chap003 - Chapter 003 Working with Financial Statements...

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Chapter 003 Working with Financial Statements Multiple Choice Questions 1. Activities of a firm which require the spending of cash are known as: a. sources of cash. B . uses of cash. c. cash payments. d. cash receipts. e. cash on hand. SECTION: 3.1 TOPIC: USES OF CASH TYPE: DEFINITIONS 2. The sources and uses of cash over a stated period of time are reflected on the: a. income statement. b. balance sheet. c. tax reconciliation statement. D . statement of cash flows. e. statement of operating position. SECTION: 3.1 TOPIC: STATEMENT OF CASH FLOWS TYPE: DEFINITIONS 3. A common-size statement is an accounting statement that expresses all of a firm's expenses as a percentage of: a. total assets. b. total equity. c. net income. d. taxable income. E . sales. SECTION: 3.2 TOPIC: COMMON-SIZE STATEMENTS TYPE: DEFINITIONS 3-1
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Chapter 003 Working with Financial Statements 4. A _____ standardizes items on the income statement and balance sheet relative to their values as of a common point in time. a. statement of standardization b. statement of cash flows C . common-base year statement d. common-size statement e. tax reconciliation statement SECTION: 3.2 TOPIC: COMMON-BASE YEAR STATEMENTS TYPE: DEFINITIONS 5. Relationships determined from a firm's financial information and used for comparison purposes are known as: A . financial ratios. b. comparison statements. c. dimensional analysis. d. scenario analysis. e. solvency analysis. SECTION: 3.3 TOPIC: FINANCIAL RATIOS TYPE: DEFINITIONS 6. Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as _____ ratios. a. asset management b. long-term solvency C . short-term solvency d. profitability e. market value SECTION: 3.3 TOPIC: SHORT-TERM SOLVENCY RATIOS TYPE: DEFINITIONS 3-2
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7. The current ratio is measured as: a. current assets minus current liabilities. B . current assets divided by current liabilities. c. current liabilities minus inventory, divided by current assets. d. cash on hand divided by current liabilities. e. current liabilities divided by current assets. SECTION: 3.3 TOPIC: CURRENT RATIO TYPE: DEFINITIONS 8. The quick ratio is measured as: a. current assets divided by current liabilities. b. (cash on hand plus accounts receivable) divided by current assets. c. current liabilities divided by current assets. d. cash on hand divided by current liabilities. E . (current assets minus inventory) divided by current liabilities. SECTION: 3.3 TOPIC: QUICK RATIO TYPE: DEFINITIONS 9. The cash ratio is measured as: a. current assets divided by current liabilities. b. (current assets minus cash on hand) divided by current liabilities. c. (current assets minus current liabilities) divided by cash on hand. d. (current assets minus inventory) divided by current liabilities. E . cash on hand divided by current liabilities. SECTION: 3.3
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This note was uploaded on 03/23/2011 for the course ECON 202098 taught by Professor Sameer during the Spring '11 term at University of Jordan.

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chap003 - Chapter 003 Working with Financial Statements...

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