1.Which of the following is not one of the three sections in a statement of cash flows?
A) Funding activities
2.What is step one of the three-step process for computing net cash provided by operating activities?
A) Add depreciation
3.Which of the following statements is true?
A) Buying property plant and equipment is a cash outflow in the investing section of the statement of cash flows.
4.Which of the following statements is true?
A) Paying a dividend to stockholders is a cash outflow in the financing section of the statement of cash flows.
5.Which of the following statements is true?
A) An increase in accounts receivable is subtracted from net income in the operating activities section of the statement of cash flows.
6.Which of the following statements is true?
A) An increase in accounts payable is added to net income in the operating activities section of the statement of cash flows.
7.Which of the following statements is true regarding the property, plant, and equipment disclosures in the investing section of the statement of cash flows?
A) They should report gross cash flows.
8.Which of the following statements is true?
A) The sale of long-term investments should be reported as a cash inflow in the investing section of the statement of cash flows.
9.Which of the following would not be reported in the financing section of the statement of cash flows?
A) Receipt of free cash flow
10.Which of the following statements is true?
A) The issuance of bonds payable is recorded as a cash inflow.
11.The statement of cash flows begins with:
A) net income.
12.The statement of cash flows explains:
A) the change in the cash balance during the period.
13.The equation to compute free cash flow begins with net cash provided by operating activities and subtracts:
A) capital expenditures and dividends
14.Free cash flow:
A) can be greater than zero or less than zero.
15.Which of the following is true regarding the direct method of computing net cash provided by operating activities?
A) A decrease in accounts receivable is added to sales.
16.Which of the following is true regarding the direct method of computing net cash provided by operating activities?
A) An increase in inventory is added to cost of goods sold.
17.Which of the following is not mentioned in the overview video?
A) Ratios to assess operating cash flows
18.Which of the following is (are) mentioned in the overview video?
A) Horizontal analysis and vertical analysis
19.In a common-size balance sheet, all accounts are stated as a percent of:
A) total assets
20.In a common-size income statement, all accounts are stated as a percent of:
A) Sales
21.Working capital is computed as:
A) current assets – current liabilities
22.The acid-test (quick) ratio excludes which of the following from the numerator?
A) Inventory
23.The formula to compute accounts receivable turnover is:
A) sales on account ÷ average accounts receivable balance
24.The operating cycle equals:
A) average sale period + average collection period
26.Which of the following statements is true regarding the times interest earned ratio?
A) It uses net operating income in the numerator.
25.Which of the following statements is true regarding the debt-to-equity ratio?
A) It is computed at one point in time using numbers from the balance sheet.
27.Which of the following statements is true regarding the gross margin percentage?
A) It is computed for a period of time using numbers from the income statement.
28.Which of the following is not included in the calculation of return on total assets?
A) Dividends
29.The book value per share includes which of the following in the numerator?
A) Total stockholders’ equity
30.The dividend payout ratio is computed as:
A) dividends per share ÷ earnings per share