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