Question 1

The cash flow statement measures cash flows on

Accepted Answer

A)   an annual basis.
B)   an accrual basis.
C)   a cash basis.
D)   a normalized basis.

Question 2

Accounts payable consist of payments due from a firm's customers.

Accepted Answer

A) True 
 B)False

Question 3

Match the term with its definition.
-Earnings after operating expenses but before interest and taxes are paid

Accepted Answer

A)  Cost of goods sold
B)  Gross profit
C)  Long-term notes
D)  Net profits
E)  Operating profitsF) Profit marginsG) Profits before taxesH) Total asset turnover

Question 4

The owners of ABC, Inc. may expect to be paid a share of the profits of the company. These payments to owners are called:

Accepted Answer

A)   return on investment.
B)   dividends.
C)   current expenses.
D)   long-term debt.

Question 5

Kate's banker would like to know the profit of her business from January 1st through December 31. She should show him the _______.

Accepted Answer

A)   cash flow statement.
B)   income statement.
C)   balance sheet.
D)   harvest plan.

Question 6

A new business needs to manage cash flows carefully because if a firm runs out of cash, it is out of business.

Accepted Answer

A) True 
 B)False

Question 7

The debts that Rhonda's company will repay within the next ______________ are considered to be current debt.

Accepted Answer

A)   2 years
B)   6 months
C)   1 quarter
D)   12 months

Question 8

Match the term with its definition.
-Assets whose value declines over time

Accepted Answer

A)  Cost of goods sold
B)  Current ratio
C)  Debt ratio
D)  Depreciable assets
E)  Income statementF) Interest expenseG) InventoryH) Net fixed assets

Question 9

Astoria is using a software application to prepare the balance sheet. She wasn't sure which of the following should be included in the fixed asset category. What would you tell her?

Accepted Answer

A)   Land
B)   Copyrights
C)   Contingency funds
D)   Goodwill

Question 10

Irma's current ratio is 2.5. This means that:

Accepted Answer

A)   for every dollar of current assets, Irma has $2.50 in current liabilities.
B)   for every dollar of current liabilities, Irma has $2.50 in current assets.
C)   Irma has enough cash to pay her debts for the next 2.5 years.
D)   Irma can borrow 2.5 times her annual sales.

Question 11

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

Accepted Answer

A)   complement each other.
B)   contradict each other.
C)   display information for the same time duration.
D)   display vision and mission statements for the company.

Question 12

In order to derive a cash flow statement, the owner must add back the _____ to the income statement.

Accepted Answer

A)   depreciation expense
B)   increase in accounts receivable
C)   increases in inventory
D)   decrease in accounts payable

Question 13

The cash flow activities on the cash flow statement are divided into these categories:

Accepted Answer

A)   cash from operations, buying or selling assets, and financing the business.
B)   payments on accounts receivable, payments on accounts payable, and changes in owner's equity.
C)   cash from sales, cash from accounts receivable, and payments on accounts payable.
D)   payment on debt, cash from sales, and increases to owner's equity.

Question 14

Erin, the owner of Sweets To Eat Ice Cream Shoppe, wants to know how her company is operating from a financial perspective. Her CPA has given her the following numbers: Sales $325,000, Operating Profits $50,000, Current Assets $125,000, Current Liabilities $40,000, Total Assets $350,000. The ice cream retail industry norms include Operating Profit Margin 10%, Return on Assets 11% and Current Ratio 2.7. Determine the company's liquidity and compare the value to the industry ratios.

Accepted Answer

Erin's current ratio is 3.125 (Current A...

Question 15

Match the term with its definition.
-Physical assets that will be used in the business for more than one year

Accepted Answer

A)  Accrued expenses
B)  Cash flow activities
C)  Cash flow statement
D)  Fixed assets
E)  Gross fixed assetsF) Long-term debtG) Other assetsH) Short-term notes

Question 16

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

Accepted Answer

A)   add the increase in accounts receivable to total sales.
B)   subtract the increase in accounts receivable from total sales.
C)   add the increase in accounts payable to total cash.
D)   subtract the increase in liabilities from owner's equity.

Question 17

Match the term with its definition.
-A financial report showing the amount of profits or losses from a firm's operations over a given period of time

Accepted Answer

A)  Cost of goods sold
B)  Current ratio
C)  Debt ratio
D)  Depreciable assets
E)  Income statementF) Interest expenseG) InventoryH) Net fixed assets

Question 18

Match the term with its definition.
-A long-term loan to purchase a building or land

Accepted Answer

A)  Balance sheet
B)  Debt
C)  Dividend
D)  Financial leverage
E)  MortgageF) Owners' equityG) Retained earningsH) Working capital cycle

Question 19

Total assets less outstanding debt equals ownership equity.

