C214 Financial Management
Study Guide Problems
01/22/2025
The following questions are for practicing both calculations and concepts for C214 – Financial Management Version
4. This list of questions does not cover everything you may encounter in an assessment and covers aspects to the
course that may not appear on the assessments. They are in the same order as the topics presented in the e-text.
Overview of Finance
1. Trading on the NYSE is executed without a specialist (i.e. a market maker).
True/False
2. Stocks and bonds are two types of financial instruments
True/False
3. The matching principle in accrual accounting requires that:
a. Revenues be recognized when the earnings process is complete and
matches expenses to revenues recognized.
b. Expenses are matched to the year in which they are incurred
c. Revenues are matched to the year in which they are booked
d. Revenues should be large enough to match expenses
4. A high-quality customer just purchased $500,000 worth of product from
your company. The contract calls for immediate delivery of the product
with a cash payment of $300,000 today and $200,000 to be paid 60
days. The expense associated with the product is $300,000, of which
$100,000 has not been paid to your supplier. Under accrual based
accounting system, you will most likely report:
a. revenues of $300,000 and expenses of $300,000.
b. revenues of $300,000 and expenses of $200,000.
c. revenues of $500,000 and expenses of $300,000.
d. revenues of $500,000 and expenses of $200,000.
Income Statement/Balance Sheet
5. A firm reported retained earnings of $300 in 12/31/20x2. For 12/31/20x3,
the firm reports retained earnings of $400 and pays dividends of $25.
What was net income in 20x3?
a. 300
b. 400
c. 125
d. 100
,6. A basic equation for the balance sheet is:
a. Equity = Assets – Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities – Equity
d. Assets = Equity – Liabilities
7. Why is the Balance Sheet known as a permanent statement?
a. Because the statement is sent to the SEC.
b. Because the other statements are reset at the end of the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders.
8. How do you calculate the change in Retained Earnings?
a. Ending Retained Earnings – Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT – Change in Cash – Dividends
d. Net Income – Dividends
9. Which of the following is generally true?
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net Income
c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net income
10. Which components are part of total assets?
a. Cash, Accounts Receivable, Short Term Debt
b. Cash Accounts Receivable, Inventory, Long Term Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity
11. Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term Investments
12. Which components are part of Total Liabilities?
a. Accounts Payable, Accounts Receivable, Short Term Debt
b. Long Term Debt, Common Stock, Retained Earnings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term Investments
Statement of Cash Flows
13. Intel reported the following for 2014:
Net Income 100,000
Depreciation 20,000
Change in A/R 10,000
, What is the cash flow from operating activities?
a. 100,000
b. 110,000
c. 120,000
d. (130,000)
14. Which of the following accounts are only included in Cash Flow from
Financing (CFF)?
a. Accounts Receivable, Accrued Expenses, Net Income
b. Dividends Paid, Property Plant and Equipment, Cash
c. Net Income, Common Stock, Accrued Expenses
d. Common Stock, Dividends Paid, Bonds Payable
15. The Statement of Cash Flows is:
a. Calculated for the same period of time as the Income Statement
b. Is calculated based on the Income Statement and the changes in the
Balance Sheet
c. Is one of the three basic accounting statements
d. All the above.
16. Intel reported the following for 2014:
Gross Equipment (1/1/14) 50,000
Gross Equipment (12/31/14) 65,000
Net income 100,000
Depreciation 20,000
What is the cash flow from investing activities for 2014?
a. 100,000
b. 80,000
c. (15,000)
d. 15,000
17. What is the Cash Flow from Operations given the following information?
Net Income 450,000
Change in Accounts Receivable 120,000
Change in Inventory - 90,000
Change in PP&E 60,000
Depreciation Expense 110,000
Change in Accounts Payable 50,000
Change in Accrued Expenses - 75,000
Change in Common Stock 300,000
a. $570,000
b. $410,000
c. $505,000
d. $375,000
18. What is the Cash Flow from Investing?
Increase in Gross PP&E 125,000
Study Guide Problems
01/22/2025
The following questions are for practicing both calculations and concepts for C214 – Financial Management Version
4. This list of questions does not cover everything you may encounter in an assessment and covers aspects to the
course that may not appear on the assessments. They are in the same order as the topics presented in the e-text.
