Question 1

The costs of materials used in the production of a product are recorded in which one of the following accounts?

Accepted Answer

A)  net sales 
B)  fixed costs 
C)  operating income 
D)  depreciation 
E)  cost of goods sold 
A)  net sales 
B)  fixed costs 
C)  operating income 
D)  depreciation 
E)  cost of goods sold

Question 2

Healthy Supplements,Inc.paid $7,300 in interest and $4,300 in dividends for the year.The firm also issued $15,000 worth of new equity securities.What is the amount of the financing cash flow?

Accepted Answer

A)  $2,500 
B)  $5,200 
C)  $6,800 
D)  $7,700 
E)  $10,700 
A)  $2,500 
B)  $5,200 
C)  $6,800 
D)  $7,700 
E)  $10,700

Question 3

Which two of the following are generally used to fund the external financing need?
I.sale of fixed assets
II.increase in accounts payable
III.issuance of long-term debt
IV.sale of equity securities

Accepted Answer

A)  I and II 
B)  I and III 
C)  II and III 
D)  II and IV 
E)  III and IV 
A)  I and II 
B)  I and III 
C)  II and III 
D)  II and IV 
E)  III and IV

Question 4

Which one of the following is the definition of investment cash flow?

Accepted Answer

A)  revenue minus expenses 
B)  cash flow from the purchases and sales of fixed assets and investments 
C)  cash flow originating from the issuance of securities 
D)  cash generated by a firm's normal business activities 
E)  pre-tax income 
A)  revenue minus expenses 
B)  cash flow from the purchases and sales of fixed assets and investments 
C)  cash flow originating from the issuance of securities 
D)  cash generated by a firm's normal business activities 
E)  pre-tax income

Question 5

A firm has current sales of $56,000.Projected sales for next year are $60,000.The percentage of sales approach is used for pro forma purposes.All balance sheet accounts,except long-term debt and common stock,change according to that approach.The expected increase in retained earnings is $3,100.What is the projected external financing need given the following current account values?

Accepted Answer

A)  -$3,532 
B)  -$1,969 
C)  -$1,390 
D)  $987 
E)  $1,480 
A)  -$3,532 
B)  -$1,969 
C)  -$1,390 
D)  $987 
E)  $1,480

Question 6

Sander's Auto recently purchased Auto Express for $9.8 million.Auto Express had a market value of $9.5 million at the time of acquisition.The additional $0.3 million that Sander's Auto paid for Auto Express will be treated on Sander's Auto's balance sheet as which type of account?

Accepted Answer

A)  patent 
B)  depreciation 
C)  licenses 
D)  goodwill 
E)  acquisition expense 
A)  patent 
B)  depreciation 
C)  licenses 
D)  goodwill 
E)  acquisition expense

Question 7

Which one of the following is the definition of operating cash flow?

Accepted Answer

A)  revenue minus expenses 
B)  cash realized from the sale of assets 
C)  cash flow originating from the issuance of securities 
D)  cash generated by a firm's normal business activities 
E)  pre-tax income 
A)  revenue minus expenses 
B)  cash realized from the sale of assets 
C)  cash flow originating from the issuance of securities 
D)  cash generated by a firm's normal business activities 
E)  pre-tax income

Question 8

GH Enterprises has annual sales of $5.2 million,depreciation of $350,000,operating expenses of $390,000,and cost of goods sold of $3.1 million.What is the gross profit?

Accepted Answer

A)  $460,000 
B)  $850,000 
C)  $2,100,000 
D)  $2,650,000 
E)  $3,710,000 
A)  $460,000 
B)  $850,000 
C)  $2,100,000 
D)  $2,650,000 
E)  $3,710,000

Question 9

Which one of the following is NOT a financing cash flow according to standard accounting practice?

Accepted Answer

A)  new issue of stock 
B)  repurchase of stock 
C)  new issue of debt 
D)  interest payments 
E)  dividend payments 
A)  new issue of stock 
B)  repurchase of stock 
C)  new issue of debt 
D)  interest payments 
E)  dividend payments

Question 10

A firm has the following account balances for this year.Sales for the year are $500,000.Projected sales for next year are $545,000.The percentage of sales approach is used for pro forma purposes.All balance sheet accounts,except long-term debt and common stock,change according to that approach.The firm plans to decrease the long-term debt balance by $5,000 next year.Retained earnings is expected to increase by $3,500 next year.What is the projected external financing need?

