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ACC201 Test 3

27 Questions - Developed by: - Developed on: 2015-12-08 - 9,116 taken

Multiple Choice section

1

Corporations invest excess cash for short periods of time in each of the following except

Low-risk securities
Government securities
Equity securities
Highly liquid securities

2

Corporations invest in other companies for all of the following reasons except to

Increase trading of the other companies' stock
Generate earnings
Meet strategic goals
House excess cash until needed

3

A typical investment to house excess cash until needed is

Stock securities
Low-risk, highly liquid securities
Stocks of companies in a related industries
Debt securities

4

A company may purchase a non controlling interest in another firm in a related industry

For strategic reasons
To house excess cash until needed
For speculative reasons
To generate earnings

5

Pension funds and mutual funds regularly invest in debt and stock securities primarily to

Meet strategic goals
House excess cash until needed
Control the company in which they invest
Generate earnings

6

At the time of acquisition of a debt investment

No journal entry is required
The Stock Investments account is debited when bonds are purchased
The Investment account is credited for its cost plus brokerage fees
The cost principle applies

7

Which of the following is not a true statement regarding short-term investments?

Debt investments are recorded at the price paid less brokerage fees
Investments are frequently government or corporate bonds
The securities usually pay interest
This type of investment must be currently traded in the securities market

8

The statement of cash flows should help investors and creditors assess each of the following except the

Entity's ability to generate future income
Reasons for the difference between net income and net cash provided by operating activities
Entity's ability to pay dividends
Cash investing and financing transactions during the period

9

The statement of cash flows

Is another name for the income statement
Must be prepared on a daily basis
Is a special section of the income statement
Summarizes the operating, financing, and investing activities of entity

10

Which of the following items is not generally used in preparing a statement of cash flows?

Adjusted trial balance
Additional information
Comparative balance sheets
Current income statement

11

The primary purpose of the statement of cash flows is to

Provide information about the cash receipts and cash payments during a period
Provide information about the investing and financing activities during a period
Facilitate banking relationships
Prove that revenues exceed expenses if there is a net income

12

If a company reports a net loss, it

May still have a net increase in cash
Will not be able to make capital expenditures
Will not be able to pay cash dividends
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
Change in the cash balance for the current period
Uses of cash in the current period
Sources of cash in the current period

15

The statement of cash flows reports each of the following except

The net change in cash
Cash sales
Cash receipts from operating activities
Cash payments from investing activities

16

Each of the following are particularly interested in the statement of cash flows except

Employees
Creditors
Government agencies
Shareholders

17

Lending money and collecting loans are

Financing activities
Investing activities
Operating activities
Non-cash investing and financing activities

18

Which one of the following is primarily interested in the liquidity of a company?

Stockholders
Long-term creditors
Short-term creditors
Federal government

19

Which one of the following is not a characteristic generally evaluated in analyzing financial statements?

Marketability
Solvency
Liquidity
Profitability

20

In analyzing the financial statements of a company, a single item on the financial statements

Is more meaningful if compared to other financial information
Should be reported in bold-face type
Is significant only if it is large
Should be accompanied by a footnote

21

Short-term creditors are usually most interested in evaluating

Marketability
Liquidity
Profitability
Solvency

22

Long-term creditors are usually most interested in evaluating

Liquidity and profitability
Solvency and marketability
Profitability and solvency
Liquidity and solvency

23

Stockholders are most interested in evaluating

Liquidity and profitability
Profitability and solvency
Liquidity and solvency
Marketability and solvency

24

A stockholder is interested in the ability of a firm to

Survive over a long period
Pay consistent dividends
Appreciate in share price
All of these

25

Comparisons of financial data made within a company are called

Intramural comparisons
Interior comparisons
Intracompany comparisons
Intracompany comparisons

26

A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is

Horizontal analysis
Ratio analysis
Vertical analysis
Common size analysis

27

Which one of the following is not a tool in financial statement analysis?

Horizontal analysis
Vertical analysis
Ratio analysis
Circular analysis

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