Question 1

Which of the following accounts does NOT belong in the liability section of a balance sheet?

Accepted Answer

A) accruals 
B) short-term debt 
C) additional paid-in capital 
D) long-term debt 
A) accruals 
B) short-term debt 
C) additional paid-in capital 
D) long-term debt C

Question 2

A company with negative net income will also have negative operating cash flow.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following statements about Generally Accepted Accounting Principles (GAAP)is NOT true?

Accepted Answer

A) GAAP is a set of rule-based accounting standards established by the Financial Accounting Standards Board (FAS
B) . 
B) GAAP sets out the standards,conventions,and rules that accountants must follow when preparing audited financial statements. 
C) GAAP is complex,providing more than 150 "pronouncements" as to how to account for different types of transactions. 
D) All of the statements above are true. 
A) GAAP is a set of rule-based accounting standards established by the Financial Accounting Standards Board (FAS
B) . 
B) GAAP sets out the standards,conventions,and rules that accountants must follow when preparing audited financial statements. 
C) GAAP is complex,providing more than 150 "pronouncements" as to how to account for different types of transactions. 
D) All of the statements above are true. D

Question 4

Given the following financial statements for ARGON Corporation,and assuming that ARGON paid a common dividend of $80,000 in 2010,what is the company's financing cash flow for 2010?

Accepted Answer

A) -$10,000 
B) -$15,000 
C) -$65,000 
D) -$70,000 
A) -$10,000 
B) -$15,000 
C) -$65,000 
D) -$70,000

Question 5

Please refer to Table 3-1 for the following questions.
Table 3-1
Jones Company
Financial Information
  
-Based on the information in Table 3-1,calculate the after tax cash flow from operations for 2008 (no assets were disposed of during the year,and there was no change in interest payable or taxes payable).

Accepted Answer

A) $4,300 
B) $1,450 
C) $5,500 
D) $6,250 
A) $4,300 
B) $1,450 
C) $5,500 
D) $6,250

Question 6

Given the following financial statements for ARGON Corporation,what is the company's after-tax cash flow from operations?

Accepted Answer

A) $10,000 
B) $270,000 
C) $120,000 
D) $295,000 
A) $10,000 
B) $270,000 
C) $120,000 
D) $295,000

Question 7

Please refer to Table 3-1 for the following questions.
Table 3-1
Jones Company
Financial Information
  
-Based on the information in Table 3-1,calculate the amount of dividends paid by Jones Company in 2010 (no assets were disposed of during the year,and there was no change in interest payable or taxes payable).

Accepted Answer

A) $2,000 
B) $2,500 
C) $3,500 
D) $4,000 
A) $2,000 
B) $2,500 
C) $3,500 
D) $4,000

Question 8

The basic format of an income statement is

Accepted Answer

A) Sales - Expenses = Profits. 
B) Income - Expenses = EBIT. 
C) Sales - Liabilities = Profits. 
D) Assets - Liabilities = Profits. 
A) Sales - Expenses = Profits. 
B) Income - Expenses = EBIT. 
C) Sales - Liabilities = Profits. 
D) Assets - Liabilities = Profits.

Question 9

Mr.Wizard's Magic Shoppe had the following condensed balance sheet at the end of operation for 2010: Mr.Wizard's Magic Shoppe Balance Sheet December 31,2010   During 2011,the following occurred a.Mr.Wizard's sold some of its investments for $13,000 which resulted in a gain of $300 after taxes.The gain (net of taxes)has been included in the company's 2011 net income. b.Additional land for a plant expansion was purchased for $25,000. c.Bonds payable were paid in the amount of $10,000. d.An additional $35,000 in capital stock was issued. e.Dividends of $15,000 were paid to stockholders. f.Net income for 2011 was $48,000 after allowing for $15,000 in depreciation. g.A second parcel of land was purchased through the issuance of $10,000 in bonds,and $5,000 in long-term notes payable. Required: a.Prepare a statement of cash flows for the year ended 12/31/2011.(check figure: ending cash balance = $72,500) b.Prepare a condensed balance sheet for Mr.Wizard's at December 31,2011.

Accepted Answer

Mr.Wizard's Magic Shoppe State

Question 10

Which of the following accounts does NOT belong on the asset side of a balance sheet?

Accepted Answer

A) accounts receivable 
B) marketable securities 
C) cash 
D) common stock 
A) accounts receivable 
B) marketable securities 
C) cash 
D) common stock

Question 11

All of the following statements about balance sheets are true EXCEPT

Accepted Answer

A) Assets - Liabilities = Shareholders' Equity. 
B) assets are reported at historical cost. 
C) balance sheets show average asset balances over a one-year period. 
D) a balance sheet reports a company's financial position at a specific point in time. 
A) Assets - Liabilities = Shareholders' Equity. 
B) assets are reported at historical cost. 
C) balance sheets show average asset balances over a one-year period. 
D) a balance sheet reports a company's financial position at a specific point in time.

Question 12

What financial statement explains the changes that took place in the firm's cash balance over a period?

