Accounting II chapters 13, 14 & 15
Examples of complementary products that may be used to create an effective product mix include which of the following?
1. Car wash at a gas station 2. Snacks at a movie 3. Nonfood necessities at a grocery store
NOT a cash flow from investing activities
1. Cash paid for wages and salaries to employees 2. Cash paid to repay loans
In the statement of cash flow, cash flows from financing activities include which of the following?
1. Recedes form short term borrowing 2. Cash received from the sale of stock to stockholders 3. Cash paid to purchase treasury stock 4. Cash paid in dividends to stockholders
What are the purposes of a cash flow statement?
1. The companys ability to generate positive cash flows in the future 2. To asses the company's need for external financing 3. To asses the company's ability to meet obligations and pay dividends
Cash budgets
1. They may show expected cash flows great detail 2. They are a forecast of future cash receipts and payments 3. They may provide useful information for evaluating performance
Purposes of developing in effective product mix
1. To increase total sales 2. To increase gross margins
All of the following are considered cash equivalents except
1. Treasury bills 2. Money market funds 3. Commercial papers 4. STOCKS
The ratio that indicates how quickly a company converts its accounts receivable into cash is called
Accounts receivable turnover rate
Reconciling a company's net income to its net cash from operating activities includes
An increase in accounts payable An increase in short term notes payable Depreciation expense
Describe the price earnings ratio
Based on an assessment of the future Reflects a company's liquidity
Items that are considered the same as cash in the preparation of the statement of cash flows are called
Cash equivalents
The financial statement that focuses entirely on a single asset in the balance sheet is the statement of...
Cash flows
Which section of the statement of cash flows is most directly related to net income?
Cash flows from operating activities
Cash flows from operating activities computed by the direct and indirect method
Cash flows from operations is the same amount by either method The direct method provides more information about the amount of specific cash inflows and outflows
To determine cash paid for merchandise, which two adjustments are required?
Change in inventory and change in accounts payable
Financial statements that present multi year information in side by side columns are called
Comparative financial statements
Assets that are relatively liquid and expected to become cash in the future are called
Current assets
A widely used measure of liquidity that includes all current assets is referred to as
Current ratio
The final section or item you would expect to find in a classified income statement is
Earnings per share
True or false: a cash budget is not a useful tool for evaluating performance
False
The cash paid out to repay debt is classified as ______________ activity in the statement of cash flows
Financing
cash flows from operating activities
Interest and dividends received Collection from customers Proceeds from the settlement of litigation
considered in calculating working capital
Inventories Wages payable
The ratio that indicates how many times during the year the company is able to sell quantity of goods equal to its average inventory is called
Inventory turnover ratio
A company that receives the repayment of loans it has made to other companies should classify the cash received as cash flows from ____________ activities
Investing
Operating Activities
It relates to day to cash inflows and outflows such as sales, purchases, salaries. Collections from customers for sales of goods and services
The ability of a company to meet its continuing obligations is referred to as
Liquidity
NOT a cash flow from operating activities
Payments of dividends to stockholders
A policy of charging higher prices in periods of higher demand is called
Peak pricing
Peak pricing
Prevent systems from becoming so overloaded that they cannot function May make goods and services available to customers who could not afford them
The balance sheet ratio that measures liquidity by excluding inventory as an asset is called
Quick ratio
A company with strong free cash flow means that
The company will have less need for external financing The company's operations are a reliable source of financing for the future
Primary factors evaluating the quality of working capital include
The length of time required to convert current assets into cash The nature of the current assets
A company both borrowed and repaid funds. How will these be presented in the financing activities section of the statement of cash flows?
The repayment will be presented as a negative cash flow The borrowing will be presented as a positive cash flow
Changes in a company's revenue, expenses, operating income, and net income is referred to as
Trends in earnings
True or false: Trends in cash flow may affect a company's credit rating?
True
Investing Activities
cash inflows and outflows that concern investing activities. Investments are expected to produce a benefit to the company. Cash proceeds from selling investments Collecting loans
Financing Activities
includes cash transactions resulting from the external financing of a business Borrowing money Repayment of amounts borrowed Pay,emits to owners, dividends
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