Chapter 5: Balance Sheet and Statement of Cash Flows Q

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Which of the following statements about the balance sheet is incorrect?

It reports the assets, liabilities, and stockholders' equity of a company for a period of time

Major limitations of the balance sheet include all of the following except

Only amounts known with certainty are reported

Current assets are presented in the balance in order of

Liquidity

Which of the following investments should always be reported as current assets?

Trading securities

Current liabilities include all of the following except

ALL ARE CORRECT
-Accrued warranty costs
-Advances received from customers
-Current portion of long-term debt

All of the following are stockholders' equity sections except

Treasury stock

The balance sheet format listing liabilities and stockholders' equity directly below assets is called the..

Report form

Which of the following is not a type of information that is supplemental to amounts presented in the balance sheet?

Balance sheet format

Companies are not required to disclose information about..

Identity of major stockholders

If additional explanations cannot be conveniently shown as parenthetical explanations, the information should be disclosed by..

Notes

The primary purpose of a statement of cash flows is to report the..

Relevant information about the cash receipts and cash payments during a period

Activities that involve the cash effects of transactions that enter into the determination of net income are classified as..

Operating activities

The last step in preparing the statement of cash flows is to..

Reconcile the change in cash with the beginning and the ending cash balances

The cash debt coverage ration is computed by dividing net cash provided by operating activities by average..

Total Liabilites

Free cash flow is calculated as net cash provided by operating activites less

Capital expenditures and dividends

(T/F) The balance sheet is sometiems referred to as the Statement of Financial Position

True

(T/F) Solvency refers to the amount of time that is expected to elapse until a liability has to be paid

False

(T/F) Current assets are presented in the balance sheet in their order of solvency

False

The statement of cash flows is divided into three different activities

True

(T/F) The current cash debt coverage ratio is equal to net cash provided by operating activities (divided by) average total liabilities

False

A balance sheet is useful for analyzing all of the following except..

Profitability

Assets can be divided into how many sub-classifications?

5

Which of the following is not one of the portfolio groupings for investments in debt and equity securities?

Investments

Which of the following types of securities do not include equity securities?

Held-to-maturity

Which of the following securities are not reported in the balance sheet at their fair value?

Held-to-maturity

Which of the following is not an intangible asset?

Capitalized leases

How mnay different ways may pertinent information be disclosed in the financial statements?

4

Payment of interest expense would come under which activity on the statement of cash flows?

Operating

Payment of a cash dividend would be reported as a cash outflow under..

Financing activities

Which of the following would be added back to net income on the statement of cash flows?

Increase in accounts payable

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