Test Bank for Analysis For Financial Management 13th Edition Robert Higgins, Je
x x x x x x x x x x x
nnifer Koski, Todd Mitton (Answer Key in the end of each chapter)
x x x x x x x x x x x
Student name:x
TRUE/FALSEx-xWritex'T'xifxthexstatementxisxtruexandx'F'xifxthexstatementxisxfalse.
1) xCurrentxliabilitiesxarexdefinedxasxliabilitiesxwithxaxmaturityxofxlessxthanxonexyear.
⊚ true
⊚ false
2) AxdeclinexinxthexNetxProperty,xPlant,xandxEquipmentxaccountxbetweenxyear-
endx2020xandxyear-endx2021xisxaxclearxindicationxthatxfixedxassetsxwerexsoldxduringx2021.
⊚ true
⊚ false
3) Whenxreportingxfinancialxperformancexforxtaxxpurposes,xU.S.xcompaniesxpreferxtoxusexa
cceleratedxdepreciationxmethodsxoverxthexstraight-linexmethod.
⊚ true
⊚ false
4) AccountingxrulesxrequirexU.S.xcompaniesxtoxdepreciatexresearchxandxdevelopmentx(R&D)x
expendituresxusingxthexstraight-linexmethod.
⊚ true
⊚ false
5) Youxcanxconstructxaxsourcesxandxusesxstatementxforx2021xifxyouxhavexaxcompany’sxyear-
xendxbalancexsheetsxforx2021xandx2022.
⊚ true
⊚ false
6) Axreductionxinxlong-termxdebtxisxaxusexofxcash.
x
⊚ true
⊚ false
,7) xThexaccrualxprinciplexrequiresxthatxrevenuexnotxbexrecognizedxuntilxpaymentxfromxaxsalexisxr
eceived.
⊚ true
⊚ false
8) Anxincreasexinxcashxandxcashxequivalentsxshouldxappearxasxaxusexofxcashxonxthexsourcesxa
ndxusesxstatement.
⊚ true
⊚ false
9) Axcashxflowxstatementxplacesxeachxsourcexorxusexofxcashxintoxonexofxthreexbroadxc
ategories:xoperatingxactivities,xinvestingxactivities,xorxfinancingxactivities.
⊚ true
⊚ false
10) Thexcostxofxequityxisxusuallyxreportedxonxthexincomexstatementxrightxbelowxinterestxe
xpense.
⊚ true
⊚ false
11) ThexUnitedxStatesxwasxonexofxthexfirstxcountriesxtoxadoptxInternationalxFinancialx
ReportingxStandards.
⊚ true
⊚ false
MULTIPLExCHOICEx-
xChoosexthexonexalternative xthatxbestxcompletes xthexstatementxorxanswers xthexquestion.
12) Whichxofxthexfollowingxstatementsxconcerningxaxfirm’sxcashxflowsxandxprofitsxisxfalse?
, A) Managersxmustxbexatxleastxasxconcernedxwithxcashxflowsxasxwithxprofits.
B) Axcompanyxthatxsellsxmerchandisexatxaxprofitxcanxbexassuredxofxgeneratingxcashxsoonxe
noughxtoxreplenishxcashxflowsxrequiredxforxcontinuedxproduction.
C) Thexcashxflowsxgeneratedxinxaxgivenxtimexperiodxcanxdifferxfromxthexprofitsxreported.
D) Profitsxarexnoxassurancexthatxcashxflowxwillxbexsufficientxtoxmaintainxsolvency.
E) Duextoxrequiredxcashxinvestmentsxinxcurrentxassets,xfast-
growingxandxprofitablexcompaniesxcanxliterallyx“growxbroke”.
13) WhichxofxthexfollowingxisxNOTxaxtypicalxreasonxforxdifferencesxbetweenxprofitsxandxcashxf
low?
A) Goodwill
B) Depreciationxexpense
C) Changesxinxaccountsxreceivable
D) Accrualxaccountingxpractices
14) Whichxonexofxthexfollowingxisxthexfinancialxstatementxthatxshowsxaxfinancialxsnapshot,xt
akenxatxaxpointxinxtime,xofxallxthexassetsxthexcompanyxownsxandxallxthexclaimsxagainstxthosexasse
ts?
A) Incomexstatement
B) Creditor’sxstatement
C) Balancexsheet
D) Cashxflowxstatement
E) Sourcesxandxusesxstatement
15) Axbalancexsheetxreportsxthexvaluexofxaxfirm’sxassets,xliabilities,xandxequity
A) overxanxannualxperiod.
