In regard to the cash flow statement, assume we want to break down

Question 1 5 / 5 points

In regard to the Cash Flow Statement, assume we want to break down Yahoo! Finance’s cost of revenue into its two major components, cost of goods sold (COGS) and depreciation. To do so, we would need to look at __________ for the depreciation amount.

Question options:

the Statement of Cash Flow

both the Income Statement and the Statement of Cash Flow

both the Balance Sheet and the Statement of Cash Flow

the Income Statement

Question 2 5 / 5 points

Which of the following statements is false?

Question options:

Financial data on the Internet or via company annual reports provide a wealth of knowledge about the operations of the firm.

Knowing the relationship of the primary financial statements and how to utilize the data in each are important tools for all financial managers.

Although the annual report of a company is printed and mailed to owners and the SEC, much of the financial statement information is available at various financial websites.

EDGAR stands for Electronic Data Gathering Analysis and Retribution.

Question 3 5 / 5 points

Notes to the financial statements help explain many of the details necessary to gain a more complete picture of the firm’s performance. Some of the items often disclosed in the financial notes include which of the following?

Question options:

How a specific item was computed

Additional information on a company’s financial condition

Methods used to prepare the financial statements

All of the above items are often included.

Question 4 5 / 5 points

The purpose of studying financial statements is:

Question options:

to mechanically build portfolio analysis.

to understand those portions of the statements that have relevance for financial decision making.

to primarily investigate all portions of the statements that have relevance for dividend policy.

to mechanically learn how to read and understand footnotes.

Question 5 5 / 5 points

The annual report of a company is:

Question options:

printed and mailed to owners and the SEC.

not available online.

not mailed to owners but only to the SEC.

always available online in more detail.

Question 6 5 / 5 points

Which of the following statements is true?

Question options:

The finance manager uses the framework of the income statement to find <br /> the operating income of the company (an accounting measure), which is <br /> also the true cash flow from operations.

In accrual-based accounting, revenue is recorded at the time of sale if <br /> the revenue has been received in cash.

Three fundamental issues separate net income and cash flow: accrual <br /> accounting, noncash expense items, and interest expense.

Generally Accepted Accounting Principles (GAAP) in the United States do <br /> not allow the use of accrual accounting to record revenue.

Question 7 5 / 5 points

Which of the following identities is true?

Question options:

Operating Cash Flow = EBIT + Depreciation – Taxes

Net Capital Spending = Ending Net Fixed Assets – Depreciation

Change in Net Working Capital (NWC) = Current Assets – Current Liabilities

Cash Flow from Assets = Operating Cash Flow + Net Capital Spending

Question 8 5 / 5 points

One of the key components to making financial decisions is to:

Question options:

understand the timing and amount of dividends.

understand the timing and amount of cash flow.

understand the timing of EBIT.

understand the amount of net income.

Question 9 5 / 5 points

Which one of the answers below is NOT one of the three components of the “Cash Flow from Assets”?

Question options:

Operating Cash Flow

Net Capital Spending

Noncash expenses

Change in Net Working Capital

Question 10 5 / 5 points

Cash flow is:

Question options:

the increase but not decrease in cash for the period.

the decrease but not increase in cash for the period.

the increase or decrease in cash for the period.

the net income for the period.

Question 11 5 / 5 points

Which of the statements below is true?

Question options:

Accounting Identity is: Assets = Liabilities – Owners’ Equity.

Accounting Identity is: Assets = Liabilities + Owners’ Equity.

Accounting Identity is: Assets = Owners’ Equity – Liabilities.

Accounting Identity is: Liabilities = Assets + Owners’ Equity.

Question 12 5 / 5 points

To find operating cash flow for the business for the year, add depreciation expense to EBIT and then:

Question options:

subtract the interest expenses.

add the taxes.

subtract the taxes.

add interest expenses.

Question 13 5 / 5 points

Understanding the sources and uses of cash in the recent past will enable a manager to __________ the cash flow for a potential project of the firm.

Question options:

determine with perfect precision

forecast with perfect precision

predict more accurately

know today

Question 14 5 / 5 points

It is important to remember that the fundamental __________ of accounting is the debit and credit recording activity where debits always equal credits.

Question options:

effect

end product

outcome

identity

Question 15 5 / 5 points

Cash flow from assets is derived from:

Question options:

cash flow from operating activities and cash flow from investing activities.

cash flow from operating activities and cash flow from financing activities.

cash flow from financing activities and cash flow from investing activities.

cash flow from creditors and cash flow from investing activities.

Question 16 5 / 5 points

Which of the statements below is false?

Question options:

The income statement summaries and categorizes a company’s revenues and expenses for that period.

Typically, income statements are prepared quarterly and annually for distribution outside the company, but usually monthly for internal managers.

The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes (EBIT).

The balance sheet reports the performance of the firm over the past period. It summarizes and categorizes a company’s revenues and expenses for that period.

Question 17 5 / 5 points

Which of the sections below is NOT contained in the annual report?

Question options:

Prediction of competitors’ returns

Company highlights

President’s letter to the shareholders

Description of the company’s activities (usually with pictures and graphs)

Question 18 5 / 5 points

Which of the following items may be included on all income statements at yahoo.finance.com, even though they may not be part of an individual company’s income statement for that year?

Question options:

Cost of Revenue and Extraordinary Items

Goodwill and Effect of Accounting Changes

Effect of Accounting Changes and Deferred Long-Term Asset Charges

Cost of Revenue and Treasury Stock

Question 19 5 / 5 points

Debts to be paid more than one year from now are claims against the firm’s assets; in other words, they are long-term liabilities. These claims are from __________ who have provided capital to the firm but whose entire repayment is not due during the coming year or operating cycle.

Question options:

banks and bondholders

banks and stockholders

stockholders and bondholders

all long-term lenders

Question 20 5 / 5 points

Notes to the financial statements help explain many of the details necessary to gain a more complete picture of the firm’s:

Question options:

capital budget.

choice of management.

dividend policy.

performance.

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