Accepted Answer

A) statement of cash flow 
B) balance sheet 
C) income statement 
D) reconciliation of free cash flow 
A) statement of cash flow 
B) balance sheet 
C) income statement 
D) reconciliation of free cash flow

Question 13

The A corporation has an operating profit margin of 20%,operating expenses of $500,000,and financing costs of $15,000.Therefore

Accepted Answer

A) the corporation's gross profit margin is less than 20%. 
B) the corporation's net profit margin is greater than 20%. 
C) the corporation's gross profit margin is greater than 20%. 
D) the corporation's gross profit margin is equal to 20% because gross profit is not affected by operating expenses or financing costs. 
A) the corporation's gross profit margin is less than 20%. 
B) the corporation's net profit margin is greater than 20%. 
C) the corporation's gross profit margin is greater than 20%. 
D) the corporation's gross profit margin is equal to 20% because gross profit is not affected by operating expenses or financing costs.

Question 14

Rogue Corp.has sales of $4,250,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000.The firm's interest expense is $250,000,and the corporate tax rate is 40%.What is Rogue's tax liability?

Accepted Answer

A) $258,000 
B) $260,000 
C) $360,000 
D) $600,000 
A) $258,000 
B) $260,000 
C) $360,000 
D) $600,000

Question 15

On an accrual basis income statement,revenues equal cash receipts and expenses equal cash expenditures.

Accepted Answer

A) True 
 B)False

Question 16

Use the following information to calculate the change in the company's cash balance for the year.

Accepted Answer

A) $145,000 
B) $180,000 
C) $260,000 
D) $365,000 
A) $145,000 
B) $180,000 
C) $260,000 
D) $365,000

Question 17

Which of the following accounts belongs on the asset side of a balance sheet?

Accepted Answer

A) depreciation expense 
B) accounts payable 
C) inventory 
D) accruals 
A) depreciation expense 
B) accounts payable 
C) inventory 
D) accruals

Question 18

Inventories are considered fixed assets because inventory levels remain fairly constant throughout the year.

Accepted Answer

A) True 
 B)False

Question 19

What information does a firm's balance sheet provide to the viewing public?

Accepted Answer

A) a report of investments made and their cost for a specific period of time 
B) a complete listing of all of a firm's cash receipts and cash expenditures for a defined period of time 
C) a report of revenues and expenses for a defined period of time 
D) an itemization of all of a firm's assets,liabilities,and equity as of the balance sheet date 
A) a report of investments made and their cost for a specific period of time 
B) a complete listing of all of a firm's cash receipts and cash expenditures for a defined period of time 
C) a report of revenues and expenses for a defined period of time 
D) an itemization of all of a firm's assets,liabilities,and equity as of the balance sheet date

Question 20

Liquidity refers to the ability to quickly convert an asset into cash without lowering the selling price.

Accepted Answer

A) True 
 B)False

Which of the following accounts does NOT belong in the liability section of a balance sheet?

A company with negative net income will also have negative operating cash flow.

Which of the following statements about Generally Accepted Accounting Principles (GAAP)is NOT true?

Given the following financial statements for ARGON Corporation,and assuming that ARGON paid a common dividend of $80,000 in 2010,what is the company's financing cash flow for 2010?

Given the following financial statements for ARGON Corporation,what is the company's after-tax cash flow from operations?

The basic format of an income statement is

Which of the following accounts does NOT belong on the asset side of a balance sheet?

All of the following statements about balance sheets are true EXCEPT

What financial statement explains the changes that took place in the firm's cash balance over a period?

The A corporation has an operating profit margin of 20%,operating expenses of $500,000,and financing costs of $15,000.Therefore

Rogue Corp.has sales of $4,250,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000.The firm's interest expense is $250,000,and the corporate tax rate is 40%.What is Rogue's tax liability?

On an accrual basis income statement,revenues equal cash receipts and expenses equal cash expenditures.

Use the following information to calculate the change in the company's cash balance for the year.

Which of the following accounts belongs on the asset side of a balance sheet?

Inventories are considered fixed assets because inventory levels remain fairly constant throughout the year.

What information does a firm's balance sheet provide to the viewing public?

Liquidity refers to the ability to quickly convert an asset into cash without lowering the selling price.

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

Working-Capital Management

International Business Finance

Cash,receivables,and Inventory Management

Filters

Exam 3: Understanding Financial Statements and Cash Flows

Which of the following accounts does NOT belong in the liability section of a balance sheet?

A company with negative net income will also have negative operating cash flow.

Which of the following statements about Generally Accepted Accounting Principles (GAAP)is NOT true?

Given the following financial statements for ARGON Corporation,and assuming that ARGON paid a common dividend of $80,000 in 2010,what is the company's financing cash flow for 2010?

Given the following financial statements for ARGON Corporation,what is the company's after-tax cash flow from operations?

The basic format of an income statement is

Which of the following accounts does NOT belong on the asset side of a balance sheet?

All of the following statements about balance sheets are true EXCEPT

What financial statement explains the changes that took place in the firm's cash balance over a period?

The A corporation has an operating profit margin of 20%,operating expenses of $500,000,and financing costs of $15,000.Therefore

Rogue Corp.has sales of $4,250,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000.The firm's interest expense is $250,000,and the corporate tax rate is 40%.What is Rogue's tax liability?

On an accrual basis income statement,revenues equal cash receipts and expenses equal cash expenditures.

Use the following information to calculate the change in the company's cash balance for the year.

Which of the following accounts belongs on the asset side of a balance sheet?

Inventories are considered fixed assets because inventory levels remain fairly constant throughout the year.

What information does a firm's balance sheet provide to the viewing public?

Liquidity refers to the ability to quickly convert an asset into cash without lowering the selling price.

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

Working-Capital Management

International Business Finance

Cash,receivables,and Inventory Management

Filters