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Exam 1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation

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Question 51

Multiple Choice

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Which of the following economic characteristics is consistent with a grocery store chain?

A) minimal competition
B) extensive competition
C) high net income to sales
D) differentiated product

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Question 52

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Indicate whether each of these items is a cash flow from operating activities, investing activities, or financing activities.

Premises

Responses

Paid cash for supplies

operating activities

Purchased equipment by paying cash

investing activities

Collected cash on account from customers

financing activities

Paid dividends to stockholders

Paid suppliers for fabric

Borrowed money from a bank on a long-term note

Paid interest to bank on the note

Paid wages to employees

Sold shares of common stock to new stockholders

Premises

Paid cash for supplies

Purchased equipment by paying cash

Collected cash on account from customers

Paid dividends to stockholders

Paid suppliers for fabric

Borrowed money from a bank on a long-term note

Paid interest to bank on the note

Paid wages to employees

Sold shares of common stock to new stockholders

Responses

operating activities

investing activities

financing activities

Show Answer

Correct Answer

Premises

Responses

Paid cash for supplies

Purchased equipment by paying cash

Collected cash on account from customers

Paid dividends to stockholders

Paid suppliers for fabric

Borrowed money from a bank on a long-term note

Paid interest to bank on the note

Paid wages to employees

Sold shares of common stock to new stockholders

Premises

Paid cash for supplies

Purchased equipment by paying cash

Collected cash on account from customers

Paid dividends to stockholders

Paid suppliers for fabric

Borrowed money from a bank on a long-term note

Paid interest to bank on the note

Paid wages to employees

Sold shares of common stock to new stockholders

Responses

Question 53

Multiple Choice

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Which financial statement for a business would you look at to determine the company's earnings performance during an accounting period?

What are the six interconnected activities related to financial statement analysis?

Under the ____________________ basis of accounting, a firm recognizes revenue when it performs all or a substantial portion, of the services it expects to perform and receives either cash or a receivable.

On a common size basis, which of the following assets is normally largest for a commercial bank?

The tools of effective financial statement analysis are also useful for assessing whether to extend ____________________ to a firm, either for a short-term or for a long-term.

Accounts receivable represent:

Labor contracts and purchase order commitments are examples of ____________________ contracts.

Which of the following assets would appear on the balance sheet at an amount greatly below its fair market value?

Which two organizations are working together to harmonize financial reporting worldwide?

Assets that do not represent a claim to a fixed amount of cash are called ____________________ assets.

Under the Sarbanes-Oxley Act of 2002, financial statements must include both a Management Assessment and an Assurance Opinion. What information do the Management Assessment and an Assurance Opinion provide to financial statement users?

Which of the following economic characteristics is consistent with a grocery store chain?

Why is the operating activities section of the statement of cash flows often believed to be the most important part of the statement?

How easily can new firms enter a market is a question one might ask when assessing _____________________________________________.

How easily can customers switch to substitute products is a question one might ask when assessing the ___________________________________.

The higher the value added from any activity, the higher should be the ____________________ from engaging in that activity.

When a firm attempting to create unique products or services for particular market niches, in order to achieve relatively high profit margins, this is best known as