FINANCE 301 Exam Study Guide Questions all
with 100% Correct Answers
Balance Sheet - ANSWER They report, as of a certain point in time, the resources of a
company, the obligations of a company, and the equity of the owners.
Income Statement - ANSWER They report, for a certain interval of time, the net assets
generated, the net assets consumed, and the net income
Matching Principle - ANSWER Matches the expenses related to a sale in the same period
Revenue Recognition - ANSWER Revenue is recognized when a good or service is
provided, not when the money is received
Cash Flow Statement - ANSWER Working capital changes are accounted for as cash
flows from operating activities.
Cash Flow Statement - ANSWER The disposal or acquisition of plant, property &
equipment is classified as an investing activity.
Cost of Goods Sold/Net Sales - ANSWER In order to calculate the amount of cost of
goods sold on a common size income statement you would do the following:
Cash/Total Assets - ANSWER In order to calculate the amount of cash on a common size
balance sheet you would do the following:
Inventory - ANSWER Which current asset is omitted when calculating the Quick Ratio?
,Costs of Goods Sold - ANSWER On the income statement, which of the following line-
items represents the amount the company's suppliers receive?
Interest expense - ANSWER On the income statement, which of the following line-items
represents the amount the company's creditors receive?
Liquidity ratios - ANSWER If lenders want to assess the likelihood of borrowers being
able to make interest payments, they would most likely look at which ratios?
Activity ratios - ANSWER If investors want to assess how efficient a company is at using
its productive resources, they would most likely look at which ratios?
Shareholder Equity - ANSWER On the Balance Sheet, what reflects the owners' residual
interest in the firm?
Gross Margin - ANSWER On the Income Statement, what is the difference between
revenues and cost of goods sold during a particular accounting period?
20% - ANSWER Calculate the ROE using the DuPont Model for a company with the
following data:
Profit margin= 15%
Total Asset Turnover= 1.2
Inventory Turnover= 1.8
Equity Multiplier=1.1
Current Ratio = 1.6
20% - ANSWER Calculate the ROE using the DuPont Model for a company with the
following data:
, Profit margin= 5%
Total Asset Turnover= 2.8
Inventory Turnover= 2.5
Equity Multiplier=1.4
Current Ratio = .75
Dividends Received - ANSWER Which of the following activities is classified as Operating
Activities on the Statement of Cash Flows?
A. Dividends Received
B. Sale of Plant
C. Proceeds from Stock Issuance
D. Sale of Long-Term Assets
E. Dividend Payments to Shareholders
Sale of Long-Term Assets - ANSWER Which of the following activities is classified as
Investing Activities on the Statement of Cash Flows?
A. Dividends Received
B. Payments to Suppliers
C. Proceeds from Stock Issuance
D. Sale of Long-Term Assets
E. Dividend Payments to Shareholders
10K - ANSWER The annual report publicly traded companies must file with the SEC is the
_______
10Q - ANSWER The quarterly report publicly traded companies must file with the SEC is
the _______
with 100% Correct Answers
Balance Sheet - ANSWER They report, as of a certain point in time, the resources of a
company, the obligations of a company, and the equity of the owners.
Income Statement - ANSWER They report, for a certain interval of time, the net assets
generated, the net assets consumed, and the net income
Matching Principle - ANSWER Matches the expenses related to a sale in the same period
Revenue Recognition - ANSWER Revenue is recognized when a good or service is
provided, not when the money is received
Cash Flow Statement - ANSWER Working capital changes are accounted for as cash
flows from operating activities.
Cash Flow Statement - ANSWER The disposal or acquisition of plant, property &
equipment is classified as an investing activity.
Cost of Goods Sold/Net Sales - ANSWER In order to calculate the amount of cost of
goods sold on a common size income statement you would do the following:
Cash/Total Assets - ANSWER In order to calculate the amount of cash on a common size
balance sheet you would do the following:
Inventory - ANSWER Which current asset is omitted when calculating the Quick Ratio?
,Costs of Goods Sold - ANSWER On the income statement, which of the following line-
items represents the amount the company's suppliers receive?
Interest expense - ANSWER On the income statement, which of the following line-items
represents the amount the company's creditors receive?
Liquidity ratios - ANSWER If lenders want to assess the likelihood of borrowers being
able to make interest payments, they would most likely look at which ratios?
Activity ratios - ANSWER If investors want to assess how efficient a company is at using
its productive resources, they would most likely look at which ratios?
Shareholder Equity - ANSWER On the Balance Sheet, what reflects the owners' residual
interest in the firm?
Gross Margin - ANSWER On the Income Statement, what is the difference between
revenues and cost of goods sold during a particular accounting period?
20% - ANSWER Calculate the ROE using the DuPont Model for a company with the
following data:
Profit margin= 15%
Total Asset Turnover= 1.2
Inventory Turnover= 1.8
Equity Multiplier=1.1
Current Ratio = 1.6
20% - ANSWER Calculate the ROE using the DuPont Model for a company with the
following data:
, Profit margin= 5%
Total Asset Turnover= 2.8
Inventory Turnover= 2.5
Equity Multiplier=1.4
Current Ratio = .75
Dividends Received - ANSWER Which of the following activities is classified as Operating
Activities on the Statement of Cash Flows?
A. Dividends Received
B. Sale of Plant
C. Proceeds from Stock Issuance
D. Sale of Long-Term Assets
E. Dividend Payments to Shareholders
Sale of Long-Term Assets - ANSWER Which of the following activities is classified as
Investing Activities on the Statement of Cash Flows?
A. Dividends Received
B. Payments to Suppliers
C. Proceeds from Stock Issuance
D. Sale of Long-Term Assets
E. Dividend Payments to Shareholders
10K - ANSWER The annual report publicly traded companies must file with the SEC is the
_______
10Q - ANSWER The quarterly report publicly traded companies must file with the SEC is
the _______
