Chapter 12, 13, 14 Multiple Choice

Question 1 of 30

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Corporations invest excess cash for short periods of time in each of the following except

Select one of the following:

  • Equity securities.

  • Highly liquid securities.

  • Low-Risk securities.

  • Government securities.

Question 2 of 30

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Corporations invest in other companies for all of the following reasons except to

Select one of the following:

  • house excess cash until needed.

  • generate earnings.

  • meet strategic goals.

  • increase trading of the other companies stock.

Question 3 of 30

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A typical investment to house excess cash until needed is

Select one of the following:

  • stocks of companies in a related industry.

  • debt securities.

  • low-risk, highly liquid securities.

  • stock securities.

Question 4 of 30

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A company may purchase a non controlling interest in another firm in related industry

Select one of the following:

  • to house excess cash until needed.

  • to generate earnings.

  • for strategic reasons.

  • for speculative reasons.

Question 5 of 30

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Pension funds and mutual funds regularly invest in debt and stock securities primarily to

Select one of the following:

  • generate earnings.

  • house excess cash until needed.

  • meet strategic goals.

  • control the company in which they invest.

Question 6 of 30

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At the time of acquisition of a debt investment,

Select one of the following:

  • 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.

Question 7 of 30

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Which of the following is not a true statement regarding short-term debt investments?

Select one of the following:

  • 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.

Question 8 of 30

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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

Select one of the following:

  • Cash..........................................40
    Interest Revenue .......................40

  • Cash.........................................80
    Interest Revenue..........................80

  • Interest Receivable................................40
    Interest Revenue................................40

  • Interest Receivable.............................80
    Interest Revenue..............................80

Question 9 of 30

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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

Select one of the following:

  • not required

  • Cash..............50
    Interest Revenue..............50

  • Interest Receivable......................50
    Interest Revenue.............................50

  • Interest Receivable.....................50
    Debt investments...........................50

Question 10 of 30

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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

Select one of the following:

  • Cash..............................40
    Interest Revenue................40

  • Cash............................40
    Interest Receivable......................40

  • Cash....................................20
    Interest Revenue...........................20

  • Cash.....................................20
    Interest Receivable.........................20

Question 11 of 30

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The statement of cash flows should help investors and creditors assess each of the following except the

Select one of the following:

  • 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.

Question 12 of 30

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The statement of cash flows

Select one of the following:

  • 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.

Question 13 of 30

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Which of the following items is not generally used in preparing a statement of cash flows?

Select one of the following:

  • Adjusted trial balance.

  • Comparative balance sheets.

  • Current income statement.

  • Additional information.

Question 14 of 30

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The primary purpose of the statement of cash flows is to

Select one of the following:

  • 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.

Question 15 of 30

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If a company reports a net loss, it

Select one of the following:

  • 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.

Question 16 of 30

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In addition to the three basic financial statements, which of the following is also a required financial statement?

Select one of the following:

  • the "Cash Budget"

  • the Statement of Cash Flows

  • the Statement of Cash Inflows and Outflows

  • the "Cash Reconciliation"

Question 17 of 30

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The statement of cash flows will not report the

Select one of the following:

  • 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.

Question 18 of 30

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The statement of cash flows reports each of the following except

Select one of the following:

  • cash receipts from operating activities.

  • cash payments from investing activities.

  • the net change in cash.

  • cash sales.

Question 19 of 30

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Each of the following are particularly interested in the statement of cash flows except

Select one of the following:

  • creditors.

  • employees.

  • shareholders.

  • government agencies.

Question 20 of 30

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Lending money and collecting the loads are

Select one of the following:

  • operating activities.

  • investing activities.

  • financing activities.

  • non-cash investing and financing activities.

Question 21 of 30

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Which one of the following is primarily interested in the liquidity of a company?

Select one of the following:

  • Federal government.

  • Stockholders.

  • Long-term creditors.

  • Short-term creditors.

Question 22 of 30

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Which of of the following is not a characteristic generally evaluated in analyzing financial statements?

Select one of the following:

  • Liquidity

  • Profitability

  • Marketability

  • Solvency

Question 23 of 30

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In analyzing the financial statements of a company, a single item on the financial statements

Select one of the following:

  • 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.

Question 24 of 30

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Short-term creditors are usually most interested in evaluating

Select one of the following:

  • solvency.

  • liquidity.

  • marketability.

  • profitability.

Question 25 of 30

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Long-term creditors are usually most interested in evaluating

Select one of the following:

  • liquidity and solvency.

  • solvency and marketability.

  • liquidity and profitability.

  • profitability and solvency.

Question 26 of 30

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Stockholders are most interested in evaluating

Select one of the following:

  • liquidity and solvency.

  • profitability and solvency.

  • liquidity and profitability.

  • marketability and solvency.

Question 27 of 30

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A stockholder is interested in the ability of a firm to

Select one of the following:

  • pay consistent dividends.

  • appreciate in share price.

  • survive over a long period.

  • all of these.

Question 28 of 30

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Comparisons of financial date made within a company are called

Select one of the following:

  • intracompany comparisons.

  • interior comparisons.

  • intercompany comparisons.

  • intramural comparisons.

Question 29 of 30

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A technique for evaluating financial statements that expresses the relationship among selected items of financial statement date is

Select one of the following:

  • common size analysis.

  • horizontal analysis.

  • ratio analysis.

  • vertical analysis.

Question 30 of 30

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Which one of the following is not a tool in financial statement analysis?

Select one of the following:

  • Horizontal analysis.

  • Circular analysis.

  • Vertical analysis.

  • Ratio analysis.

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Chapter 12, 13, 14 Multiple Choice

Natalie Balzert
Quiz by , created about 2 years ago

Quiz on Chapter 12, 13, 14 Multiple Choice, created by Natalie Balzert on 25/11/2014.

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Natalie Balzert
Created by Natalie Balzert about 2 years ago
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