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Unformatted text preview: Axel Grossmann Sample Exam II FIN 3383 Chapter 3 1. Which of the following statements is CORRECT? a. The balance sheet gives us a picture of the firm’s financial situation over a period of time. b. The income statement gives us a snapshot of what is happening at a point in time. c. Four key financial statements are the balance sheet, the income statement, the statement of cash flows, and the statement of retained earnings. d. The statement of cash flows tells us how much cash the firm has in the form of currency and demand deposits. e. The statement of cash needs tells us how much cash the firm will require during some future period, generally a month or a year. 2. Which of the following items is NOT included in current assets? a. Accounts payable. b. Inventory. c. Accounts receivable. d. Cash. e. Short-term, highly liquid, marketable securities. 3. Other things held constant, which of the following actions would increase the amount of cash on a company’s balance sheet? a. The company issues new common stock. b. The company repurchases common stock. c. The company pays a dividend. d. The company purchases a new piece of equipment. e. The company gives customers more time to pay their bills. 4. Which of the following statements is CORRECT? a. In the statement of cash flows, depreciation charges are reported as a use of cash. b. In the statement of cash flows, a decrease in accounts receivable is reported as a use of cash. c. In the statement of cash flows, an increase in accounts receivables is reported as a use of cash. d. In the statement of cash flows, a decrease in inventories is reported as a use of cash. e. None of the above 5. How is net operating working capital (NOWC) defined? a. Current assets required in operations – (Accounts payable + Accruals) b. (Current assets – Accounts payable) + (Accruals + Notes payable) c. Current liabilities - Current assets d. Total assets – (Accounts payable + Notes payable) e. (Accounts receivable + Accounts payable) – (Inventory + Notes payable) 6. Which of the following statements is CORRECT? a. Accounts receivable are reported as a current liability on the balance sheet. b. Dividends paid reduce the net income that is reported on a company’s income statement. c. If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet. d. If a company issues new long-term bonds during the current year, this will increase its reported current liabilities at the end of the year. e. If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will fall. Axel Grossmann Sample Exam II FIN 3383 (The following information applies to the next four problems.) The following 2 years of financial information are for Sebring Corporation....
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- Spring '10
- Balance Sheet, Current Assets, Generally Accepted Accounting Principles, Axel Grossmann