Which statement is true:

Which statement is true:

a. Financial analysis is the use of financial statements to analyze a company's financial position and performance.
b. Financial analysis is the use of balance sheet to analyze a company's financial position and performance, and to assess future performance.
c. Financial analysis is the use of income statement and balance sheet to analyze a company's financial position and performance, and to assess future performance.
d. Financial analysis is the use of financial statements to analyze a company's financial position and performance, and to assess future performance.

Answer: D

In indirect method, the net income figure from the income statement is used to calculate the amount of net cash flow from operating activities because:

In indirect method, the net income figure from the income statement is used to calculate the amount of net cash flow from operating activities because:

a. the income statement is prepared on accrual basis in which revenue is recognized when earned and not when received
b. the income statement is prepared on cash basis in which revenue is recognized when earned and not when received
c. the cash flow statement is prepared on accrual basis in which revenue is recognized when earned and not when received
d. the cash flow statement is prepared on cash basis in which revenue is recognized when earned and not when received

Answer: A

Which statement is true:

Which statement is true:

a. Liquidity refers to the ability of a company to meets its long-term (and current) obligations.
b. Profitability refers to the ability of a company to meets its long-term (and current) obligations.
c. Efficiency refers to the ability of a company to meets its long-term (and current) obligations.
d. Solvency refers to the ability of a company to meets its long-term (and current) obligations.

Answer: D

Major noncurrent assets include:

Major noncurrent assets include:

a. Property
b. All of these
c. Equipment
d. Investments

Answer: B

It is an indicator of a company's ability to meet financial obligations

It is an indicator of a company's ability to meet financial obligations

a. Liquidity
b. Solvency
c. Profitability
d. Efficiency

Answer: A

Major current assets include:

Major current assets include:

a. cash and cash equivalents
b. marketable securities
c. all of these
d. derivative financial instruments

Answer: C

Which statement is true:

Which statement is true:

a. Gains are cash inflows that arise from the company's ongoing business activities.
b. Gains are cash outflows that arise from the company's ongoing business activities.
c. Losses are cash outflows that arise from the company's ongoing business activities.
d. None of these

Answer: D

Which statement is true:

Which statement is true:

a. Economic income and accounting income are always the same.
b. The matching principle in accounting prescribes that costs must be recognized in the same period when the related revenues are recognized.
c. Gains are cash inflows that arise from the company's ongoing business activities.
d. Losses are cash outflows that arise from the company's ongoing business activities.

Answer: B

Which of the following measures of accounting income is typically reported in an income statement?

Which of the following measures of accounting income is typically reported in an income statement? 

a. Net income
b. Comprehensive income
c. Continuing income
d. All of these

Answer: D

As a general rule, revenue is normally recognized when it is:

As a general rule, revenue is normally recognized when it is: 

a. received
b. realizable and received
c. realizable and earned
d. realizable

Answer: C

The classification of marketable equity securities as trading or available-for-sale is determined by:

The classification of marketable equity securities as trading or available-for-sale is determined by: 

a. management's intent regarding the disposition of the securities
b. when the securities mature
c. whether the current assets are greater or less than the current liabilities
d. whether management wants to mark them to market or not

Answer: A

Trading Marketable Securities:

Trading Marketable Securities: 

a. are considered current assets.
b. are considered current liability
c. are considered non-current liability
d. are considered non-current assets.

Answer: D

Which asset is very liquid that can be converted into cash quickly:

Which asset is very liquid that can be converted into cash quickly:

a. Trading Marketable Securities
b. Inventory
c. Prepaid expense
d. All of these

Answer: A

Which item is listed on the owner equity of the balance sheet?

Which item is listed on the owner equity of the balance sheet?

a. Paid-in capital
b. Common stock
c. Retained earning
d. All of these

Answer: D

Which activity is an example of operating activities?

Which activity is an example of operating activities?

a. Selling goods
b. Paying employees
c. Advertising
d. All of these



Answer: D

Which statement is true:

Which statement is true:

a. Total liabilities to total assets ratio <50 percent indicates that a firm is relying more on borrowed money than owners' equity.
b. Total liabilities to total assets ratio > 60 percent indicates that a firm is relying more on borrowed money than owners' equity.
c. Total liabilities to total assets ratio <60 percent indicates that a firm is relying more on borrowed money than owners' equity.
d. Total liabilities to total assets ratio > 50 percent indicates that a firm is relying more on borrowed money than owners' equity.

Answer: D

Which ratio measures the extent to which a firm relies on debt financing:

Which ratio measures the extent to which a firm relies on debt financing:

a. Leverage ratios
b. Liquidity ratios
c. Profitability ratios
d. Efficiency ratios

Answer: A

Which ratio indicates the number of times merchandise inventory moves through a business?

Which ratio indicates the number of times merchandise inventory moves through a business?

a. Inventory turnover ratio
b. Asset turnover ratio
c. Day in inventory
d. Account receivable ratio

Answer: A

Which activity focus on selling goods and services, but they also consider expenses as important elements of sound financial management.

Which activity focus on selling goods and services, but they also consider expenses as important elements of sound financial management.

a. Financing activity
b. Operating activity
c. Investing activity
d. None of these

Answer: B

Which activity help to provide valuable assets required to run a business?

Which activity help to provide valuable assets required to run a business?

a. Financing activity
b. Operating activity
c. Investing activity
d. None of these

Answer: C