DECA Financial Analysis PI's Tier 3
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QUESTIONS AND ANSWERS
Discuss the nature of depreciation. ANSWER - Depreciation is an accounting method of
allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term
assets for both tax and accounting purposes.
Describe the nature of cash flow. ANSWER - Incomings and outgoings of cash,
representing the operating activities of an organization.
In accounting, cash flow is the difference in the amount of cash available at the beginning of
a period (opening balance) and the amount at the end of that period (closing balance). It is
called positive if the closing balance is higher than the opening balance, otherwise called
negative. Cash flow is increased by (1) selling more goods or services, (2) selling an asset,
(3) reducing costs, (4) increasing the selling price, (5) collecting faster, (6) paying slower,
(7) bringing in more equity, or (8) taking a loan. The level of cash flow is not necessarily a
good measure of performance, and vice versa: high levels of cash flow do not necessarily
mean high or even any profit and high levels of profit do not automatically translate into
high or even positive cash flow.
Discuss the nature of corporate bonds. ANSWER - The corporate bond is a debt
instrument, and the company's payment ability is its backing, typically in the form of profits
from future operations. The physical assets of a business entity may also serve as collateral
for corporate bonds.
Discuss the cost of corporate bonds. ANSWER - Bond prices are quoted as a percentage of
the face value of the bond, based on $100. For example, if a bond is selling at 95, it means
that the bond may be purchased for 95% of its face value; a $10,000 bond, therefore, would
cost the investor $9,500. Interest on bonds is usually paid every six months.
Discuss the issuance of stock from a corporation. ANSWER - Preferred stock, common
stock, additional paid‐in‐capital, retained earnings, and treasury stock are all reported on
the balance sheet in the stockholders' equity section. Information regarding the par value,
, authorized shares, issued shares, and outstanding shares must be disclosed for each type of
stock.
Discuss the cost of common stock. ANSWER - Companies sell shares to grow or expand.
This way, the owner gets the money to expand his business and make more profit, and the
lender gets a portion of profit every time the company makes some.
Discuss the nature of stock options. ANSWER - An initial public offering (IPO) is the first
time that the stock of a private company is offered to the public. IPOs are often issued by
smaller, younger companies seeking capital to expand, but they can also be done by large
privately owned companies looking to become publicly traded.
Discuss the nature of Initial Public Offerings. ANSWER - An initial public offering (IPO) is
the first time that the stock of a private company is offered to the public. IPOs are often
issued by smaller, younger companies seeking capital to expand, but they can also be done
by large privately owned companies looking to become publicly traded.
Describe the components of a payment system. ANSWER - A payment system is any
system used to settle financial transactions through the transfer of monetary value, and
includes the institutions, instruments, people, rules, procedures, standards, and
technologies that make such an exchange possible.
Describe components of a collection system. ANSWER - Cash payments, primarily from
individuals in a retail business
Checks, from individuals in a retail environment and business customers
Credit and debit card payments from individuals and businesses
Online payment methods such as PayPal, from individuals and companies.
Credit or payment plans, from both individuals and business customers.
Other external payment sources, such as insurance companies, in certain types of
companies.
Manage bank accounts (e.g., scoper of services, fee sutructures, system integration).
ANSWER -
Describe the nature of short-term financial management. ANSWER - Companies develop
short-term financial plans to meet budget and investment goals within one fiscal year.
These plans have a higher degree of certainty compared to long-term plans. Short-term
Update Verified Questions And
Answers With 100% Correct Answers
Graded A+ Guaranteed Success!!
QUESTIONS AND ANSWERS
Discuss the nature of depreciation. ANSWER - Depreciation is an accounting method of
allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term
assets for both tax and accounting purposes.
Describe the nature of cash flow. ANSWER - Incomings and outgoings of cash,
representing the operating activities of an organization.
In accounting, cash flow is the difference in the amount of cash available at the beginning of
a period (opening balance) and the amount at the end of that period (closing balance). It is
called positive if the closing balance is higher than the opening balance, otherwise called
negative. Cash flow is increased by (1) selling more goods or services, (2) selling an asset,
(3) reducing costs, (4) increasing the selling price, (5) collecting faster, (6) paying slower,
(7) bringing in more equity, or (8) taking a loan. The level of cash flow is not necessarily a
good measure of performance, and vice versa: high levels of cash flow do not necessarily
mean high or even any profit and high levels of profit do not automatically translate into
high or even positive cash flow.
Discuss the nature of corporate bonds. ANSWER - The corporate bond is a debt
instrument, and the company's payment ability is its backing, typically in the form of profits
from future operations. The physical assets of a business entity may also serve as collateral
for corporate bonds.
Discuss the cost of corporate bonds. ANSWER - Bond prices are quoted as a percentage of
the face value of the bond, based on $100. For example, if a bond is selling at 95, it means
that the bond may be purchased for 95% of its face value; a $10,000 bond, therefore, would
cost the investor $9,500. Interest on bonds is usually paid every six months.
Discuss the issuance of stock from a corporation. ANSWER - Preferred stock, common
stock, additional paid‐in‐capital, retained earnings, and treasury stock are all reported on
the balance sheet in the stockholders' equity section. Information regarding the par value,
, authorized shares, issued shares, and outstanding shares must be disclosed for each type of
stock.
Discuss the cost of common stock. ANSWER - Companies sell shares to grow or expand.
This way, the owner gets the money to expand his business and make more profit, and the
lender gets a portion of profit every time the company makes some.
Discuss the nature of stock options. ANSWER - An initial public offering (IPO) is the first
time that the stock of a private company is offered to the public. IPOs are often issued by
smaller, younger companies seeking capital to expand, but they can also be done by large
privately owned companies looking to become publicly traded.
Discuss the nature of Initial Public Offerings. ANSWER - An initial public offering (IPO) is
the first time that the stock of a private company is offered to the public. IPOs are often
issued by smaller, younger companies seeking capital to expand, but they can also be done
by large privately owned companies looking to become publicly traded.
Describe the components of a payment system. ANSWER - A payment system is any
system used to settle financial transactions through the transfer of monetary value, and
includes the institutions, instruments, people, rules, procedures, standards, and
technologies that make such an exchange possible.
Describe components of a collection system. ANSWER - Cash payments, primarily from
individuals in a retail business
Checks, from individuals in a retail environment and business customers
Credit and debit card payments from individuals and businesses
Online payment methods such as PayPal, from individuals and companies.
Credit or payment plans, from both individuals and business customers.
Other external payment sources, such as insurance companies, in certain types of
companies.
Manage bank accounts (e.g., scoper of services, fee sutructures, system integration).
ANSWER -
Describe the nature of short-term financial management. ANSWER - Companies develop
short-term financial plans to meet budget and investment goals within one fiscal year.
These plans have a higher degree of certainty compared to long-term plans. Short-term
