  Cash payment of dividends to shareholders. 
B)  Cash from sale of products. 
C)  Purchase of plant, and equipment. 
D)  Rent received from industrial property owned.

Question 2

The generally accepted accounting principles (GAAP) are

Accepted Answer

A)  rules that outline how a firm can operate ethically. 
B)  rules on how the firm will be valued in the event of a merger. 
C)  rules and procedures that define how companies are to maintain financial records and prepare financial reports. 
D)  rules for how a company can issue stock to raise money. 
A)  rules that outline how a firm can operate ethically. 
B)  rules on how the firm will be valued in the event of a merger. 
C)  rules and procedures that define how companies are to maintain financial records and prepare financial reports. 
D)  rules for how a company can issue stock to raise money.

Question 3

What is the firm's cash flow from financing activities?

Accepted Answer

A)  -$66,405 
B)  $61,656 
C)  -$61,656 
D)  -$182,057 
A)  -$66,405 
B)  $61,656 
C)  -$61,656 
D)  -$182,057

Question 4

The balance sheet identifies the productive resources (assets) that a firm uses to generate income, as well as the sources of funding from creditors (liabilities) and owners (shareholders' equity) that were used to buy the assets.

Accepted Answer

A) True 
 B)False

Question 5

Which one of the following is NOT true about goodwill?

Accepted Answer

A)  It is an intangible asset. 
B)  It represents the value of all unrecorded assets acquired in a merger. 
C)  It equals the premium paid over the fair market value of the assets acquired in a merger. 
D)  When goodwill appears on a firm's balance sheet, it reduces the firm's net worth by that amount. 
A)  It is an intangible asset. 
B)  It represents the value of all unrecorded assets acquired in a merger. 
C)  It equals the premium paid over the fair market value of the assets acquired in a merger. 
D)  When goodwill appears on a firm's balance sheet, it reduces the firm's net worth by that amount.

Question 6

Rent and insurance are examples of depletion expenses.

Accepted Answer

A) True 
 B)False

Question 7

Galan Associates prepared its financial statement for 2008 based on the information given here. The company had cash worth $1,234, inventory worth $13,480, and accounts receivables of $7,789. The company's net fixed assets are $42,331, and other assets are $1,822. It had accounts payables of $9,558, notes payables of $2,756, common stock of $22,000, and retained earnings of $14,008. How much long-term debt does the firm have?

Accepted Answer

A)  $54,342 
B)  $76,342 
C)  $12,314 
D)  $18,334 
A)  $54,342 
B)  $76,342 
C)  $12,314 
D)  $18,334

Question 8

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

Accepted Answer

A)  $304,322 
B)  $299,176 
C)  $192,602 
D)  none of the above 
A)  $304,322 
B)  $299,176 
C)  $192,602 
D)  none of the above

Question 9

Which one of the following is NOT a cash flow from investing activities?

Accepted Answer

A)  buying and selling bonds or stock of other firms 
B)  buying or selling of land, buildings, and plant and equipment 
C)  cash payments of dividends to shareholders 
D)  issuing and paying out on insurance contracts 
A)  buying and selling bonds or stock of other firms 
B)  buying or selling of land, buildings, and plant and equipment 
C)  cash payments of dividends to shareholders 
D)  issuing and paying out on insurance contracts

Question 10

Which of the following is an income statement item?

Accepted Answer

A)  Accumulated depreciation. 
B)  Accrued taxes. 
C)  Retained earnings. 
D)  Selling and administrative expenses. 
A)  Accumulated depreciation. 
B)  Accrued taxes. 
C)  Retained earnings. 
D)  Selling and administrative expenses.

Question 11

Cash flows from operating activities relate to the buying and selling of long-term assets.

Accepted Answer

A) True 
 B)False

Question 12

Accounting profits include noncash revenues (e.g., prepaid rent) and noncash expenses (e.g., depreciation), whereas cash flows do not include these items.

Accepted Answer

A) True 
 B)False

Question 13

The going concern assumption states that a business will be shutting down its operation in the near future.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Depreciation and amortization are examples of prepaid expenses.

Accepted Answer

A) True 
 B)False

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

According to the realization principle, revenue from a sale of the firm's products are recognized

Accepted Answer

A)  when the products are shipped to the buyer. 
B)  when the buyer orders the goods. 
C)  when cash is realized from the sale of the products. 
D)  at the time of the sale. 
A)  when the products are shipped to the buyer. 
B)  when the buyer orders the goods. 
C)  when cash is realized from the sale of the products. 
D)  at the time of the sale.

