ACC201 Test 3

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27 Questions - Developed by: Karli - Developed on: - 2.395 taken

Multiple Choice section

  • 1
    Corporations invest excess cash for short periods of time in each of the following except
    Equity securities
    Low-risk securities
    Government securities
    Highly liquid securities
  • 2
    Corporations invest in other companies for all of the following reasons except to
    Meet strategic goals
    House excess cash until needed
    Increase trading of the other companies' stock
    Generate earnings
  • 3
    A typical investment to house excess cash until needed is
    Debt securities
    Stocks of companies in a related industries
    Low-risk, highly liquid securities
    Stock securities
  • 4
    A company may purchase a non controlling interest in another firm in a related industry
    To house excess cash until needed
    To generate earnings
    For strategic reasons
    For speculative reasons
  • 5
    Pension funds and mutual funds regularly invest in debt and stock securities primarily to
    Generate earnings
    Control the company in which they invest
    Meet strategic goals
    House excess cash until needed
  • 6
    At the time of acquisition of a debt investment
    No journal entry is required
    The Investment account is credited for its cost plus brokerage fees
    The Stock Investments account is debited when bonds are purchased
    The cost principle applies
  • 7
    Which of the following is not a true statement regarding short-term investments?
    This type of investment must be currently traded in the securities market
    Debt investments are recorded at the price paid less brokerage fees
    Investments are frequently government or corporate bonds
    The securities usually pay interest
  • 8
    The statement of cash flows should help investors and creditors assess each of the following except the
    Reasons for the difference between net income and net cash provided by operating activities
    Entity's ability to pay dividends
    Entity's ability to generate future income
    Cash investing and financing transactions during the period
  • 9
    The statement of cash flows
    Is another name for the income statement
    Summarizes the operating, financing, and investing activities of entity
    Must be prepared on a daily basis
    Is a special section of the income statement
  • 10
    Which of the following items is not generally used in preparing a statement of cash flows?
    Additional information
    Current income statement
    Comparative balance sheets
    Adjusted trial balance
  • 11
    The primary purpose of the statement of cash flows is to
    Facilitate banking relationships
    Prove that revenues exceed expenses if there is a net income
    Provide information about the cash receipts and cash payments during a period
    Provide information about the investing and financing activities during a period
  • 12
    If a company reports a net loss, it
    Will not be able to make capital expenditures
    Will not be able to pay cash dividends
    May still have a net increase in cash
    Will not be able to get a loan
  • 13
    In addition to the three basic financial statements, which of the following is also a required financial statement?
    The "Cash Budget"
    The "Cash Reconciliation"
    The Statement of Cash Inflows and Outflows
    The Statement of Cash Flows
  • 14
    The statement of cash flows will not report the
    Amount of checks outstanding at the end of the period
    Sources of cash in the current period
    Uses of cash in the current period
    Change in the cash balance for the current period
  • 15
    The statement of cash flows reports each of the following except
    The net change in cash
    Cash payments from investing activities
    Cash receipts from operating activities
    Cash sales
  • 16
    Each of the following are particularly interested in the statement of cash flows except
    Government agencies
  • 17
    Lending money and collecting loans are
    Financing activities
    Non-cash investing and financing activities
    Investing activities
    Operating activities
  • 18
    Which one of the following is primarily interested in the liquidity of a company?
    Federal government
    Long-term creditors
    Short-term creditors
  • 19
    Which one of the following is not a characteristic generally evaluated in analyzing financial statements?
  • 20
    In analyzing the financial statements of a company, a single item on the financial statements
    Should be reported in bold-face type
    Should be accompanied by a footnote
    Is more meaningful if compared to other financial information
    Is significant only if it is large
  • 21
    Short-term creditors are usually most interested in evaluating
  • 22
    Long-term creditors are usually most interested in evaluating
    Profitability and solvency
    Solvency and marketability
    Liquidity and solvency
    Liquidity and profitability
  • 23
    Stockholders are most interested in evaluating
    Marketability and solvency
    Liquidity and solvency
    Profitability and solvency
    Liquidity and profitability
  • 24
    A stockholder is interested in the ability of a firm to
    Survive over a long period
    Appreciate in share price
    All of these
    Pay consistent dividends
  • 25
    Comparisons of financial data made within a company are called
    Interior comparisons
    Intracompany comparisons
    Intramural comparisons
    Intracompany comparisons
  • 26
    A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is
    Vertical analysis
    Common size analysis
    Horizontal analysis
    Ratio analysis
  • 27
    Which one of the following is not a tool in financial statement analysis?
    Horizontal analysis
    Circular analysis
    Vertical analysis
    Ratio analysis

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