Exam 10: Understanding a Firms Financial Statements

The balance sheet and income statement are separate reports,but actually

To increase her return on equity,Latitia could:

Raul needed an expensive piece of equipment to expand his business.He borrowed the money from the bank and pledged the equipment as ___________.If Raul does not repay the loan,the bank can take his equipment.

To determine how much Harlan sold to cash customers,he must:

Horace is reviewing a document that shows the results of his firm's operations over a period of one year.Horace is looking at the:

Describe sources of current debt.

When Cameron and Ashley allow a customer to buy on credit,which account increases?

For investment purposes,Wilma needs a snapshot of the firm's financial position at a specific point in time.She should look at the

Match the term with its definition. a.Accrued expenses b.Cash flow activities c.Cash flow statement d.Fixed assets e.Gross fixed assets f.Long-term debt g.Other assets h.Short-term notes -Operating,investing,and financing activities that result in cash inflows or outflows

Trucks for Stuff is a one year old company that provides statewide moving services to customers.Describe the types of current,fixed and other assets Trucks for Stuff would have.

Jan's bank has asked her to show them how her firm's financial position has changed in the past year.She should provide the company's balance sheet.

Jasper bought some new equipment for his business.Six months later he wants to know whether this was a good idea.To do that,he can calculate the:

In order to determine the cash flows from day-to-day operations,the firm must convert the company's income statement from a cash basis to an accrual basis.

Match the term with its definition. a.Accrual-basis accounting b.Cash-basis accounting c.Current ratio d.Financial statements e.Liquidity f.Operating profit margin g.Return on assets h.Return on equity -The degree to which a firm has working capital available to meet maturing debt obligations

Dividends to a firm's owners are not considered an expense in the income statement.

While increasing debt levels can increase the owner's return on equity,it also reduces risk.

Match the term with its definition. a.Cost of goods sold b.Gross profit c.Long-term notes d.Net profits e.Operating profits f.Profit margins g.Profits before taxes h.Total asset turnover -Earnings after operating expenses but before interest and taxes are paid

Coronado cannot use the income statement as a measure of cash flows because it is calculated on a(n)_______ rather than a(n)_______ basis.

Regina wants to open her own coffee stand.To do that she will need equipment and supplies.The two methods Regina can use to pay for these items are:

Walter knows the result of the equation "Sales-Expenses = Profits" can be found on the: