Chapter 12, 13, 14 Multiple Choice

Question 1

Question

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

Answer

Equity securities.
Highly liquid securities.
Low-Risk securities.
Government securities.

Question 2

Question

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

Answer

house excess cash until needed.
generate earnings.
meet strategic goals.
increase trading of the other companies stock.

Question 3

Question

A typical investment to house excess cash until needed is

Answer

stocks of companies in a related industry.
debt securities.
low-risk, highly liquid securities.
stock securities.

Question 4

Question

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

Answer

to house excess cash until needed.
to generate earnings.
for strategic reasons.
for speculative reasons.

Question 5

Question

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

Answer

generate earnings.
house excess cash until needed.
meet strategic goals.
control the company in which they invest.

Question 6

Question

At the time of acquisition of a debt investment,

Answer

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

Question

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

Answer

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

Question

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

Answer

Cash..........................................40 Interest Revenue .......................40
Cash.........................................80 Interest Revenue..........................80
Interest Receivable................................40 Interest Revenue................................40
Interest Receivable.............................80 Interest Revenue..............................80

Question 9

Question

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

Answer

not required
Cash..............50 Interest Revenue..............50
Interest Receivable......................50 Interest Revenue.............................50
Interest Receivable.....................50 Debt investments...........................50

Question 10

Question

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

Answer

Cash..............................40 Interest Revenue................40
Cash............................40 Interest Receivable......................40
Cash....................................20 Interest Revenue...........................20
Cash.....................................20 Interest Receivable.........................20

Question 11

Question

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

Answer

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

Question

The statement of cash flows

Answer

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

Question

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

Answer

Adjusted trial balance.
Comparative balance sheets.
Current income statement.
Additional information.

Question 14

Question

The primary purpose of the statement of cash flows is to

Answer

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

Question

If a company reports a net loss, it

Answer

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

Question

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

Answer

the "Cash Budget"
the Statement of Cash Flows
the Statement of Cash Inflows and Outflows
the "Cash Reconciliation"

Question 17

Question

The statement of cash flows will not report the

Answer

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

Question

The statement of cash flows reports each of the following except

Answer

cash receipts from operating activities.
cash payments from investing activities.
the net change in cash.
cash sales.

Question 19

Question

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

Answer

creditors.
employees.
shareholders.
government agencies.

Question 20

Question

Lending money and collecting the loads are

Answer

operating activities.
investing activities.
financing activities.
non-cash investing and financing activities.

Question 21

Question

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

Answer

Federal government.
Stockholders.
Long-term creditors.
Short-term creditors.

Question 22

Question

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

Answer

Liquidity
Profitability
Marketability
Solvency

Question 23

Question

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

Answer

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

Question

Short-term creditors are usually most interested in evaluating

Answer

solvency.
liquidity.
marketability.
profitability.

Question 25

Question

Long-term creditors are usually most interested in evaluating

Answer

liquidity and solvency.
solvency and marketability.
liquidity and profitability.
profitability and solvency.

Question 26

Question

Stockholders are most interested in evaluating

Answer

liquidity and solvency.
profitability and solvency.
liquidity and profitability.
marketability and solvency.

Question 27

Question

A stockholder is interested in the ability of a firm to

Answer

pay consistent dividends.
appreciate in share price.
survive over a long period.
all of these.

Question 28

Question

Comparisons of financial date made within a company are called

Answer

intracompany comparisons.
interior comparisons.
intercompany comparisons.
intramural comparisons.

Question 29

Question

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

Answer

common size analysis.
horizontal analysis.
ratio analysis.
vertical analysis.

Question 30

Question

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

Answer

Horizontal analysis.
Circular analysis.
Vertical analysis.
Ratio analysis.

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Chapter 12, 13, 14 Multiple Choice

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Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Question 8

Question 9

Question 10

Question 11

Question 12

Question 13

Question 14

Question 15

Question 16

Question 17

Question 18

Question 19

Question 20

Question 21

Question 22

Question 23

Question 24

Question 25

Question 26

Question 27

Question 28

Question 29

Question 30

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	Created by Natalie Balzert over 6 years ago