Reference no: EM13920661

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