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Ques : Which of the following does Financing Activities not include?
Ans : Payments to vendors
Ques : Which of the following errors/s can a trial balance be used to detect?
Ans : An entry where both sides of the transaction are entered as a debit
Ques : Which of the following errors/s can a trial balance be used to detect?
Ans : A transposition error when entering the credit side of an entry
Ques : Which of the following are the 3 main sections of Statement of Cash Flows?
Ans : Operating, Investing, Financing
Ques : Which of the following does the cash flow cycle measure?
Ans : The time between purchase of raw materials and collection of cash
Ques : Which of the following is not a fundamental of accounting?
Ans : Magnitude
Ques : Which of the following is a difference between a public company and a private one?
Ans : Public companies must have audited financial statements and prepared SEC reports
Ques : What does the indirect method of preparing the cash flow statement effectively accomplish?
Ans : It takes the accrual basis of accounting and converts it to cash basis
Ques : Which cash collection technique is the most cost-effective for companies with many locations?
Ans : Self-addressed stamped envelopes
Ques : How does Treasury Stock differ from Trading Stock?
Ans : Treasury stock has no voting or dividend rights
Ques : How often do companies typically generate standard financial reports?
Ans : Monthly
Ques : What is one procedure a Company Manager would take to make the information on financial reports more useful for examination?
Ans : Use the information on the financial reports to do a financial analysis, creating comparable ratios
Ques : How does the income statement of a charity differ from that of a public company?
Ans : Charities produce a similar report which shows funding sources, and program expenses and other commitments
Ques : In what general way do investors use the information in the financial statements?
Ans : To determine if a company is worth investing in
Ques : In what general way do investors use the information in the financial statements?
Ans : To determine if a company is worth investing in
Ques : To determine if a company is worth investing in
Ans : Capital
Ques : A company declares a dividend. What is its effect on the cash?
Ans : It decreases Cash
Ques : How are the Cash Flow Statement and Balance Sheet related?
Ans : Changes in Accounts Receivable and Accounts Payable are reflected on the Cash Flow Statement
Ques : Which is/are the primary financial statements used to measure liquidity?
Ans : Cash Flow Statement and Balance Sheet
Ques : What is the primary reason a government entity would want to look at a company's financial statements?
Ans : To determine tax liability
Ques : A company pays out a previous declared common stock dividend. What is its effect on the cash?
Ans : It will decrease
Ques : What is the purpose of a trial balance?
Ans : To act as a worksheet, making sure all debits equal all credits, as well as aid in the discovery of issues
Ques : The best financial report to see a company's cash balance is ______.
Ans : Balance Sheet
Ques : What purpose would a company's financial statements have for the lending institutions?
Ans : To determine if the company is meeting current covenants in their existing debt agreement
Ques : Financial managers use the _____________ to plan for monthly financing needs.
Ans : cash budget
Ques : What is another name for the Balance Sheet?
Ans : Statement of Financial Position
Ques : How are the Cash Flow Statement and Balance Sheet related?
Ans : Ending cash balance from the Cash Flow Statement is transferred to the Balance Sheet
Ques : What are the four traits of a useful financial statement?
Ans : Understandable, Relevant, Reliable, Comparable
Ques : What is the purpose of an income statement?
Ans : To show the reader how the company made and spent money in the period presented
Ques : What is Treasury Stock?
Ans : Stock repurchased by the issuing company, reducing the amount of stock outstanding in the open market
Ques : How do investors turn the information on the financial statements into more useful data which is comparable to other companies?
Ans : Perform financial analysis
Ques : What is another name for the Income Statement?
Ans : Profit & Loss Statement
Ques : Which is/are the primary financial statements used to measure solvency?
Ans : Balance Sheet and Income Statement
Ques : The formula to calculate Ending Retained Earnings is ______.
Ans : Ending Retained Earnings = Beginning RE - Investments - Dividends Paid + Net Income
Ques : The three sections of a Statement of Cash Flows are _____.
Ans : Operating, investing, financing
Ques : What does GAAP stand for?
Ans : Generally Accepted Accounting Principles
Ques : Which financial statement best allows a firm to assess its ability to pay dividends?
Ans : Statement of Cash Flows
Ques : What is one possible use employees would have of the company financial statements?
Ans : It helps the employees to demonstrate their own personal contribution to the company
Ques : Which of the following transactions would have no impact on the stockholder's equity?
Ans : Purchase of land from the proceeds of a bank loan
Ques : Which of the following transactions is a non cash event but would be disclosed in the notes of the Statement of Cash Flows?
Ans : Exchange of shares for an asset
Ques : What does the Balance Sheet reflect?
Ans : Net changes over a period of time
Ques : How does Gross Income differ from Net Income?
Ans : Gross Income measures profitability before operating expenses, whereas Net Income is calculated after all operating expenses
Ques : What is historical value?
Ans : The original cost or price paid for an asset
Ques : When a company files a statement of their financial plans for the next two years with the SEC, it is called a ______.
Ans : Prospectus
Ques : What does Treasury Stock appear on the balance sheet as?
Ans : As a reduction of opening Retained Earnings
Ques : What are the main categories of a balance sheet?
Ans : Assets, Liabilities, Equity
Ques : What way is government accounting different from public company accounting?
Ans : The chart of accounts and financial statements are classified and organized differently
Ques : What is the one problem while comparing financial statements with companies based in different countries?
Ans : Countries use different accounting standards, comparisons can only be made directly with countries using GAAP
Ques : Which is the primary financial statement used to measure profitability?
Ans : Income Statement
Ques : How are the income statement and balance sheet linked?
Ans : Net income from the income statement transfers to the balance sheet equity section
Ques : Which method of preparing the statement of cash flows begins with Net Income?
Ans : Indirect
Ques : By doing/issuing which of the following could a company raise short-term funds by selling receivables and inventory?
Ans : By line of credit
Ques : How would the financial statements be useful for a Company Manager?
Ans : To make operational decisions based on comparing past and current results
Ques : What is one possible use employees would have for the company financial statements?
Ans : Employees have a vested interest in the company for job security and any equity incentive they have
Ques : What is the purpose of the statement of cash flows?
Ans : To demonstrate how the company used their cash in the period reported
Ques : Pro forma statements are _______ statements.
Ans : next years'
Ques : Retained earnings will change over time because of several factors. Which of the following factors would lead to an increase in the Retained Earnings?
Ans : Net income
Ques : Which is/are the primary financial statements used to measure stability?
Ans : Balance Sheet
Ques : What is the purpose of an audit?
Ans : To verify that statements made by the company are true based on an independent party's evaluation
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