MBA 5300 CHAPTER 2 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

MBA 5300 CHAPTER 2 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS

Question:
1. Is published once a year and provides stockholders with details about the company's performance and
financial condition.
Answer:
Annual Report

Question:
2. Accounts for all revenues and expenses over an accounting period.
Answer:
Income Statement

Question:
3. Summarizes a company's assets, liabilities, and stockholders' equity at a specific point in time.
Answer:
Balance Sheet

Question:
4. Aggregates all cash inflows, which the company receives from its ongoing activities and investment
sources, and all cash outflows.
Answer:
Statement of Cash Flows

Question:
5. Explains the changes in a company's retained earnings over the accounting year.
Answer:
Statement of Stockholders' Equity

Question:
6. Does the firm generate enough internal funds to support anticipated investment, or does additional
outside capital need to be raised? Balance Sheet or Statement of Cash Flows??
Answer:
Statement of Cash Flows

Question:
7. Can the firm meet all its short-term obligations using its current assets?
Balance Sheet or Statement of Cash Flows??
Answer:
Balance Sheet

Question:
8. Cash and Equivalents equation

, Answer:
Cash and Equivalents=Total Current Assets - Accounts Receivable - Inventories

Question:
9. Net Fixed Assets equation
Answer:
Net Fixed Assets=Total Assets - Total Current Assets

Question:
10. Current Liabilities Equation
Answer:
Total Current Liabilities=Accounts Payable + Accruals + Notes Payable

Question:
11. Common Equity equation
Answer:
Common Equity = Common Stock + Retained Earnings

Question:
12. Inventory Increases more than inventory sold when...
Answer:
Total inventories of raw materials, work in process, and final goods increases more than Cash and
Equivalents

Question:
13. XYZ firm is profitable when...
Answer:
Retained Earnings increases between years

Question:
14. Book Value per Share
Answer:
Total Common Equity / Common Shares Outstanding

Question:
15. Asset order on balance sheet
Answer:
Liquidity (Order of cash conversion). High liquidity on top

Question:
16. Shareholders' Equity
Answer:
Shareholders' Equity = Paid-in Capital + Retained Earnings OR Shareholders' Equity = Total Assets -
Total Liabilities