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