B) overxanyxperiodxofxtime.
C) atxanyxpointxinxtime.
D) atxthexendxofxthexyearxonly.
, 16) Axcompanyxsellsxusedxequipmentxwithxaxbookxvaluexofx$100,000xforx$250,000xcash.xHowx
wouldxthisxtransactionxaffectxthexcompany’sxbalancexsheet?
A) Equityxrisesx$250,000;xnetxplantxandxequipmentxfallsx$250,000.
B) Cashxrisesx$250,000;xnetxplantxandxequipmentxfallsx$100,000;xequityxrisesx$150,000.
C) Cashxrisesx$250,000;xaccountsxreceivablexfallsx$100,000;xgoodwillxrisesx$150,000.
D) Cashxrisesx$250,000;xnetxplantxandxequipmentxfallsx$250,000.
17) Axcompanyxpurchasesxaxnewx$10xmillionxbuildingxfinancedxhalfxwithxcashxandxhalfxwithxaxb
ankxloan.xHowxwouldxthisxtransactionxaffectxthexcompany’sxbalancexsheet?
A) Netxplantxandxequipmentxrisesx$10xmillion;xcashxfallsx$10xmillion;xbankxdebtxrisesx$5x
million.
B) Netxplantxandxequipmentxrisesx$5xmillion;xcashxfallsx$10xmillion;xbankxdebtxrisesx$5x
million.
C) Netxplantxandxequipmentxrisesx$5xmillion;xcashxfallsx$5xmillion;xbankxdebtxrisesx$5x
million.
D) Netxplantxandxequipmentxrisesx$10xmillion;xcashxfallsx$5xmillion;xbankxdebtxrisesx$5x
million.
18) Whichxonexofxthexfollowingxisxthexfinancialxstatementxthatxsummarizesxaxfirm’sxrevenuexa
ndxexpensesxoverxaxperiodxofxtime?
A) Incomexstatement
B) Balancexsheet
C) Cashxflowxstatement
D) Sourcesxandxusesxstatement
E) Marketxvaluexstatement
19) Thexsourcesxandxusesxofxcashxoverxaxstatedxperiodxofxtimexarexreflectedxinxthe
x x x x x x x x x x x
nnifer Koski, Todd Mitton (Answer Key in the end of each chapter)
x x x x x x x x x x x
Student name:x
TRUE/FALSEx-xWritex'T'xifxthexstatementxisxtruexandx'F'xifxthexstatementxisxfalse.
1) xCurrentxliabilitiesxarexdefinedxasxliabilitiesxwithxaxmaturityxofxlessxthanxonexyear.
⊚ true
⊚ false
2) AxdeclinexinxthexNetxProperty,xPlant,xandxEquipmentxaccountxbetweenxyear-
endx2020xandxyear-endx2021xisxaxclearxindicationxthatxfixedxassetsxwerexsoldxduringx2021.
⊚ true
⊚ false
3) Whenxreportingxfinancialxperformancexforxtaxxpurposes,xU.S.xcompaniesxpreferxtoxusexa
cceleratedxdepreciationxmethodsxoverxthexstraight-linexmethod.
⊚ true
⊚ false
4) AccountingxrulesxrequirexU.S.xcompaniesxtoxdepreciatexresearchxandxdevelopmentx(R&D)x
expendituresxusingxthexstraight-linexmethod.
⊚ true
⊚ false
5) Youxcanxconstructxaxsourcesxandxusesxstatementxforx2021xifxyouxhavexaxcompany’sxyear-
xendxbalancexsheetsxforx2021xandx2022.
⊚ true
⊚ false
6) Axreductionxinxlong-termxdebtxisxaxusexofxcash.
x
⊚ true
⊚ false
,7) xThexaccrualxprinciplexrequiresxthatxrevenuexnotxbexrecognizedxuntilxpaymentxfromxaxsalexisxr
eceived.
⊚ true
⊚ false
8) Anxincreasexinxcashxandxcashxequivalentsxshouldxappearxasxaxusexofxcashxonxthexsourcesxa
ndxusesxstatement.
⊚ true
⊚ false
9) Axcashxflowxstatementxplacesxeachxsourcexorxusexofxcashxintoxonexofxthreexbroadxc
ategories:xoperatingxactivities,xinvestingxactivities,xorxfinancingxactivities.
