,Test Bank for Analysis For Financial Management 13th Edition Robert Higg
x# x# x # x# x# x# x# x# x# x#
ins, Jennifer Koski, Todd Mitton
x# x# x# x#
Student name: x#
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
1) Current liabilities are defined as liabilities with a maturity of less than one year.
x# x# x# x# x# x# x# x# x# x# x# x# x#
⊚ true
⊚ false
2) A decline in the Net Property, Plant, and Equipment account between year-
x# x# x# x# x# x# x# x# x# x# x#
end 2020 and year-end 2021 is a clear indication that fixed assets were sold during 2021.
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
⊚ true
⊚ false
3) When reporting financial performance for tax purposes, U.S. companies prefer to u
x# x# x# x# x# x# x# x# x# x# x#
se accelerated depreciation methods over the straight-line method.
x# x# x# x# x# x# x#
⊚ true
⊚ false
4) Accounting rules require U.S. companies to depreciate research and development (R&
x# x# x# x# x# x# x# x# x# x#
D) expenditures using the straight-line method.
x# x# x# x# x#
⊚ true
⊚ false
5) You can construct a sources and uses statement for 2021 if you have a company’s ye
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
ar- end balance sheets for 2021 and 2022.
x# x# x# x# x# x# x#
⊚ true
⊚ false
6) A reduction in long-term debt is a use of cash.
x# x# x# x# x# x# x# x# x#
⊚ true
⊚ false
,7) The accrual principle requires that revenue not be recognized until payment from a sale
x# x# x# x# x# x# x# x# x# x# x# x# x# x
is received.
# x#
⊚ true
⊚ false
8) An increase in cash and cash equivalents should appear as a use of cash on the sour
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
ces and uses statement.
x# x# x#
⊚ true
⊚ false
9) A cash flow statement places each source or use of cash into one of three bro
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
ad categories: operating activities, investing activities, or financing activities.
x# x# x# x# x# x# x# x#
⊚ true
⊚ false
10) The cost of equity is usually reported on the income statement right below inter
x# x# x# x# x# x# x# x# x# x# x# x# x#
est expense.
x#
⊚ true
⊚ false
11) The United States was one of the first countries to adopt International Financi
x# x# x# x# x# x# x# x# x# x# x# x#
al Reporting Standards.
x# x#
⊚ true
⊚ false
MULTIPLE CHOICE - x# x#
Choose the one alternative that best completes the statement or answers the question.
x# x# x# x# x# x# x# x# x# x# x# x# x#
12) Which of the following statements concerning a firm’s cash flows and profits is false?
x# x# x# x# x# x# x# x# x# x# x# x# x#
, A) Managers must be at least as concerned with cash flows as with profits.
x# x# x# x# x# x# x# x# x# x# x# x#
B) A company that sells merchandise at a profit can be assured of generating cash so
x# x# x# x# x# x# x# x# x# x# x# x# x# x#
on enough to replenish cash flows required for continued production.
x# x# x# x# x# x# x# x# x#
C) The cash flows generated in a given time period can differ from the profits reported.
x# x# x# x# x# x# x# x# x# x# x# x# x# x#
D) Profits are no assurance that cash flow will be sufficient to maintain solvency.
x# x# x# x# x# x# x# x# x# x# x# x#
E) Due to required cash investments in current assets, fast-
x# x# x# x# x# x# x# x#
growing and profitable companies can literally “grow broke”.
x# x# x# x# x# x# x#
13) Which of the following is NOT a typical reason for differences between profits and ca
x# x# x# x# x# x# x# x# x# x# x# x# x# x#
sh flow?
x#
A) Goodwill
B) Depreciation expense x#
C) Changes in accounts receivable x# x# x#
D) Accrual accounting practices x# x#
14) Which one of the following is the financial statement that shows a financial snapsh
x# x# x# x# x# x# x# x# x# x# x# x# x#
ot, taken at a point in time, of all the assets the company owns and all the claims against
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
those assets?
x#
A) Income statement x#
B) Creditor’s statement x#
C) Balance sheet x#
D) Cash flow statement x# x#
E) Sources and uses statement x# x# x#
15) A balance sheet reports the value of a firm’s assets, liabilities, and equity
x# x# x# x# x# x# x# x# x# x# x# x#
A) over an annual period. x# x# x#
B) over any period of time.x# x# x# x#
C) at any point in time.
x# x# x# x#
D) at the end of the year only.
x# x# x# x# x# x#
x# x# x # x# x# x# x# x# x# x#
ins, Jennifer Koski, Todd Mitton
x# x# x# x#
Student name: x#
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
1) Current liabilities are defined as liabilities with a maturity of less than one year.
x# x# x# x# x# x# x# x# x# x# x# x# x#
⊚ true
⊚ false
2) A decline in the Net Property, Plant, and Equipment account between year-
x# x# x# x# x# x# x# x# x# x# x#
end 2020 and year-end 2021 is a clear indication that fixed assets were sold during 2021.
