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