Question 18

The book value of an asset is the historical cost of the asset less the accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 19

Book value is the amount a firm paid for its assets at the time of purchase.

Accepted Answer

A) True 
 B)False

Question 20

The matching principle calls for the accountant of a firm to

Accepted Answer

A)  identify an asset with each liability of the firm. 
B)  associate the revenue generated from a sale to the costs incurred to produce the product. 
C)  match each item of inventory with the historical cost at which it was acquired. 
D)  none of the above 
A)  identify an asset with each liability of the firm. 
B)  associate the revenue generated from a sale to the costs incurred to produce the product. 
C)  match each item of inventory with the historical cost at which it was acquired. 
D)  none of the above

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

The generally accepted accounting principles (GAAP) are

What is the firm's cash flow from financing activities?

The balance sheet identifies the productive resources (assets) that a firm uses to generate income, as well as the sources of funding from creditors (liabilities) and owners (shareholders' equity) that were used to buy the assets.

Which one of the following is NOT true about goodwill?

Rent and insurance are examples of depletion expenses.

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

Which one of the following is NOT a cash flow from investing activities?

Which of the following is an income statement item?

Cash flows from operating activities relate to the buying and selling of long-term assets.

Accounting profits include noncash revenues (e.g., prepaid rent) and noncash expenses (e.g., depreciation), whereas cash flows do not include these items.

The going concern assumption states that a business will be shutting down its operation in the near future.

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

Depreciation and amortization are examples of prepaid expenses.

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.

According to the realization principle, revenue from a sale of the firm's products are recognized

The book value of an asset is the historical cost of the asset less the accumulated depreciation.

Book value is the amount a firm paid for its assets at the time of purchase.

The matching principle calls for the accountant of a firm to

The Financial Manager and the Company

The Financial System and the Level of Interest Rates

Analysing Financial Statements

The Time Value of Money

Discounted Cash Flows and Valuation

Risk and Return

Bond Valuation and the Structure of Interest Rates

Share Valuation

The Fundamentals of Capital Budgeting

Cash Flows and Capital Budgeting

Evaluating Project Economics and Capital Rationing

The Cost of Capital

Working Capital Management

How Companies Raise Capital

Capital Structure Policy

Dividends and Dividend Policy

Business Formation, Growth and Valuation

Strategic Financial Planning and Forecasting

Options and Corporate Finance

International Financial Management

Filters

Exam 3: Financial Statements, Cash Flows and Tax

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

The generally accepted accounting principles (GAAP) are

What is the firm's cash flow from financing activities?

The balance sheet identifies the productive resources (assets) that a firm uses to generate income, as well as the sources of funding from creditors (liabilities) and owners (shareholders' equity) that were used to buy the assets.

Which one of the following is NOT true about goodwill?

Rent and insurance are examples of depletion expenses.

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

Which one of the following is NOT a cash flow from investing activities?

Which of the following is an income statement item?

Cash flows from operating activities relate to the buying and selling of long-term assets.

Accounting profits include noncash revenues (e.g., prepaid rent) and noncash expenses (e.g., depreciation), whereas cash flows do not include these items.

The going concern assumption states that a business will be shutting down its operation in the near future.

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

Depreciation and amortization are examples of prepaid expenses.

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.

According to the realization principle, revenue from a sale of the firm's products are recognized

The book value of an asset is the historical cost of the asset less the accumulated depreciation.

Book value is the amount a firm paid for its assets at the time of purchase.

The matching principle calls for the accountant of a firm to

The Financial Manager and the Company

The Financial System and the Level of Interest Rates

Analysing Financial Statements

The Time Value of Money

Discounted Cash Flows and Valuation

Risk and Return

Bond Valuation and the Structure of Interest Rates

Share Valuation

The Fundamentals of Capital Budgeting

Cash Flows and Capital Budgeting

Evaluating Project Economics and Capital Rationing

The Cost of Capital

Working Capital Management

How Companies Raise Capital

Capital Structure Policy

Dividends and Dividend Policy

Business Formation, Growth and Valuation

Strategic Financial Planning and Forecasting

Options and Corporate Finance

International Financial Management

Filters