Question 1 2.5 / 2.5 points
Which of the following is an acceptable method to report total comprehensive income?
On the face of the balance sheet
Total comprehensive income does not have to be reported
In the operating section of the cash flow statement
In the statement of stockholders' equity
Question 2 2.5 / 2.5 points
Which items below would be classified as operating expenses?
Depreciation, capital leases, and operating profit
Interest expense, interest income, and rent expense
Accounts payable, lease payments, and depreciation
Advertising, selling and administrative, and repairs and maintenance
Question 3 2.5 / 2.5 points
How should gross profit margin be analyzed for firms having more than one revenue source?
The overall gross profit margin should be calculated for all revenue sources.
Gross profit margin cannot be analyzed if a firm has multiple revenue sources.
A separate gross profit margin for each revenue source should be calculated.
The gross profit margins from each revenue source should be calculated and then averaged.
Question 4 2.5 / 2.5 points
Which equation represents an income statement?
Assets = liabilities + stockholders' equity
Cash in – cash out = net income
Revenues - expenses = net income
Beginning retained earnings + revenues – expenses = ending retained earnings
Question 5 2.5 / 2.5 points
How is earnings per common share calculated?
Operating profit divided by the average number of common stock shares outstanding
Net profit divided by the average number of common and preferred stock shares outstanding
Operating profit divided by the average number of repurchased common stock shares
Net profit divided by the average number of common stock shares outstanding
Question 6 2.5 / 2.5 points
What is another term frequently used when referring to operating profit?
Earnings before interest and taxes (EBIT)
Earnings before interest, taxes, depreciation and amortization (EBITDA)
Net profit
Earnings before interest (EBI)
Question 7 2.5 / 2.5 points
How does the equity method distort earnings?
Income is recognized even though cash may never be received.
Equity earnings are recorded even if the investor cannot exercise influence over the investee's policies.
Equity earnings are only recorded on a cash basis of accounting.
Equity earnings are recorded when investment ownership is 100%.
Question 8 2.5 / 2.5 points
Which of the following statements is true?
Only service companies report both cost of goods sold and gross profit.
Cost of goods sold is the largest expense item for many firms.
Cost of goods sold is not affected by the choice of inventory valuation method.
Cost of goods sold equals gross profit.
Question 9 2.5 / 2.5 points
Selling and administrative expenses include which of the following income statement items?
Salaries, insurance, and interest
Salaries, rent, and advertising
Rent, interest, and cost of goods
Advertising, research & development, and amortization
Question 10 2.5 / 2.5 points
Why is it important to assess operating profit?
Question 11 2.5 / 2.5 points
Why is the common-size income statement valuable to the analyst?
Question 12 2.5 / 2.5 points
Use the following information for Jett Co. to answer the next question.
2015 2014
Sales 1,200 1,000
COGS 850 700
Operating expenses 200 200
Income taxes 30 35
Jett Co.'s gross profit, operating profit and net profit margins for 2015 are:
Question 13 2.5 / 2.5 points
When will volume changes cause volatility in the gross profit margin?
Question 14 2.5 / 2.5 points
How is it possible for a U.S. firm to have increasing earnings but a lower effective tax rate?
Question 15 2.5 / 2.5 points
Use the following information for Jett Co. to answer the next question.
2015 2014
Sales 1,200 1,000
COGS 850 700
Operating expenses 200 200
Income taxes 30 35
Jett Co.'s average tax rates for 2015 and 2014 are:
Question 16 2.5 / 2.5 points
Of what value is the calculation of gross profit margin?
Question 17 2.5 / 2.5 points
Which of the following statements is false?
Question 18 2.5 / 2.5 points
How should companies with more than one revenue source report revenue and cost of goods sold?
Question 19 2.5 / 2.5 points
Which of the following items could be found on a statement of shareholders' equity?
Question 20 2.5 / 2.5 points
How is a common-size income statement prepared?
Lesson 5 Exam
Question 21 2.5 / 2.5 points
Use the indirect method to answer the question below. The following information is available for Casey Company:
Net income $200 Increase in plant and equip. $90
Depreciation expense 50 Payment of dividends 25
Increase in accts. receiv. 30 Increase in long-term debt 100
Decrease in inventories 10 Decrease in accounts payable 20
What is cash flow from operating activities for Casey Company?
Question 22 2.5 / 2.5 points
What is implied if the accounts receivable account has increased?
Question 23 0 / 2.5 points
Capital expenditures are a(n) __________ use of cash for firms.
Question 24 2.5 / 2.5 points
Why is the statement of cash flows useful to the analyst?
Question 25 2.5 / 2.5 points
The statement of cash flows shows the changes in the __________ accounts between periods.
Question 26 0 / 2.5 points
Which are examples of cash outflows for investing activities?
Question 27 2.5 / 2.5 points
Which are examples of cash outflows for operating activities?
Question 28 2.5 / 2.5 points
What impact does depreciation have on the cash account?
Question 29 0 / 2.5 points
Payments for purchases of inventory, dividends, and acquisitions are all examples of __________ cash flows.
Question 30 2.5 / 2.5 points
What type of accounts are accounts receivable and accounts payable?
Question 31 2.5 / 2.5 points
Which item may be of concern when analyzing cash flow from operating activities?
Question 32 2.5 / 2.5 points
Temporary shortfalls of cash can be satisfied by borrowing or other means, such as selling long-lived assets, but ultimately a company must generate cash from:
Question 33 2.5 / 2.5 points
Cash flow from operations represents the "__________" income from the company's business operations.
Question 34 2.5 / 2.5 points
How would you know if a statement of cash flows had been prepared using the direct or the indirect method?
Question 35 2.5 / 2.5 points
Which are examples of cash inflows for investing activities?
Question 36 0 / 2.5 points
Generating cash from __________ activities is the preferred method for obtaining excess cash.
Question 37 2.5 / 2.5 points
If net cash provided or used by operating, financing and investing activities are added together, the result is:
Question 38 2.5 / 2.5 points
Cash flows are segregated on a statement of cash flows by __________ activities, __________ activities, and __________ activities.
Question 39 0 / 2.5 points
The four parts of a statement of cash flows include:
Question 40
Which of the following items would be classified as investing activities on the statement of cash flows?
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