Question 1

The fourth step in financial statement analysis is using the financial statements to analyze the current ____________________ and ____________________ of the firm.

Accepted Answer

The answer of The fourth step in financial statement analysis...

Question 2

Which of the following is not considered to be a liability?

Accepted Answer

Cost of goods sold is an expense, not a liability. Wages payable, accounts payable, and notes payable are all considered to be liabilities.

Question 3

Another important step in financial statement analysis is to assess the quality of a firm's ________________________________________ and if necessary adjust them for such characteristics as sustainability or comparability.

Accepted Answer

The answer of Another important step in financial statement analysis...

Question 4

The higher the value added from any activity,the higher should be the ____________________ from engaging in that activity.

Accepted Answer

The answer of The higher the value added from any...

Question 5

All of the following are principal provisions of the Sarbanes-Oxley Act of 2002 except:

Accepted Answer

The principal provisions of the Sarbanes-Oxley Act of 2002 include A, B, and C. However, the FASB does not have oversight and enforcement authority over the SEC, so option D is incorrect.

Question 6

Why is the operating activities section of the statement of cash flows often believed to be the most important part of the statement?

Accepted Answer

The operating activities section of the statement of cash flows is considered the most important part of the statement because it shows how well a company is generating cash from its core business operations to meet current cash payments for goods or services. This information can be crucial for investors and creditors in assessing a company's ability to continue operating and meeting its financial obligations. The other options mentioned are also important parts of the statement of cash flows, but do not provide as much insight into a company's operating performance.

Question 7

Which form does the balance sheet equation take in the United Kingdom?

Accepted Answer

The balance sheet equation in the United Kingdom takes the form of Noncurrent Assets + [Current assets - Current Liabilities] - Noncurrent Liabilities = Shareholders' Equity. This equation represents the resources of the company (noncurrent assets), the company's working capital (current assets minus current liabilities), and the long-term sources of funds (noncurrent liabilities and shareholders' equity) that are used to finance the company's assets.

Question 8

Assets for a particular business might include

Accepted Answer

Assets for a business include items that the company owns and can use to generate revenue, such as cash, inventories, and goodwill. Retained earnings, common shareholders' equity, and accumulated other comprehensive income are not assets; they are part of equity. Accounts payable is a liability.

Question 9

Net income is equal to:

Accepted Answer

Net income is calculated by subtracting expenses and losses from revenues and gains, which is option B. Option A is the formula for calculating shareholders' equity, and option C is the formula for calculating liabilities. Option D does not account for shareholder equity, which is an important aspect of a company's financial standing.

Question 10

Which financial statement for a business would you look at to determine the company's earnings performance during an accounting period?

Accepted Answer

The income statement shows a business's revenue, expenses, and net income (or loss) over a specific period, such as a month or year. This statement is used to determine the company's earnings performance during that accounting period.

Question 11

Normally,intense rivalries have a tendency to reduce ____________________.

Accepted Answer

The answer of Normally,intense rivalries have a tendency to reduce...

Question 12

The five economic attributes that are normally studied are demand,supply,manufacturing,____________________,and investing and financing.

Accepted Answer

The answer of The five economic attributes that are normally...

Question 13

The first step in financial statement analysis is to identify the __________________________________________________ of the industry in which a firm participates.

Accepted Answer

The answer of The first step in financial statement analysis...

Question 14

The tools of effective financial statement analysis are also useful for assessing whether to extend ____________________ to a firm,either for a short-term or for a long-term.

Accepted Answer

The answer of The tools of effective financial statement analysis...

Question 15

The threat of new entrants is measured by whether there are entry barriers,such as capital investment,________________________________________,patents,or regulation that inhibit new entrants.

Accepted Answer

The answer of The threat of new entrants is measured...

Question 16

Accounts receivable represent:

Accepted Answer

Accounts receivable represent the amounts which are owed to the company by its customers resulting from credit sales.

Question 17

The ______________________________ sets forth the sequence of activities involved in the creation,manufacture and distribution of its products and services.

Accepted Answer

The answer of The ______________________________ sets forth the sequence of...

Question 18

The two categories of shareholders' equity usually found on the balance sheet of a corporation are

Accepted Answer

The two categories of shareholders' equity usually found on the balance sheet of a corporation are common stock and retained earnings. Common stock represents the amount of money invested by shareholders in exchange for common stock shares, while retained earnings represent the portion of the company's profits that have not been distributed as dividends to shareholders.

Question 19

When identifying the strategies that a particular firm pursues to gain a competitive advantage it is important to determine if its products are designed to meet the needs of a specific market segment or are they intended for a _____________________________________________.

Accepted Answer

The answer of When identifying the strategies that a particular...

Question 20

On the statement of cash flows,an amount paid for utilities would be classified as

Accepted Answer

Utilities payment is an expense incurred in the daily operations of the business, which makes it an operating activity. Financing activities involve transactions related to debt or equity financing, while investing activities involve the purchase or sale of long-term assets. Non-cash activities are typically transactions that do not involve cash, such as the issuance of stock or the exchange of assets.

Quiz 1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation

The fourth step in financial statement analysis is using the financial statements to analyze the current and of the firm.