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Chapter 03
Working with Financial Statements
Multiple Choice Questions
1.
Activities of a firm which require the spending of cash are known as:
2.
The sources and uses of cash over a stated period of time are reflected on
the:
3.
A common-size income statement is an accounting statement that
expresses all of a firm's expenses as percentage of:
4.
Which one of the following standardizes items on the income statement and
balance sheet relative to their values as of a chosen point in time?
5.
Relationships determined from a firm's financial information and used for
comparison purposes are known as:
6.
The formula which breaks down the return on equity into three component
parts is referred to as which one of the following?
7.
The U.S. government coding system that classifies a firm by the nature of
its business operations is known as the:
8.
Which one of the following is a source of cash?
9.
Which one of the following is a use of cash?
10.
Which one of the following is a source of cash?
11.
Which one of the following is a source of cash?
12.
On the Statement of Cash Flows, which of the following are considered
financing activities?
I. increase in long-term debt
II. decrease in accounts payable
III. interest paid
IV. dividends paid
13.
On the Statement of Cash Flows, which of the following are considered
operating activities?
I. costs of goods sold
II. decrease in accounts payable
III. interest paid
IV. dividends paid
14.
According to the Statement of Cash Flows, a decrease in accounts
receivable will _____ the cash flow from _____ activities.
15.
According to the Statement of Cash Flows, an increase in interest expense
will _____ the cash flow from _____ activities.
16.
On a common-size balance sheet all accounts are expressed as a
percentage of:
17.
On a common-base year financial statement, accounts receivables will be
expressed relative to which one of the following?
18.
A firm uses 2011 as the base year for its financial statements. The
common-size, base-year statement for 2012 has an inventory value of 1.08.
This is interpreted to mean that the 2012 inventory is equal to 108 percent
of which one of the following?
19.
Which of the following ratios are measures of a firm's liquidity?
I. cash coverage ratio
II. interval measure
III. debt-equity ratio
IV. quick ratio
20.
An increase in current liabilities will have which one of the following effects,
all else held constant? Assume all ratios have positive values.
21.
An increase in which one of the following will increase a firm's quick ratio
without affecting its cash ratio?
