Chapter 03 Working With Financial Statements Test Bank
1.
Activities of a firm that require the spending of cash are known as:
A. Sources of cash.
B. Uses of cash.
C. Cash collections.
D. Cash receipts.
E. Cash on hand.
2.
The sources and uses of cash over a stated period of time are reflected on the:
A. Income statement.
B. Balance sheet.
C. Tax reconciliation statement.
D. Statement of cash flows.
E. Statement of operating position.
3.
A common-size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of:
A. Total assets.
B. Total equity.
C. Net income.
D. Taxable income.
E. Sales.
4.
Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in
time?
A. Statement of standardization.
B. Statement of cash flows.
C. Common-base year statement.
D. Common-size statement.
E. Base reconciliation statement.
.
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,5.
Relationships determined from a firm's financial information and used for comparison purposes are known as:
A. Financial ratios.
B. Identities.
C. Dimensional analysis.
D. Scenario analysis.
E. Solvency analysis.
6.
Which one of these identifies the relationship between the return on assets and the return on equity?
A. Profit margin.
B. Profitability determinant.
C. Balance sheet multiplier.
D. DuPont identity.
E. Debt-equity ratio.
7.
The U.S. government coding system that classifies a firm by the nature of its business operations is known as the:
A. Centralized Business Index.
B. Peer Grouping codes.
C. Standard Industrial Classification codes.
D. Governmental ID codes.
E. Government Engineered Coding System.
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,8.
Which one of the following is a source of cash for a non-tax-paying firm?
A. Increase in accounts receivable.
B. Increase in depreciation.
C. Decrease in accounts payable.
D. Increase in common stock.
E. Increase in inventory.
9.
Which one of the following is a use of cash?
A. Decrease in fixed assets.
B. Decrease in inventory.
C. Increase in long-term debt.
D. Decrease in accounts receivables.
E. Decrease in accounts payable.
10.
Which one of the following is a source of cash?
A. Repurchase of common stock,
B. Acquisition of debt,
C. Purchase of inventory,
D. Payment to a supplier,
E. Granting credit to a customer,
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, 11.
Which one of the following is a source of cash?
A. Increase in accounts receivable,
B. Decrease in common stock,
C. Increase in fixed assets,
D. Decrease in accounts payable,
E. Decrease in inventory,
12.
On the statement of cash flows, which of the following are considered financing activities?
I. Increase in long-term debt.
II. Decrease in accounts payable.
III. Interest paid.
IV. Dividends paid.
A. I and IV only.
B. III and IV only.
C. II and III only.
D. I, III, and IV only.
E. I, II, III, and IV.
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1.
Activities of a firm that require the spending of cash are known as:
A. Sources of cash.
B. Uses of cash.
C. Cash collections.
D. Cash receipts.
E. Cash on hand.
2.
The sources and uses of cash over a stated period of time are reflected on the:
A. Income statement.
B. Balance sheet.
C. Tax reconciliation statement.
D. Statement of cash flows.
E. Statement of operating position.
3.
A common-size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of:
A. Total assets.
B. Total equity.
C. Net income.
D. Taxable income.
E. Sales.
4.
Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in
time?
A. Statement of standardization.
B. Statement of cash flows.
C. Common-base year statement.
D. Common-size statement.
E. Base reconciliation statement.
.
1
,5.
Relationships determined from a firm's financial information and used for comparison purposes are known as:
A. Financial ratios.
B. Identities.
C. Dimensional analysis.
D. Scenario analysis.
E. Solvency analysis.
6.
Which one of these identifies the relationship between the return on assets and the return on equity?
A. Profit margin.
B. Profitability determinant.
C. Balance sheet multiplier.
D. DuPont identity.
E. Debt-equity ratio.
7.
The U.S. government coding system that classifies a firm by the nature of its business operations is known as the:
A. Centralized Business Index.
B. Peer Grouping codes.
C. Standard Industrial Classification codes.
D. Governmental ID codes.
E. Government Engineered Coding System.
2
,8.
Which one of the following is a source of cash for a non-tax-paying firm?
A. Increase in accounts receivable.
B. Increase in depreciation.
C. Decrease in accounts payable.
D. Increase in common stock.
E. Increase in inventory.
9.
Which one of the following is a use of cash?
A. Decrease in fixed assets.
B. Decrease in inventory.
C. Increase in long-term debt.
D. Decrease in accounts receivables.
E. Decrease in accounts payable.
10.
Which one of the following is a source of cash?
A. Repurchase of common stock,
B. Acquisition of debt,
C. Purchase of inventory,
D. Payment to a supplier,
E. Granting credit to a customer,
3
, 11.
Which one of the following is a source of cash?
A. Increase in accounts receivable,
B. Decrease in common stock,
C. Increase in fixed assets,
D. Decrease in accounts payable,
E. Decrease in inventory,
12.
On the statement of cash flows, which of the following are considered financing activities?
I. Increase in long-term debt.
II. Decrease in accounts payable.
III. Interest paid.
IV. Dividends paid.
A. I and IV only.
B. III and IV only.
C. II and III only.
D. I, III, and IV only.
E. I, II, III, and IV.
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