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FIN305 Unit 7 Chapter 10-11 Quiz 2018 (Perfect Answer)
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Question 1

Which of the following is not a typical cash flow under operating activities?

Cash inflows from sale of goods or services

Cash inflows from sale of property, plant, and equipment

Cash outflows to employees

Cash outflows to suppliers

Question 2

Which of the following was not given as a reason for acquirers paying too much in an acquisition?


Overuse of conventional financial statements

Overoptimistic appraisal of market potential

Overestimation of synergies

Question 3

Which of the following represents an internal source of cash?

Cash inflows from financing activities

Cash inflows from investing activities

Cash inflows from selling land

Cash inflows from operating activities

Question 4

Management should use the statement of cash flows for which of the following purposes?

Determine the financial position.

Determine cash flow from investing activities.

Determine the balance in accounts payable.

Determine the balance in accounts receivable.

Question 5

Which of the following would not be an example of the use of a multiple when valuing common equity?

Multiperiod discounted earnings models

Price to earnings (PE)

Price to book

Price to operating cash flow

Question 6

Which of the following ratios would best disclose effective management of working capital by a given firm relative to other firms in the same industry?

A high rate of financial leverage relative to the industry average

A high number of days’ sales uncollected relative to the industry average

A high turnover of net working capital relative to the industry average

A high number of days’ sales in inventory relative to the industry average

Question 7

Notes to financial statements are beneficial in meeting the disclosure requirements of financial reporting. The notes should not be used to

Correct an improper presentation in the financial statements.

Describe depreciation methods employed by the company.

Describe principles and methods peculiar to the industry in which the company operates when these principles and methods are predominately followed in that industry.

Disclose the basis of consolidation for consolidated statements.

Question 8

The concept of conservatism is often considered important in accounting. The application of this concept means that in the event some doubt occurs as to how a transaction should be recorded, it should be recorded so as to

Understate income and overstate assets

Overstate income and overstate assets

Understate income and understate assets

Overstate income and understate assets

Question 9

Which of the following could lead to cash flow problems?

Tightening of credit by suppliers

Easing of credit by suppliers

Reduction of inventory

Selling bonds

Question 10

Working capital is defined as

Current assets less current liabilities.

Cash equivalent accounts less current liabilities.

Current assets less notes payable.

Total assets less current liabilities.

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