COMM 180-Test 1 Spg 06-V1

COMM 180-Test 1 Spg 06-V1 - V1 C OMM 180 Making Business...

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V1 C OMM 180 Making Business Work Test 1 Spring 2006 Check the section you are enrolled: Section 1, Tuesday/Thursday 8am Section 2, Tuesday/Thursday 3:30pm This test consists of 50 multiple-choice questions. Mark correct answer on Scantron sheet provided with #2 pencil. Print your name: _______________________________________ Write out and sign the pledge: 1
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V1 1. A current asset: a. Has a life of less than one year. b. Includes accounts payable. c. Is an illiquid asset. d. Is included in the income statement. e. Is part of shareholders’ equity. 2. For large, high credit-quality firms, which of the following likely offers the least expensive borrowing cost? a. Commercial paper b. Factored receivables c. Inventory liens d. Unsecured committed bank lines of credit e. Unsecured noncommitted bank lines of credit 3. The cash generated from a firm’s normal business activities is called: a. Financing cash flow. b. Net income. c. Gross profit. d. Operating cash flow. e. Free cash flow. 4. All else the same, which of the following will likely decrease the firm’s cash cycle? a. Changing credit terms to require payment in 30 days rather than 20. b. Purchasing inventory less frequently and in larger amounts. c. Delaying payment on payables for an additional 10 days. d. Offering a smaller discount for cash sales. e. Increasing the size of the firm’s cash dividend payment. 5. The need to hold cash to satisfy the ongoing disbursement and collection activities of the firm as part of its daily operations is called the: a. Speculative motive. b. Precautionary motive. c. Transaction motive. d. Float motive. 6. Net income is allocated to which two items? a. Shareholder’s equity and cash b. Common stock and dividends c. Taxes and dividends d. Paid-in surplus and cash e. Retained earnings and dividends 7. Which of the following statements is true? a. Liabilities equal assets plus shareholders’ equity. b. Shareholders’ equity equals assets plus liabilities. c. Shareholders’ equity equals liabilities minus assets. d. Assets equal liabilities plus shareholders’ equity. e. Assets equal liabilities minus shareholders’ equity. 2
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V1 8. A company procedure whereby the firm maintains a relatively high ratio of current assets to sales is called a _____ policy. a. Cash-out b. Restrictive c. Low inventory d. Flexible e. Stock-out 9. Balance sheet assets . I. are always equal to total liabilities minus shareholders’ equity II. represent items acquired with the use of the firm’s assumed liabilities and equity III. are listed in order of decreasing liquidity a. I only b. II only c. III only d. I and III only e. II and III only 10. An income statement . a. measures performance as a snapshot on a specific date b. prepared according to GAAP will show revenue when it accrues c. includes accrued taxes payable d. includes expenses only when they are ultimately paid off in cash e. is an accurate representation of a firm’s net cash flows 11. Holidays, Etc. produces and distributes seasonal merchandise to retail outlets. The firm has adopted
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This note was uploaded on 04/30/2008 for the course COMM 180 taught by Professor Achinson during the Fall '05 term at UVA.

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COMM 180-Test 1 Spg 06-V1 - V1 C OMM 180 Making Business...

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