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32 Cards in this Set
- Front
- Back
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T or F The income statement measures the increase in the assets of a firm over a period of time |
F |
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T or F Equity is a measure of the monetary contributions that have been made directly or indirectly on behalf of the shareholders of the company |
T |
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T or F The change in accumulated amortization should always be equal to the amortization expense charged in the income statement |
T |
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T or F Shareholders equity is equal to assets minus liabilities |
T |
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T or F asset accounts are listed in order of their liquidity |
T |
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which account represents the cumulative profits and losses of the firm since its formation, minus dividends paid? retained earnings accumulated amortization common stock share price |
accumulated amortization |
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gross profit it equal to : sales-direct variable expenses sales-(selling and admin expenses) sales-(cogs and selling and admin exp.) sales-(cogs and amortization expense |
sales - direct variable expenses |
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increasing interest expense will have what effect on ebit? increase it decrease it no effect not enough info |
no effect |
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T or F to compute the quick ratio, accounts receivable are not included in current assets |
F |
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T or F A current ratio of 2:1 is always acceptable |
F |
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in examining the liquidity ratios, the primary emphasis is the firms... |
Ability to pay short-term obligations on time |
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in addition to comparison with industry ratios, it is also helpful to analyze ratios using.... trend analysis historical comparisons neither both a and b |
both a and b trend analysis and historical comparisons |
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T or F The primary purpose of the cash budget is to plan accounts payable payments |
F |
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profit is generally adequate to finance significant growth T or F |
F |
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T or F an increase in sales and/or profits means there is also an increase in cash on the balance sheet |
F |
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if you own 20 % of shares of a company and it declares a 10,000 dividend, you are intitled to... 2000 of the dividend an office 20% of the dividens nothing |
2000 |
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in forecasting a firms cash needs for some future period... a cash budget approach can work level and seasonal production schedules the %ofsales is a broad brush quicker approach cash budgets are more exact then %ofsale all of the above |
all |
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shareholders of companies may be held responsible for repaying bank loans if.. |
they signed a personal guarantee with the bank |
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ideally sales projections should be derived from |
internal and external viewpoints |
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the percent of sales method of financial forecasting ..... -is more detailed then a cash budget -requires more time than a cash budget -assumes balance sheet maintain a consistent relationship to sales -provides a month to month data breakdown |
assumes balance sheet maintain consistant relationship to sales |
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pro forma financial statements are... projections of financial statements for future often required by prospective creditors the most comprehensive means of financial forc. all answers correct |
all answers |
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T or F operating income is not the same thing as EBIT |
F |
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T or F the contribution margin is equal to price per unit munis total costs per unit |
F |
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the break-even point can be calculated as.. |
fixed cost divided by contribution margin |
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how is gross profit determined? |
deduct cost of sales from revenue |
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for a furniture manufacturing company, which of the following is a fixed cost? freight in insurance direct labour raw materials |
insurance |
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payback period, net present value, and internal rate of return can be used for.. |
evaluating investment proposals |
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if a company has an average collection period of 45 days last year and this year it was 35 days, what is true ? |
things are getting worse because the average collection period is increasing |
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The factoring of accounts receivable consists of |
allowing a finance company to manage your accounts receivable for a fee |
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a new product line is proposed to be started by the company. the company learns that the IRR on the project is much greater then its WACC. what should the company do? hire an accountant stay far away from investing in product invest immediately think about it for a while |
invest asap |
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in calculating the net present value of an investment, the basic discount rate used is usually... |
the weighted average cost of capital for the company |
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which account pepresents the cumulative profits and losses of the firm since its formation, minus dividens |
retained earnings |