Accepted Answer

A) True 
 B)False

Question 20

Eugenia's company bought a delivery truck to deliver merchandise to customers. This truck should appear as ___________ on the balance sheet.

Accepted Answer

A)   a current asset
B)   inventory
C)   a fixed asset
D)   a short-term investment

Exam 10: Understanding a Firms Financial Statements

Match the term with its definition. -A financial report showing the amount of profits or losses from a firm's operations over a given period of time

Correct Answer
verified

A new business needs to manage cash flows carefully because if a firm runs out of cash, it is out of business.

Correct Answer
verified

Match the term with its definition. -Earnings after operating expenses but before interest and taxes are paid

Correct Answer
verified

Correct Answer
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Erin's current ratio is 3.125 (Current A...
View Answer

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

Correct Answer
verified

Accounts payable consist of payments due from a firm's customers.

Correct Answer
verified

Match the term with its definition. -Physical assets that will be used in the business for more than one year

Correct Answer
verified

In order to derive a cash flow statement, the owner must add back the _____ to the income statement.

Correct Answer
verified

The owners of ABC, Inc. may expect to be paid a share of the profits of the company. These payments to owners are called:

Correct Answer
verified

Eugenia's company bought a delivery truck to deliver merchandise to customers. This truck should appear as ___________ on the balance sheet.

Correct Answer
verified

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

Correct Answer
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Total assets less outstanding debt equals ownership equity.

Correct Answer
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Irma's current ratio is 2.5. This means that:

Correct Answer
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The debts that Rhonda's company will repay within the next ______________ are considered to be current debt.

Correct Answer
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Match the term with its definition. -Assets whose value declines over time

Correct Answer
verified

Match the term with its definition. -A long-term loan to purchase a building or land

Correct Answer
verified

Astoria is using a software application to prepare the balance sheet. She wasn't sure which of the following should be included in the fixed asset category. What would you tell her?

Correct Answer
verified

The cash flow statement measures cash flows on

Correct Answer
verified

The cash flow activities on the cash flow statement are divided into these categories:

Correct Answer
verified

Kate's banker would like to know the profit of her business from January 1st through December 31. She should show him the _______.

Correct Answer
verified

Exam 10: Understanding a Firms Financial Statements

Match the term with its definition. -A financial report showing the amount of profits or losses from a firm's operations over a given period of time

Correct AnswerverifiedShow Answer

A new business needs to manage cash flows carefully because if a firm runs out of cash, it is out of business.

Correct AnswerverifiedShow Answer

Match the term with its definition. -Earnings after operating expenses but before interest and taxes are paid

Correct AnswerverifiedShow Answer

Correct AnswerverifiedErin's current ratio is 3.125 (Current A...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Accounts payable consist of payments due from a firm's customers.

Correct AnswerverifiedShow Answer

Match the term with its definition. -Physical assets that will be used in the business for more than one year

Correct AnswerverifiedShow Answer

In order to derive a cash flow statement, the owner must add back the _____ to the income statement.

Correct AnswerverifiedShow Answer

The owners of ABC, Inc. may expect to be paid a share of the profits of the company. These payments to owners are called:

Correct AnswerverifiedShow Answer

Eugenia's company bought a delivery truck to deliver merchandise to customers. This truck should appear as ___________ on the balance sheet.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Total assets less outstanding debt equals ownership equity.

Correct AnswerverifiedShow Answer

Irma's current ratio is 2.5. This means that:

Correct AnswerverifiedShow Answer

The debts that Rhonda's company will repay within the next ______________ are considered to be current debt.

Correct AnswerverifiedShow Answer

Match the term with its definition. -Assets whose value declines over time

Correct AnswerverifiedShow Answer

Match the term with its definition. -A long-term loan to purchase a building or land

Correct AnswerverifiedShow Answer

Astoria is using a software application to prepare the balance sheet. She wasn't sure which of the following should be included in the fixed asset category. What would you tell her?

Correct AnswerverifiedShow Answer

The cash flow statement measures cash flows on

Correct AnswerverifiedShow Answer

The cash flow activities on the cash flow statement are divided into these categories:

Correct AnswerverifiedShow Answer

Kate's banker would like to know the profit of her business from January 1st through December 31. She should show him the _______.

Correct AnswerverifiedShow Answer

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Erin's current ratio is 3.125 (Current A...
View Answer

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