Overview of Finance
1. Trading on the NYSE is executed without a specialist (i.e. a market maker).
True/False
2. Stocks and bonds are two types of financial instruments
True/False
3. The matching principle in accrual accounting requires that:
a. Revenues be recognized when the earnings process is complete and
matches expenses to revenues recognized.
b. Expenses are matched to the year in which they are incurred
c. Revenues are matched to the year in which they are booked
d. Revenues should be large enough to match expenses
4. A high-quality customer just purchased $500,000 worth of product from
your company. The contract calls for immediate delivery of the product
with a cash payment of $300,000 today and $200,000 to be paid 60
days. The expense associated with the product is $300,000, of which
$100,000 has not been paid to your supplier. Under accrual based
accounting system, you will most likely report:
a. revenues of $300,000 and expenses of $300,000.
b. revenues of $300,000 and expenses of $200,000.
c. revenues of $500,000 and expenses of $300,000.
d. revenues of $500,000 and expenses of $200,000.
Income Statement/Balance Sheet
5. A firm reported retained earnings of $300 in 12/31/20x2. For 12/31/20x3,
the firm reports retained earnings of $400 and pays dividends of $25.
What was net income in 20x3?
a. 300
b. 400
c. 125
d. 100
,6. A basic equation for the balance sheet is:
a. Equity = Assets – Liabilities
b. Liabilities = Equity + Assets
c. Assets = Liabilities – Equity
d. Assets = Equity – Liabilities
7. Why is the Balance Sheet known as a permanent statement?
a. Because the statement is sent to the SEC.
b. Because the other statements are reset at the end of the fiscal year
c. Because it is printed out and archived
d. Because it persists in the minds of the shareholders.
8. How do you calculate the change in Retained Earnings?
a. Ending Retained Earnings – Change in Cash
b. EBIT divided by Total Assets + Dividends
c. EBIT – Change in Cash – Dividends
d. Net Income – Dividends
9. Which of the following is generally true?
a. Gross Profit and Operating Income are the same
b. Cost of Goods Sold + Operating Expenses = Net Income
c. Operating Income and EBIT are the same
d. EBIT + Income Taxes = Net income
10. Which components are part of total assets?
a. Cash, Accounts Receivable, Short Term Debt
b. Cash Accounts Receivable, Inventory, Long Term Assets
c. Accounts Payable, Long Term Assets, Long Term Debt
d. Accounts Payable, Net Income, Equity
11. Which components are part of current assets?
a. Cash, Accounts Receivable, Property Plant & Equipment
b. Accounts Receivable, Accounts Payable, Inventory
c. Long Term Debt, Property Plant & Equipment, Common Stock
d. Inventory, Cash, Accounts Receivable, Short Term Investments
12. Which components are part of Total Liabilities?
a. Accounts Payable, Accounts Receivable, Short Term Debt
b. Long Term Debt, Common Stock, Retained Earnings
c. Bonds, Accounts Payable, Mortgage
d. Common Stock, Long Term Debt, Short Term Investments
Statement of Cash Flows
13. Intel reported the following for 2014:
Net Income 100,000
Depreciation 20,000
Change in A/R 10,000
, What is the cash flow from operating activities?
a. 100,000
b. 110,000
c. 120,000
d. (130,000)
14. Which of the following accounts are only included in Cash Flow from
Financing (CFF)?
a. Accounts Receivable, Accrued Expenses, Net Income
b. Dividends Paid, Property Plant and Equipment, Cash
c. Net Income, Common Stock, Accrued Expenses
d. Common Stock, Dividends Paid, Bonds Payable
15. The Statement of Cash Flows is:
a. Calculated for the same period of time as the Income Statement
b. Is calculated based on the Income Statement and the changes in the
Balance Sheet
c. Is one of the three basic accounting statements
d. All the above.
16. Intel reported the following for 2014:
Gross Equipment (1/1/14) 50,000
Gross Equipment (12/31/14) 65,000
Net income 100,000
Depreciation 20,000
What is the cash flow from investing activities for 2014?
a. 100,000
b. 80,000
c. (15,000)
d. 15,000
17. What is the Cash Flow from Operations given the following information?
Net Income 450,000
Change in Accounts Receivable 120,000
Change in Inventory - 90,000
Change in PP&E 60,000
Depreciation Expense 110,000
Change in Accounts Payable 50,000
Change in Accrued Expenses - 75,000
Change in Common Stock 300,000
a. $570,000
b. $410,000
c. $505,000
d. $375,000
18. What is the Cash Flow from Investing?
Increase in Gross PP&E 125,000
