Question 1
Which of the following could lead to cash flow problems?
Tightening of credit by suppliers
Easing of credit by suppliers
Reduction of inventory
Improved quality of accounts receivable
Selling of bonds
Question 2
Which of the following represents an internal source of cash?
Cash inflows from financing activities
Cash inflows from investing activities
Cash inflows from selling land
Cash inflows from operating activities
Cash inflows from issuing stock
Question 3
Which of the following is not a typical cash flow under operating activities?
cash inflows from sale of goods or services
cash inflows from interest
cash outflows to employees
cash outflows to suppliers
cash inflows from sale of property, plant, and equipment
Question 4
Working capital is defined as
total assets less intangible assets
current assets divided by current liabilities
current assets less current liabilities
total assets less current assets
current assets less liabilities
Question 5
Management should use the statement of cash flows for which of the following purposes?
To determine dividend policy
To determine cash flow from operations
To determine cash flow from investing activities
To determine cash flow from financing activities
To determine the balance in accounts receivable
Question 6
Notes to financial statements are beneficial in meeting the disclosure requirements of financial reporting. The notes should not be used to
Describe depreciation methods employed by the company.
Describe principles and methods peculiar to the industry in which the company operates when these principles and methods are predominately followed in that industry.
Disclose the basis of consolidation for consolidated statements.
Correct an improper presentation in the financial statements.
Question 7
The concept of conservatism is often considered important in accounting. The application of this concept means that in the event some doubt occurs as to how a transaction should be recorded, it should be recorded so as to
Understate income and overstate assets
Overstate income and overstate assets
Understate income and understate assets
Overstate income and understate assets
Question 8
Which of the following ratios would best disclose effective management of working capital by a given firm relative to other firms in the same industry?
A high rate of financial leverage relative to the industry average
A high number of days' sales uncollected relative to the industry average
A high turnover of net working capital relative to the industry average
A high number of days' sales in inventory relative to the industry average
Question 9
Which of the following would not be an example of the use of a multiple when valuing common equity?
Multiperiod discounted earnings models
Price-to-earnings (PE)
Price-to-book
Price-to-operating cash flow
Question 10
Which of the following was not given as a reason for acquirers paying too much in an acquisition?
Overbidding
Overuse of conventional financial statements
Overoptimistic appraisal of market potential
Overestimation of synergies