⊚ true
⊚ false
10) Thexcostxofxequityxisxusuallyxreportedxonxthexincomexstatementxrightxbelowxinterestxe
xpense.
⊚ true
⊚ false
11) ThexUnitedxStatesxwasxonexofxthexfirstxcountriesxtoxadoptxInternationalxFinancialx
ReportingxStandards.
⊚ true
⊚ false
MULTIPLExCHOICEx-
xChoosexthexonexalternative xthatxbestxcompletes xthexstatementxorxanswers xthexquestion.
12) Whichxofxthexfollowingxstatementsxconcerningxaxfirm’sxcashxflowsxandxprofitsxisxfalse?
, A) Managersxmustxbexatxleastxasxconcernedxwithxcashxflowsxasxwithxprofits.
B) Axcompanyxthatxsellsxmerchandisexatxaxprofitxcanxbexassuredxofxgeneratingxcashxsoonxe
noughxtoxreplenishxcashxflowsxrequiredxforxcontinuedxproduction.
C) Thexcashxflowsxgeneratedxinxaxgivenxtimexperiodxcanxdifferxfromxthexprofitsxreported.
D) Profitsxarexnoxassurancexthatxcashxflowxwillxbexsufficientxtoxmaintainxsolvency.
E) Duextoxrequiredxcashxinvestmentsxinxcurrentxassets,xfast-
growingxandxprofitablexcompaniesxcanxliterallyx“growxbroke”.
13) WhichxofxthexfollowingxisxNOTxaxtypicalxreasonxforxdifferencesxbetweenxprofitsxandxcashxf
low?
A) Goodwill
B) Depreciationxexpense
C) Changesxinxaccountsxreceivable
D) Accrualxaccountingxpractices
14) Whichxonexofxthexfollowingxisxthexfinancialxstatementxthatxshowsxaxfinancialxsnapshot,xt
akenxatxaxpointxinxtime,xofxallxthexassetsxthexcompanyxownsxandxallxthexclaimsxagainstxthosexasse
ts?
A) Incomexstatement
B) Creditor’sxstatement
C) Balancexsheet
D) Cashxflowxstatement
E) Sourcesxandxusesxstatement
15) Axbalancexsheetxreportsxthexvaluexofxaxfirm’sxassets,xliabilities,xandxequity
A) overxanxannualxperiod.
B) overxanyxperiodxofxtime.
C) atxanyxpointxinxtime.
D) atxthexendxofxthexyearxonly.
, 16) Axcompanyxsellsxusedxequipmentxwithxaxbookxvaluexofx$100,000xforx$250,000xcash.xHowx
wouldxthisxtransactionxaffectxthexcompany’sxbalancexsheet?
A) Equityxrisesx$250,000;xnetxplantxandxequipmentxfallsx$250,000.
B) Cashxrisesx$250,000;xnetxplantxandxequipmentxfallsx$100,000;xequityxrisesx$150,000.
C) Cashxrisesx$250,000;xaccountsxreceivablexfallsx$100,000;xgoodwillxrisesx$150,000.
D) Cashxrisesx$250,000;xnetxplantxandxequipmentxfallsx$250,000.
17) Axcompanyxpurchasesxaxnewx$10xmillionxbuildingxfinancedxhalfxwithxcashxandxhalfxwithxaxb
ankxloan.xHowxwouldxthisxtransactionxaffectxthexcompany’sxbalancexsheet?
A) Netxplantxandxequipmentxrisesx$10xmillion;xcashxfallsx$10xmillion;xbankxdebtxrisesx$5x
million.
B) Netxplantxandxequipmentxrisesx$5xmillion;xcashxfallsx$10xmillion;xbankxdebtxrisesx$5x
million.
C) Netxplantxandxequipmentxrisesx$5xmillion;xcashxfallsx$5xmillion;xbankxdebtxrisesx$5x
million.
D) Netxplantxandxequipmentxrisesx$10xmillion;xcashxfallsx$5xmillion;xbankxdebtxrisesx$5x
million.
18) Whichxonexofxthexfollowingxisxthexfinancialxstatementxthatxsummarizesxaxfirm’sxrevenuexa
ndxexpensesxoverxaxperiodxofxtime?
A) Incomexstatement
B) Balancexsheet
C) Cashxflowxstatement
D) Sourcesxandxusesxstatement
E) Marketxvaluexstatement
19) Thexsourcesxandxusesxofxcashxoverxaxstatedxperiodxofxtimexarexreflectedxinxthe
