Q.1 The balance sheet of a company indicates whether or not the company has sufficient cash and short-term investments. The company's payables turnover ratio, on the other hand, remains low.
A.
A. The company has a liquidity crisis.
B.
B. Suppliers to the company provide it with favorable credit terms.
C.
C. The company has excellent policies in place for collecting receivables.
2.
Q2. Identify which of the following sources of short-term financing is most likely to be utilized by small businesses:
A.
A. Overdraft line
B.
B. Revolving credit agreement
C.
C. Uncommitted lines of credit
3.
Q3. The interest on convertible debt is included in the numerator for diluted Earnings Per Share.
A.
A) After tax adjustments, added to earnings available to common shareholders
B.
B) Earnings available to common shareholders are increased.
C.
C) After tax adjustments, subtracted from earnings available to common shareholders
4.
Q4. What will be seen by a user who is interested in learning about the current state of a company's assets is the following:
A.
A. Balance sheet.
B.
B. Cash flow statement.
C.
C. Income statement.
5.
Q5. The difference between the amount of depreciation recognized on the income statement and the amount recognized on the tax return will result in a
A.
A. Deferred tax liability. (DTL)
B.
B. Deferred tax asset.(DTA)
C.
C. Permanent difference.
6.
Q6.What is the difference between calculating cash flow from operations using the direct method and calculating it using the indirect method?
A.
A) When using the direct method, balance sheet items are excluded from the calculation of cash flow from operations, whereas they are included when using the indirect method.
B.
B) Sales are recorded in the direct method, and cash is followed as it flows through the income statement, whereas the indirect method records net income and adjusts for noncash charges and other items.
C.
C) While the indirect method calculates cash flows from operations by starting with gross income and adjusting for inflation, the direct method calculates cash flows from operations by starting with gross profit and flowing through the income statement.
7.
Q7. The cash conversion cycle is the:
A.
A) The amount of time it takes for inventory to sell
B.
B) The time it takes to sell inventory plus the time it takes to collect accounts receivable is called the sales cycle.
C.
C) A calculation based on the sum of the time it takes to sell inventory and collect on accounts receivable, less the time it takes to pay for credit purchases
8.
Q8. Which of the following is incorrect option another name for the income statement?
A.
A. Statement of earnings
B.
B. Statement of operations
C.
C. Statement of financial position
9.
Q9. Which of the following is the true reason for a company's low receivables turnover?
A.
A. a lower rate of growth in sales than competitors
B.
B. greater sales growth than competitors
C.
C. A history of having more bad debts than competitors
10.
Q10. Which of the following statements is true regarding the reporting of earnings per share (EPS)?
A.
A) The amount of diluted EPS must be less than or equal to the amount of basic EPS.
B.
B) The amount of basic EPS can be less than the amount of diluted EPS.
C.
C) When antidilutive securities are converted into shares of common stock, the earnings per share (EPS) is less than the basic earnings per share.
11.
Q11. According to the accounting equation, a firm’s assets are incorrect