Accepted Answer

A)  $10,520 
B)  $14,720 
C)  $18,520 
D)  $20,720 
E)  $25,620 
A)  $10,520 
B)  $14,720 
C)  $18,520 
D)  $20,720 
E)  $25,620

Question 11

ABC Construction,Inc.has buildings and equipment of $315,600,long-term debt of $154,700,accounts payable of $52,000,cash of $9,800,accounts receivable of $18,300,inventory of $62,000,and retained earnings of $147,000.What is the total equity of the firm?

Accepted Answer

A)  $5,200 
B)  $97,000 
C)  $147,000 
D)  $199,000 
E)  $228,000 
A)  $5,200 
B)  $97,000 
C)  $147,000 
D)  $199,000 
E)  $228,000

Question 12

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6.If the cash flow per share is $4.67,what is the book value per share?

Accepted Answer

A)  $2.84 
B)  $3.55 
C)  $4.44 
D)  $6.45 
E)  $7.68 
A)  $2.84 
B)  $3.55 
C)  $4.44 
D)  $6.45 
E)  $7.68

Question 13

Behrend Corporation has annual sales of $4.5 million,depreciation of $425,000,operating expenses of $679,000,cost of goods sold of $2.3 million,and interest expense of $230,000.What is the operating income?

Accepted Answer

A)  $1,096,000 
B)  $2,036,000 
C)  $3,525,000 
D)  $4,000,000 
E)  $4,811,000 
A)  $1,096,000 
B)  $2,036,000 
C)  $3,525,000 
D)  $4,000,000 
E)  $4,811,000

Question 14

The summation of the operating,investment,and financing cash flows for a stated period of time must equal which one of the following for the same time period?

Accepted Answer

A)  net income 
B)  total assets 
C)  ending cash balance 
D)  change in the cash balance 
E)  taxable income 
A)  net income 
B)  total assets 
C)  ending cash balance 
D)  change in the cash balance 
E)  taxable income

Question 15

The Erie Bay Liner Company has sales of $2.4 million and operating expenses of $180,000.The firm uses the percentage of sales approach and estimates next year's sales at $2.5 million.What are the operating expenses expected to be next year?

Accepted Answer

A)  $171,231 
B)  $175,123 
C)  $179,400 
D)  $182,549 
E)  $187,500 
A)  $171,231 
B)  $175,123 
C)  $179,400 
D)  $182,549 
E)  $187,500

Question 16

Regulation FD requires companies to do which one of the following when disclosing material non-public information?

Accepted Answer

A)  advise the SEC 7 working days prior to such disclosure 
B)  disclose the information without preference to any party or parties 
C)  only disclose the information to professional analysts 
D)  only disclose the information after a 7-day advance notice of an announcement 
E)  disclose the information only after a 24-hour delay 
A)  advise the SEC 7 working days prior to such disclosure 
B)  disclose the information without preference to any party or parties 
C)  only disclose the information to professional analysts 
D)  only disclose the information after a 7-day advance notice of an announcement 
E)  disclose the information only after a 24-hour delay

Question 17

Which one of the following is a financial planning method wherein some account values vary in relation to expected sales?

Accepted Answer

A)  common size approach 
B)  linear method 
C)  percentage of net income method 
D)  adjusted sales method 
E)  percentage of sales approach 
A)  common size approach 
B)  linear method 
C)  percentage of net income method 
D)  adjusted sales method 
E)  percentage of sales approach

Question 18

What is the financing cash flow,given the following information?

Accepted Answer

A)  -$210 
B)  -$160 
C)  -$110 
D)  -$60 
E)  -$50 
A)  -$210 
B)  -$160 
C)  -$110 
D)  -$60 
E)  -$50

Question 19

A firm has sales of $685,000 and cost of goods sold of $435,000.The firm expects sales to increase by 6 percent next year.What is the gross profit amount expected to be next year if the firm uses the percentage of sales approach when compiling pro forma statements?

Accepted Answer

A)  $235,100 
B)  $265,000 
C)  $335,000 
D)  $355,100 
E)  $536,100 
A)  $235,100 
B)  $265,000 
C)  $335,000 
D)  $355,100 
E)  $536,100

Question 20

Which one of the following means of communication do most firms use for announcements in order to comply with Regulation FD?

Accepted Answer

A)  TV spots 
B)  e-mail alerts 
C)  public newspapers 
D)  radio 
E)  analyst networks 
A)  TV spots 
B)  e-mail alerts 
C)  public newspapers 
D)  radio 
E)  analyst networks

The costs of materials used in the production of a product are recorded in which one of the following accounts?

