Question 1 2.5 / 2.5 points
Which are examples of cash outflows for investing activities?
Short-lived assets, purchases of securities, and loans to others
Short-lived assets, sales of securities, and loans to others.
Long-lived assets, sales of securities, and loans to others.
Long-lived assets, purchases of securities, and loans to others.
Question 2 0 / 2.5 points
Depreciation and amortization expense __________ net income because they represent the recognition of a cash expense.
are subtracted from
are not included in
are added back to
have no effect on
Question 3 0 / 2.5 points
Payments for purchases of inventory, dividends, and acquisitions are all examples of __________ cash flows.
financing
investing
operating
marketing
Question 4 2.5 / 2.5 points
Which are examples of cash outflows for operating activities?
Question 5 2.5 / 2.5 points
What is implied if the accounts receivable account has increased?
Question 6 2.5 / 2.5 points
What impact does depreciation have on the cash account?
Question 7 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?
$195
$310
$210
$290
Question 8 2.5 / 2.5 points
Cash flows are segregated on a statement of cash flows by __________ activities, __________ activities, and __________ activities.
cash; investing; financing
operating; investing; future
cash; investing; future
operating; investing; financing
Question 9 2.5 / 2.5 points
The statement of cash flows shows the changes in the __________ accounts between periods.
profit
income summary
balance sheet
losses
Question 10 2.5 / 2.5 points
Which item may be of concern when analyzing cash flow from operating activities?
Increasing inventories
Decreasing accounts receivable
Repayment of debt
Payments of dividends
Question 11 2.5 / 2.5 points
There are two formats the FASB allows, the __________ and the __________ method, for presenting cash flows from operating activities.
cost; indirect
cash; indirect
direct; cost
direct; indirect
Question 12 2.5 / 2.5 points
If net cash provided or used by operating, financing and investing activities are added together, the result is:
net income.
the change in cash.
cash outflow.
cash inflow.
Question 13 0 / 2.5 points
Generating cash from __________ activities is the preferred method for obtaining excess cash.
operating
financing
investing
sales
Question 14 2.5 / 2.5 points
A change in the retained earnings account is the result of the __________ for the period and the payment of __________.
net income; earnings
net income; dividends
net profit; earnings
net profit; dividends
Question 15 2.5 / 2.5 points
Which of the following items would be classified as investing activities on the statement of cash flows?
Question 16 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 17 2.5 / 2.5 points
Which are examples of cash inflows for investing activities?
Question 18 2.5 / 2.5 points
What type of accounts are accounts receivable and accounts payable?
Cash accounts
Operating accounts
Financing accounts
Investing accounts
Question 19 2.5 / 2.5 points
Analyzing the statement of cash flows helps determine the future __________ financing needs of a business firm.
internal
external
potential
internal equity
Question 20 2.5 / 2.5 points
Cash outflows result from __________ in asset accounts and __________ in liability and equity accounts.
increases; decreases
decreases; increases
increases; increases
decreases; decreases
Lesson 4 Exam
Question 21 2.5 / 2.5 points
Which of the following is an acceptable method to report total comprehensive income?
Question 22 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 23 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:
50.0%, 32.5%, and 22.5% respectively.
29.2%, 12.5%, and 10.0%, respectively.
27.0%, 11.0%, and 10.5%, respectively.
21.5%, 17.5%, and 12.0%, respectively.
Question 24 2.5 / 2.5 points
When will volume changes cause volatility in the gross profit margin?
If cost of goods sold includes fixed costs which do not vary proportionately with volume changes
In industries with little capital
In industries having no fixed costs
If cost of goods sold includes costs that vary proportionately with volume changes
Question 25 2.5 / 2.5 points
Why is the common-size income statement valuable to the analyst?
Question 26 2.5 / 2.5 points
Which item would not be classified as an operating expense?
Interest expense
Rent expense
Depreciation
Repairs and maintenance
Question 27 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 28 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 29 2.5 / 2.5 points
How should companies with more than one revenue source report revenue and cost of goods sold?
Question 30 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 31 2.5 / 2.5 points
Which of the items below would be included under "Other income and expense"?
Salaries, interest expense, and equity losses
Equity earnings, gains from sale of assets, and interest income
Research and development, dividend income, and interest expense
Advertising, cost of goods sold, and selling and administrative expenses
Question 32 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 33 2.5 / 2.5 points
Of what value is the calculation of gross profit margin?
Question 34 2.5 / 2.5 points
How does the equity method distort earnings?
Question 35 2.5 / 2.5 points
How should gross profit margin be analyzed for firms having more than one revenue source?
Question 36 2.5 / 2.5 points
How is earnings per common share calculated?
Question 37 2.5 / 2.5 points
Which of the following statements is false?
It is important to analyze operating expenses over which management exercises discretion and that have considerable impact on the firm's profitability.
Impairment charges do not need to be analyzed since they are generally a non-recurring expense.
Operating expenses should be tracked in terms of trends, absolute amounts, relationship to sales, and relationship to industry competitors.
Operating expenses can be easily analyzed by preparing a common-size income statement.
Question 38 2.5 / 2.5 points
What are the two basic formats of the income statement?
Multiple-step and single-step
Cash basis and single-step
Accrual basis and single-step
Accrual basis and multiple-step
Question 39 2.5 / 2.5 points
Which of the following statements is true?
In stable industries, such as retailers, the gross profit margin is generally volatile from year to year.
Gross profit margin and operating profit margin are complements of each other and the two percentages add up to 100%.
Fixed costs do not vary proportionately with volume changes but remain the same within a relevant range of activity.
In capital intensive industries sales volume changes result in a stable gross profit margin.
Question 40 2.5 / 2.5 points
What is amortization?
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