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
⊚ true
⊚ false
3) When reporting financial performance for tax purposes, U.S. companies prefer to u
x# x# x# x# x# x# x# x# x# x# x#
se accelerated depreciation methods over the straight-line method.
x# x# x# x# x# x# x#
⊚ true
⊚ false
4) Accounting rules require U.S. companies to depreciate research and development (R&
x# x# x# x# x# x# x# x# x# x#
D) expenditures using the straight-line method.
x# x# x# x# x#
⊚ true
⊚ false
5) You can construct a sources and uses statement for 2021 if you have a company’s ye
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
ar- end balance sheets for 2021 and 2022.
x# x# x# x# x# x# x#
⊚ true
⊚ false
6) A reduction in long-term debt is a use of cash.
x# x# x# x# x# x# x# x# x#
⊚ true
⊚ false
,7) The accrual principle requires that revenue not be recognized until payment from a sale
x# x# x# x# x# x# x# x# x# x# x# x# x# x
is received.
# x#
⊚ true
⊚ false
8) An increase in cash and cash equivalents should appear as a use of cash on the sour
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
ces and uses statement.
x# x# x#
⊚ true
⊚ false
9) A cash flow statement places each source or use of cash into one of three bro
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
ad categories: operating activities, investing activities, or financing activities.
x# x# x# x# x# x# x# x#
⊚ true
⊚ false
10) The cost of equity is usually reported on the income statement right below inter
x# x# x# x# x# x# x# x# x# x# x# x# x#
est expense.
x#
⊚ true
⊚ false
11) The United States was one of the first countries to adopt International Financi
x# x# x# x# x# x# x# x# x# x# x# x#
al Reporting Standards.
x# x#
⊚ true
⊚ false
MULTIPLE CHOICE - x# x#
Choose the one alternative that best completes the statement or answers the question.
x# x# x# x# x# x# x# x# x# x# x# x# x#
12) Which of the following statements concerning a firm’s cash flows and profits is false?
x# x# x# x# x# x# x# x# x# x# x# x# x#
, A) Managers must be at least as concerned with cash flows as with profits.
x# x# x# x# x# x# x# x# x# x# x# x#
B) A company that sells merchandise at a profit can be assured of generating cash so
x# x# x# x# x# x# x# x# x# x# x# x# x# x#
on enough to replenish cash flows required for continued production.
x# x# x# x# x# x# x# x# x#
C) The cash flows generated in a given time period can differ from the profits reported.
x# x# x# x# x# x# x# x# x# x# x# x# x# x#
D) Profits are no assurance that cash flow will be sufficient to maintain solvency.
x# x# x# x# x# x# x# x# x# x# x# x#
E) Due to required cash investments in current assets, fast-
x# x# x# x# x# x# x# x#
growing and profitable companies can literally “grow broke”.
x# x# x# x# x# x# x#
13) Which of the following is NOT a typical reason for differences between profits and ca
x# x# x# x# x# x# x# x# x# x# x# x# x# x#
sh flow?
x#
A) Goodwill
B) Depreciation expense x#
C) Changes in accounts receivable x# x# x#
D) Accrual accounting practices x# x#
14) Which one of the following is the financial statement that shows a financial snapsh
x# x# x# x# x# x# x# x# x# x# x# x# x#
ot, taken at a point in time, of all the assets the company owns and all the claims against
x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x# x#
those assets?
x#
A) Income statement x#
B) Creditor’s statement x#
C) Balance sheet x#
D) Cash flow statement x# x#
E) Sources and uses statement x# x# x#
15) A balance sheet reports the value of a firm’s assets, liabilities, and equity
x# x# x# x# x# x# x# x# x# x# x# x#
A) over an annual period. x# x# x#
B) over any period of time.x# x# x# x#
C) at any point in time.
x# x# x# x#
D) at the end of the year only.
x# x# x# x# x# x#
