Corporations invest excess cash for short periods of time in each of the following except
Equity securities.
Highly liquid securities.
Low-Risk securities.
Government securities.
Corporations invest in other companies for all of the following reasons except to
house excess cash until needed.
generate earnings.
meet strategic goals.
increase trading of the other companies stock.
A typical investment to house excess cash until needed is
stocks of companies in a related industry.
debt securities.
low-risk, highly liquid securities.
stock securities.
A company may purchase a non controlling interest in another firm in related industry
to house excess cash until needed.
to generate earnings.
for strategic reasons.
for speculative reasons.
Pension funds and mutual funds regularly invest in debt and stock securities primarily to
control the company in which they invest.
At the time of acquisition of a debt investment,
no journal entry is required.
the cost principle applies.
the Stock investments account is debited when bonds are purchased.
the Investment account is credited for its cost plus brokerage fees.
Which of the following is not a true statement regarding short-term debt investments?
The securities usually pay interest.
Investments are frequently government or corporate bonds.
This type of investment must be currently traded in the securities market.
Debt investments are recorded at the price paid less brokerage fees.
On January 1, 2013, Danner Company purchased at face value, a $1000, 8% bond that pays interest on January 1 and July 1. Danner Company has a calendar year end. The entry for the receipt of interest on July 1, 2013 is
Cash..........................................40 Interest Revenue .......................40
Cash.........................................80 Interest Revenue..........................80
Interest Receivable................................40 Interest Revenue................................40
Interest Receivable.............................80 Interest Revenue..............................80
On January 1, 2013, Danner Company purchased at face value, a $1000, 10% bond that pays interest on January 1 and July 1. Danner Company has a calendar year end. The adjusting entry on December 31, 2013 is
not required
Cash..............50 Interest Revenue..............50
Interest Receivable......................50 Interest Revenue.............................50
Interest Receivable.....................50 Debt investments...........................50
On January 1, 2013, Milton Company purchased at face value, a $1000, 4% bond that pays interest on January 1 and July 1. Milton Company has a calendar year end. The entry for the receipt of interest on January 1, 2014 is
Cash..............................40 Interest Revenue................40
Cash............................40 Interest Receivable......................40
Cash....................................20 Interest Revenue...........................20
Cash.....................................20 Interest Receivable.........................20
The statement of cash flows should help investors and creditors assess each of the following except the
entity's ability to generate future income.
entity's ability to pay dividends.
reasons for the difference between net income and net cash provided by operating activities.
cash investing and financing transactions during the period.
The statement of cash flows
must be prepared on a daily basis.
summarizes the operating, financing,and investing activities of an entity.
is another name for the income statement.
is a special section of the income statement.
Which of the following items is not generally used in preparing a statement of cash flows?
Adjusted trial balance.
Comparative balance sheets.
Current income statement.
Additional information.
The primary purpose of the statement of cash flows is to
provide information about the investing and financing activities during a period.
prove that revenues exceed expenses if there is a net income.
provide information about the cash receipts and cash payments during a period.
facilitate banking relationships.
If a company reports a net loss, it
may still have a net increase in cash.
will not be able to pay cash dividends.
will not be able to get a loan.
will not be able to make capital expenditures.
In addition to the three basic financial statements, which of the following is also a required financial statement?
the "Cash Budget"
the Statement of Cash Flows
the Statement of Cash Inflows and Outflows
the "Cash Reconciliation"
The statement of cash flows will not report the
amount of checks outstanding at the end of the period.
sources of cash in the current period.
uses of cash in the current period.
change in the cash balance for the current period.
The statement of cash flows reports each of the following except
cash receipts from operating activities.
cash payments from investing activities.
the net change in cash.
cash sales.
Each of the following are particularly interested in the statement of cash flows except
creditors.
employees.
shareholders.
government agencies.
Lending money and collecting the loads are
operating activities.
investing activities.
financing activities.
non-cash investing and financing activities.
Which one of the following is primarily interested in the liquidity of a company?
Federal government.
Stockholders.
Long-term creditors.
Short-term creditors.
Which of of the following is not a characteristic generally evaluated in analyzing financial statements?
Liquidity
Profitability
Marketability
Solvency
In analyzing the financial statements of a company, a single item on the financial statements
should be reported in bold-face type.
is more meaningful if compared to other financial information.
is significant only if it is large.
should be accompanied by a footnote.
Short-term creditors are usually most interested in evaluating
solvency.
liquidity.
marketability.
profitability.
Long-term creditors are usually most interested in evaluating
liquidity and solvency.
solvency and marketability.
liquidity and profitability.
profitability and solvency.
Stockholders are most interested in evaluating
marketability and solvency.
A stockholder is interested in the ability of a firm to
pay consistent dividends.
appreciate in share price.
survive over a long period.
all of these.
Comparisons of financial date made within a company are called
intracompany comparisons.
interior comparisons.
intercompany comparisons.
intramural comparisons.
A technique for evaluating financial statements that expresses the relationship among selected items of financial statement date is
common size analysis.
horizontal analysis.
ratio analysis.
vertical analysis.
Which one of the following is not a tool in financial statement analysis?
Horizontal analysis.
Circular analysis.
Vertical analysis.
Ratio analysis.
