Question 1
Which of the following is not a typical cash flow under
operating activities?
Cash inflows from sale of goods or services
Cash inflows from
sale of property, plant, and equipment
Cash outflows to employees
Cash outflows to suppliers
Question 2
Which of the following was not given as a reason for
acquirers paying too much in an acquisition?
Overbidding
Correct Overuse of
conventional financial statements
Overoptimistic appraisal of market potential
Overestimation of synergies
Question 3
Which of the following represents an internal source of
cash?
Cash inflows from financing activities
Cash inflows from investing activities
Cash inflows from selling land
Cash inflows from
operating activities
Question 4
Management should use the statement of cash flows for which
of the following purposes ?
the balance in accounts
receivable.
Determine the financial position.
Determine cash flow from investing activities.
Determine the balance in accounts payable.
Determine the balance in accounts receivable.
Question 5
Which of the following would not be an example of the use of
a multiple when valuing common equity?
Multiperiod discounted earnings models
Price to earnings (PE)
Price to book
Price to operating cash flow
Question 6
Which of the following ratios would best disclose effective
management of working capital by a given firm relative to other firms in the
same industry?
A high rate of financial leverage relative to the industry
average
A high number of days’ sales uncollected relative to the
industry average
A high turnover of
net working capital relative to the industry average
A high number of days’ sales in inventory relative to the
industry average
Question 7
Notes to financial statements are beneficial in meeting the
disclosure requirements of financial reporting. The notes should not be used to
Correct an improper presentation in the
financial statements.
Describe depreciation methods employed by the company.
Describe principles and methods peculiar to the industry in
which the company operates when these principles and methods are predominately
followed in that industry.
Disclose the basis of consolidation for consolidated
statements.
Question 8
Understate income and overstate assets
Overstate income and overstate assets
Understate income and understate assets
Overstate income and understate assets
Question 9
1
Which of the following could lead to cash flow problems?
Tightening of credit by suppliers
Easing of credit by suppliers
Reduction of inventory
Selling bonds
Question 10
Working capital is defined as
Current assets less
current liabilities.
Cash equivalent accounts less current liabilities.
Current assets less notes payable.
Total assets less current liabilities.
