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.
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?
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?
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:
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:
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?
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?
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:
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”?
Operating Cash Flow
Net Capital Spending
Change in Net Working Capital
Question 10 5 / 5 points
Cash flow is:
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?
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:
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.
determine with perfect precision
forecast with perfect precision
predict more accurately
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 15 5 / 5 points
Cash flow from assets is derived from:
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?
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?
Prediction of competitors’ returns
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?
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.
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:
choice of management.