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
the operating income   of the company (an accounting measure), which is
also the true   cash flow from operations.

 

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

 

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

 

Generally Accepted Accounting   Principles (GAAP) in the United States do
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.