Question 1 10 out of 10 points Which of the following could lead to cash flow problems? Answer Tightening of credit by suppliers Easing of credit by suppliers Reduction of inventory Improved quality of accounts receivable Selling of bonds Question 2 10 out of 10 points Which of the following represents an internal source of cash? Answer 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 10 out of 10 points Which of the following is not a typical cash flow under operating activities? Answer 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 10 out of 10 points Working capital is defined as Answer 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 0 out of 10 points Management should use the statement of cash flows for which of the following purposes? Answer 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 10 out of 10 points Notes to financial statements are beneficial in meeting the disclosure requirements of financial reporting. The notes should not be used to Answer 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 0 out of 10 points 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 Answer Understate income and overstate assets Overstate income and overstate assets Understate income and understate assets Overstate income and understate assets Question 8 0 out of 10 points 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? Answer 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 10 out of 10 points Which of the following would not be an example of the use of a multiple when valuing common equity? Answer Multiperiod discounted earnings models Price-to-earnings (PE) Price-to-book Price-to-operating cash flow Question 10 10 out of 10 points Which of the following was not given as a reason for acquirers paying too much in an acquisition? Answer Overbidding Overuse of conventional financial statements Overoptimistic appraisal of market potential Overestimation of synergies
