C214 - Study Guide Problems
Question and answers already passed
2026
1. Trading on the NYSE is executed without a specialist (i.e. a market maker).
True/False - correct answer ✔False
2. Stocks and bonds are two types of financial instruments
True/False - correct answer ✔True
When revenue is matched with cost of sales in an income statement it is called: - correct answer
✔Matching Principle
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:
Revenues of ________________ Expenses of ____________________ - correct answer ✔Revenues
500,000 Expenses 300,000
Income Statement/Balance Sheet - correct answer ✔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? - correct answer ✔Beg RE
= 300, NI = 125, Div = -25, End RE = 400
6. A basic equation for the balance sheet is: - correct answer ✔Equity = Assets - Liabilities
,7. Why is the Balance Sheet known as a permanent statement? - correct answer ✔Because the other
statements are reset at the end of the fiscal year
8. How do you calculate the change in Retained Earnings? - correct answer ✔Net Income - Dividends
9. Sales minus Cost of Sales minus other expenses equals what? - correct answer ✔Operating Income
or EBIT
NI = EBIT(1-tax rate)
10.Name four accounts that are part of total assets? - correct answer ✔Cash
Accounts Receivable
Inventory
Long Term Assets
11. Name three accounts that are part of current assets? - correct answer ✔Inventory
Cash
Accounts Receivable
Short Term Investments
12. Name four accounts that are part of Total Liabilities? - correct answer ✔Bonds
Accounts Payable
Mortgage
Statement of Cash Flows - correct answer ✔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? - correct answer ✔100 + 20 - 10 = 110
14. Name three accounts that are only included in Cash Flow from Financing (CFF)? - correct answer
✔Common Stock
Dividends Paid
Bonds Payable
15.Define the Statement of Cash Flows: - correct answer ✔Calculated for the same period of time as
the Income Statement
Is calculated based on the Income Statement and the changes in the Balance Sheet
Is one of the three basic accounting statements
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? - correct answer ✔(15,000) Depreciation is
not counted when using Gross PPE
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 - correct answer ✔No PPE, Common Stock
Add Depreciation
Add AP
450 + 110 Depn - 120 + 90 + 50 - 75 = 505,000
18. What is the Cash Flow from Investing?
Increase in Gross PP&E 125,000
Beginning Net PP&E 750,000
Ending Net PP&E 850,000
Depreciation Expense 25,000 - correct answer ✔Ignore increase in PPE
Net End 850 less Net Beg 750 plus Depn 25 = 125 Outflow
(125,000)
19. What is the Cash Flow from Investing?
Beginning Net PP&E 250,000
Ending Net PP&E 300,000
Depreciation Expense 40,000
Change in Long Term Investments 100,000
Question and answers already passed
2026
1. Trading on the NYSE is executed without a specialist (i.e. a market maker).
True/False - correct answer ✔False
2. Stocks and bonds are two types of financial instruments
True/False - correct answer ✔True
When revenue is matched with cost of sales in an income statement it is called: - correct answer
✔Matching Principle
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:
Revenues of ________________ Expenses of ____________________ - correct answer ✔Revenues
500,000 Expenses 300,000
Income Statement/Balance Sheet - correct answer ✔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? - correct answer ✔Beg RE
= 300, NI = 125, Div = -25, End RE = 400
6. A basic equation for the balance sheet is: - correct answer ✔Equity = Assets - Liabilities
,7. Why is the Balance Sheet known as a permanent statement? - correct answer ✔Because the other
statements are reset at the end of the fiscal year
8. How do you calculate the change in Retained Earnings? - correct answer ✔Net Income - Dividends
9. Sales minus Cost of Sales minus other expenses equals what? - correct answer ✔Operating Income
or EBIT
NI = EBIT(1-tax rate)
10.Name four accounts that are part of total assets? - correct answer ✔Cash
Accounts Receivable
Inventory
Long Term Assets
11. Name three accounts that are part of current assets? - correct answer ✔Inventory
Cash
Accounts Receivable
Short Term Investments
12. Name four accounts that are part of Total Liabilities? - correct answer ✔Bonds
Accounts Payable
Mortgage
Statement of Cash Flows - correct answer ✔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? - correct answer ✔100 + 20 - 10 = 110
14. Name three accounts that are only included in Cash Flow from Financing (CFF)? - correct answer
✔Common Stock
Dividends Paid
Bonds Payable
15.Define the Statement of Cash Flows: - correct answer ✔Calculated for the same period of time as
the Income Statement
Is calculated based on the Income Statement and the changes in the Balance Sheet
Is one of the three basic accounting statements
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? - correct answer ✔(15,000) Depreciation is
not counted when using Gross PPE
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 - correct answer ✔No PPE, Common Stock
Add Depreciation
Add AP
450 + 110 Depn - 120 + 90 + 50 - 75 = 505,000
18. What is the Cash Flow from Investing?
Increase in Gross PP&E 125,000
Beginning Net PP&E 750,000
Ending Net PP&E 850,000
Depreciation Expense 25,000 - correct answer ✔Ignore increase in PPE
Net End 850 less Net Beg 750 plus Depn 25 = 125 Outflow
(125,000)
19. What is the Cash Flow from Investing?
Beginning Net PP&E 250,000
Ending Net PP&E 300,000
Depreciation Expense 40,000
Change in Long Term Investments 100,000