Healthy Supplements,Inc.paid $7,300 in interest and $4,300 in dividends for the year.The firm also issued $15,000 worth of new equity securities.What is the amount of the financing cash flow?

Which two of the following are generally used to fund the external financing need? I.sale of fixed assets II.increase in accounts payable III.issuance of long-term debt IV.sale of equity securities

Which one of the following is the definition of investment cash flow?

Sander's Auto recently purchased Auto Express for $9.8 million.Auto Express had a market value of $9.5 million at the time of acquisition.The additional $0.3 million that Sander's Auto paid for Auto Express will be treated on Sander's Auto's balance sheet as which type of account?

Which one of the following is the definition of operating cash flow?

GH Enterprises has annual sales of $5.2 million,depreciation of $350,000,operating expenses of $390,000,and cost of goods sold of $3.1 million.What is the gross profit?

Which one of the following is NOT a financing cash flow according to standard accounting practice?

ABC Construction,Inc.has buildings and equipment of $315,600,long-term debt of $154,700,accounts payable of $52,000,cash of $9,800,accounts receivable of $18,300,inventory of $62,000,and retained earnings of $147,000.What is the total equity of the firm?

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6.If the cash flow per share is $4.67,what is the book value per share?

Behrend Corporation has annual sales of $4.5 million,depreciation of $425,000,operating expenses of $679,000,cost of goods sold of $2.3 million,and interest expense of $230,000.What is the operating income?

The summation of the operating,investment,and financing cash flows for a stated period of time must equal which one of the following for the same time period?

The Erie Bay Liner Company has sales of $2.4 million and operating expenses of $180,000.The firm uses the percentage of sales approach and estimates next year's sales at $2.5 million.What are the operating expenses expected to be next year?

Regulation FD requires companies to do which one of the following when disclosing material non-public information?

Which one of the following is a financial planning method wherein some account values vary in relation to expected sales?

What is the financing cash flow,given the following information?

A firm has sales of $685,000 and cost of goods sold of $435,000.The firm expects sales to increase by 6 percent next year.What is the gross profit amount expected to be next year if the firm uses the percentage of sales approach when compiling pro forma statements?

Which one of the following means of communication do most firms use for announcements in order to comply with Regulation FD?

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters

Exam 17: Projecting Cash Flow and Earnings

The costs of materials used in the production of a product are recorded in which one of the following accounts?

Healthy Supplements,Inc.paid $7,300 in interest and $4,300 in dividends for the year.The firm also issued $15,000 worth of new equity securities.What is the amount of the financing cash flow?

Which two of the following are generally used to fund the external financing need? I.sale of fixed assets II.increase in accounts payable III.issuance of long-term debt IV.sale of equity securities

Which one of the following is the definition of investment cash flow?

Sander's Auto recently purchased Auto Express for $9.8 million.Auto Express had a market value of $9.5 million at the time of acquisition.The additional $0.3 million that Sander's Auto paid for Auto Express will be treated on Sander's Auto's balance sheet as which type of account?

Which one of the following is the definition of operating cash flow?

GH Enterprises has annual sales of $5.2 million,depreciation of $350,000,operating expenses of $390,000,and cost of goods sold of $3.1 million.What is the gross profit?

Which one of the following is NOT a financing cash flow according to standard accounting practice?

ABC Construction,Inc.has buildings and equipment of $315,600,long-term debt of $154,700,accounts payable of $52,000,cash of $9,800,accounts receivable of $18,300,inventory of $62,000,and retained earnings of $147,000.What is the total equity of the firm?

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6.If the cash flow per share is $4.67,what is the book value per share?

Behrend Corporation has annual sales of $4.5 million,depreciation of $425,000,operating expenses of $679,000,cost of goods sold of $2.3 million,and interest expense of $230,000.What is the operating income?

The summation of the operating,investment,and financing cash flows for a stated period of time must equal which one of the following for the same time period?

The Erie Bay Liner Company has sales of $2.4 million and operating expenses of $180,000.The firm uses the percentage of sales approach and estimates next year's sales at $2.5 million.What are the operating expenses expected to be next year?

Regulation FD requires companies to do which one of the following when disclosing material non-public information?

Which one of the following is a financial planning method wherein some account values vary in relation to expected sales?

What is the financing cash flow,given the following information?

A firm has sales of $685,000 and cost of goods sold of $435,000.The firm expects sales to increase by 6 percent next year.What is the gross profit amount expected to be next year if the firm uses the percentage of sales approach when compiling pro forma statements?

Which one of the following means of communication do most firms use for announcements in order to comply with Regulation FD?

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters