Question 1

An increase in inventories uses cash, reducing the firm's net cash balance.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following forms of income can individuals defer from taxation?

Accepted Answer

A) dividends 
B) interest 
C) realized capital gains 
D) unrealized capital gains 
A) dividends 
B) interest 
C) realized capital gains 
D) unrealized capital gains

Question 3

What is the change in cash for a firm with the following: $10,000 cash flow from operations, $1,600 cash used for new investment, a reduction in the level of debt of $2,000, $1,000 in cash dividends, and $200 in depreciation expense?

Accepted Answer

A) $5,600 
B) $9,600 
C) $9,400 
D) $5,400 
A) $5,600 
B) $9,600 
C) $9,400 
D) $5,400

Question 4

If a firm's statement of cash flows shows that cash was used for investments, which of the following would seem most likely?

Accepted Answer

A) the inventory balance increased. 
B) common stock was repurchased. 
C) new machines were acquired. 
D) cash dividends were paid. 
A) the inventory balance increased. 
B) common stock was repurchased. 
C) new machines were acquired. 
D) cash dividends were paid.

Question 5

When subtracting an asset's accumulated depreciation from its historic cost, the resulting value is termed the:

Accepted Answer

A) book value of the asset. 
B) market value of the asset. 
C) depreciation expense. 
D) current asset value. 
A) book value of the asset. 
B) market value of the asset. 
C) depreciation expense. 
D) current asset value.

Question 6

Which of the following statements about depreciation is correct?

Accepted Answer

A) depreciation is subtracted from cost of goods sold to calculate net income. 
B) when depreciation expense is incurred, cash balances are reduced. 
C) depreciation expense does not affect net income. 
D) depreciation reduces the book value of assets. 
A) depreciation is subtracted from cost of goods sold to calculate net income. 
B) when depreciation expense is incurred, cash balances are reduced. 
C) depreciation expense does not affect net income. 
D) depreciation reduces the book value of assets.

Question 7

What happens to the market value of a firm's equity as the book value of the firm's equity increases?

Accepted Answer

A) it increases by the same amount. 
B) it decreases by the same amount. 
C) it remains constant. 
D) there is no set relationship to determine this outcome. 
A) it increases by the same amount. 
B) it decreases by the same amount. 
C) it remains constant. 
D) there is no set relationship to determine this outcome.

Question 8

Which of the following is more likely to be correct if market value of equity is less than book value of equity?

Accepted Answer

A) investors anticipate excellent earning potential. 
B) investors anticipate low earning potential relative to the level of risk. 
C) assets have been fully depreciated. 
D) the company is bankrupt. 
A) investors anticipate excellent earning potential. 
B) investors anticipate low earning potential relative to the level of risk. 
C) assets have been fully depreciated. 
D) the company is bankrupt.

Question 9

According to the statement of cash flows, cash flows from financing could be positive if:

Accepted Answer

A) the firm repaid more debt than it added. 
B) the firm added more debt than it repaid. 
C) interest rates were low on outstanding debt. 
D) the firm sold portions of its plant and equipment. 
A) the firm repaid more debt than it added. 
B) the firm added more debt than it repaid. 
C) interest rates were low on outstanding debt. 
D) the firm sold portions of its plant and equipment.

Question 10

Amy wants to know if inventory is increasing as a percentage of total assets.Which one of these statements most easily provides the information she is seeking?

Accepted Answer

A) statement of cash flows 
B) balance sheet 
C) common-size balance sheet 
D) income statement 
A) statement of cash flows 
B) balance sheet 
C) common-size balance sheet 
D) income statement

An increase in inventories uses cash, reducing the firm's net cash balance.

Which of the following forms of income can individuals defer from taxation?

What is the change in cash for a firm with the following: $10,000 cash flow from operations, $1,600 cash used for new investment, a reduction in the level of debt of $2,000, $1,000 in cash dividends, and $200 in depreciation expense?

If a firm's statement of cash flows shows that cash was used for investments, which of the following would seem most likely?

When subtracting an asset's accumulated depreciation from its historic cost, the resulting value is termed the:

Which of the following statements about depreciation is correct?

What happens to the market value of a firm's equity as the book value of the firm's equity increases?

Which of the following is more likely to be correct if market value of equity is less than book value of equity?

According to the statement of cash flows, cash flows from financing could be positive if:

Amy wants to know if inventory is increasing as a percentage of total assets.Which one of these statements most easily provides the information she is seeking?

Goals and Governance of the Firm

Financial Markets and Institutions

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters

Exam 3: Accounting and Finance

An increase in inventories uses cash, reducing the firm's net cash balance.

Which of the following forms of income can individuals defer from taxation?

What is the change in cash for a firm with the following: $10,000 cash flow from operations, $1,600 cash used for new investment, a reduction in the level of debt of $2,000, $1,000 in cash dividends, and $200 in depreciation expense?

If a firm's statement of cash flows shows that cash was used for investments, which of the following would seem most likely?

When subtracting an asset's accumulated depreciation from its historic cost, the resulting value is termed the:

Which of the following statements about depreciation is correct?

What happens to the market value of a firm's equity as the book value of the firm's equity increases?

Which of the following is more likely to be correct if market value of equity is less than book value of equity?

According to the statement of cash flows, cash flows from financing could be positive if:

Amy wants to know if inventory is increasing as a percentage of total assets.Which one of these statements most easily provides the information she is seeking?

Goals and Governance of the Firm

Financial Markets and Institutions

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters