Question 1

The four main financial objectives of a firm are:

Accepted Answer

A)   efficiency, effectiveness, strength, and flexibility
B)   power, success, efficiency, effectiveness
C)   control, effectiveness, liquidity, and power
D)   success, strength, liquidity, and profitability
E)   profitability, liquidity, efficiency, and stability

Question 2

Which of the following is an example of a long-term liability?

Accepted Answer

A)   accounts payable
B)   real estate mortgage
C)   accrued expenses
D)   current portion of real estate mortgage
E)   owner's equity

Question 3

Describe the difference between historical and pro form financial statements.

Accepted Answer

Historical financial statements reflect ...

Question 4

A firm's profit margin, or return on sales, is computed by dividing net income by net sales.

Accepted Answer

A) True 
 B)False

Question 5

A firm's profit margin, or return on sales, is computed by dividing:

Accepted Answer

A)   net income by net sales
B)   gross profit by net sales
C)   net income by gross profit
D)   net income by cost of sales
E)   operating income by gross profit

Question 6

Money owned to a company by its customers is referred to as:

Accepted Answer

A)   accounts obtainable
B)   accounts payable
C)   accounts receivable
D)   inventory
E)   accounts collectable

Question 7

Which of the following statements about pro forma financial statements is incorrect?

Accepted Answer

A)   Pro form financial statements are projections for future periods based on forecasts.
B)   Pro forma financial statements are typically completed for two to three years in the future.
C)   Pro forma financial statements are required by the SEC.
D)   Most companies consider their pro forma financial statements to be confidential and reveal them to outsiders only on a "need to know basis."
E)   Pro forma financial statements are strictly planning tools.

Question 8

Describe each of the four primary financial objectives of firms.

Accepted Answer

The four primary financial objectives of...

Question 9

A firm's ________ reflects the results of its operations over a specified period and shows whether it is making a profit or is experiencing a loss.

Accepted Answer

A)   statement of cash flows
B)   income statement
C)   forecast
D)   balance sheet
E)   operating budget

Question 10

In the context of a firm's statement of cash flows, ________ include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings.

Accepted Answer

A)   operating activities
B)   investing activities
C)   capital activities
D)   financing activities
E)   liquidity activities

Question 11

Jamie Diehl has spent the past several days pouring over her historical financial statements and her projections for future sales periods based on forecasts. Jamie's objective is to develop a set of financial statements that she can show to an investor, which will reflect the projected financial status of her firm for the next two-three years. Jamie is working on creating a set of ________ financial statements.

Accepted Answer

A)   simulated
B)   pro forma
C)   improvised
D)   ad-hoc
E)   concurrent

Question 12

If a firm's debt-to-equity ratio gets to low, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth.

Accepted Answer

A) True 
 B)False

Question 13

Peggy Owens owns a store that sells exercise equipment. Each January 1, she makes a very accurate account of all her merchandise and products waiting to be sold that are in her store. On January 1, Peggy is taking account of her store's:

Accepted Answer

A)   long-term assets
B)   owners' equity
C)   accounts payable
D)   accounts receivable
E)   inventory

Question 14

Which of the following was not identified as one of the four main financial objectives of a firm?

Accepted Answer

A)   stability
B)   efficiency
C)   timeliness
D)   liquidity
E)   profitability

Question 15

The pro forma income statement shows the projected flow of cash into and out of the company during a specified period.

Accepted Answer

A) True 
 B)False

Question 16

A statement of cash flows is a snapshot of a company's assets, liabilities, and owners' equity at a specific point in time.

Accepted Answer

A) True 
 B)False

Question 17

Which financial statement records all of a firm's revenues and expenses for a given period and shows whether the firm is making a profit or experiencing a loss?

Accepted Answer

A)   balance sheet
B)   owner's equity statement
C)   statement of cash flows
D)   forecast
E)   income statement

Question 18

A firm's working capital is defined as its fixed assets minus its long-term liabilities.

Accepted Answer

A) True 
 B)False

Question 19

The income statement records all the revenues and expenses for a given period and shows whether the firm is making a profile or is experiencing a loss.

Accepted Answer

A) True 
 B)False

Question 20

________ are projections for future periods based on forecasts and are typically completed for two to three years in the future.

Accepted Answer

A)   Chronological financial statements
B)   Pro forma financial statements
C)   Ad-hoc financial statements
D)   Concurrent financial statements
E)   Historical financial statements

Exam 8: Assessing a New Venture's Financial Strength and Viability

A statement of cash flows is a snapshot of a company's assets, liabilities, and owners' equity at a specific point in time.

Correct Answer
verified

Which financial statement records all of a firm's revenues and expenses for a given period and shows whether the firm is making a profit or experiencing a loss?

Correct Answer
verified

If a firm's debt-to-equity ratio gets to low, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth.

Correct Answer
verified

In the context of a firm's statement of cash flows, ________ include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings.

Correct Answer
verified

The four main financial objectives of a firm are:

Correct Answer
verified

Which of the following statements about pro forma financial statements is incorrect?

Correct Answer
verified

The pro forma income statement shows the projected flow of cash into and out of the company during a specified period.

Correct Answer
verified

A firm's profit margin, or return on sales, is computed by dividing net income by net sales.

Correct Answer
verified

Describe each of the four primary financial objectives of firms.

Correct Answer
verified
The four primary financial objectives of...
View Answer

The income statement records all the revenues and expenses for a given period and shows whether the firm is making a profile or is experiencing a loss.

Correct Answer
verified

A firm's working capital is defined as its fixed assets minus its long-term liabilities.

Correct Answer
verified

Correct Answer
verified

Peggy Owens owns a store that sells exercise equipment. Each January 1, she makes a very accurate account of all her merchandise and products waiting to be sold that are in her store. On January 1, Peggy is taking account of her store's:

Correct Answer
verified

A firm's ________ reflects the results of its operations over a specified period and shows whether it is making a profit or is experiencing a loss.

Correct Answer
verified

Money owned to a company by its customers is referred to as:

Correct Answer
verified

Which of the following is an example of a long-term liability?

Correct Answer
verified

Describe the difference between historical and pro form financial statements.

Correct Answer
verified
Historical financial statements reflect ...
View Answer

A firm's profit margin, or return on sales, is computed by dividing:

Correct Answer
verified

________ are projections for future periods based on forecasts and are typically completed for two to three years in the future.

Correct Answer
verified

Which of the following was not identified as one of the four main financial objectives of a firm?

Correct Answer
verified

Exam 8: Assessing a New Venture's Financial Strength and Viability

A statement of cash flows is a snapshot of a company's assets, liabilities, and owners' equity at a specific point in time.

Correct AnswerverifiedShow Answer

Which financial statement records all of a firm's revenues and expenses for a given period and shows whether the firm is making a profit or experiencing a loss?

Correct AnswerverifiedShow Answer

If a firm's debt-to-equity ratio gets to low, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth.

Correct AnswerverifiedShow Answer

In the context of a firm's statement of cash flows, ________ include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings.

Correct AnswerverifiedShow Answer

The four main financial objectives of a firm are:

Correct AnswerverifiedShow Answer

Which of the following statements about pro forma financial statements is incorrect?

Correct AnswerverifiedShow Answer

The pro forma income statement shows the projected flow of cash into and out of the company during a specified period.

Correct AnswerverifiedShow Answer

A firm's profit margin, or return on sales, is computed by dividing net income by net sales.

Correct AnswerverifiedShow Answer

Describe each of the four primary financial objectives of firms.

Correct AnswerverifiedThe four primary financial objectives of...View AnswerShow Answer

The income statement records all the revenues and expenses for a given period and shows whether the firm is making a profile or is experiencing a loss.

Correct AnswerverifiedShow Answer

A firm's working capital is defined as its fixed assets minus its long-term liabilities.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Peggy Owens owns a store that sells exercise equipment. Each January 1, she makes a very accurate account of all her merchandise and products waiting to be sold that are in her store. On January 1, Peggy is taking account of her store's:

Correct AnswerverifiedShow Answer

A firm's ________ reflects the results of its operations over a specified period and shows whether it is making a profit or is experiencing a loss.

Correct AnswerverifiedShow Answer

Money owned to a company by its customers is referred to as:

Correct AnswerverifiedShow Answer

Which of the following is an example of a long-term liability?

Correct AnswerverifiedShow Answer

Describe the difference between historical and pro form financial statements.

Correct AnswerverifiedHistorical financial statements reflect ...View AnswerShow Answer

A firm's profit margin, or return on sales, is computed by dividing:

Correct AnswerverifiedShow Answer

________ are projections for future periods based on forecasts and are typically completed for two to three years in the future.

Correct AnswerverifiedShow Answer

Which of the following was not identified as one of the four main financial objectives of a firm?

Correct AnswerverifiedShow Answer

Correct Answer
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The four primary financial objectives of...
View Answer

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Correct Answer
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Historical financial statements reflect ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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