Balance sheet

What equation correctly shows the relationship between the items on a company's balance sheet?

Assets = liabilities + stockholders' equity

All of the following are considered to be components of cash flow except: A) financing activities. B)operating activities. C)banking activities. D)investing activities.

C)banking activities. There is no such term as banking activities in the context of cash flow. Cash flow is generated through financing (issuing stock or bonds), investing (profits from investments), and operations of the entity (the most significant of all).

All of the following appear on a corporation's balance sheet as fixed assets except: A) computer equipment. B)furniture. C)inventory. D) real estate.

C. Inventory Inventory is considered a current asset, not a fixed asset, because the company expects to convert its inventory into cash within a short period. The other choices are fixed assets, and the company does not expect to turn them into cash (sell them) during the normal business cycle.

When a company recognizes a sale only when payment is made, it is using which form of accounting?

Cash

All of the following corporate actions would have the effect of increasing the firm's net worth except: A) purchasing some of the corporation's outstanding bonds at a discount. B) issuing convertible preferred stock. C) issuing common stock. D) Issuing convertible debentures.

D) Issuing convertible debentures.

In order to be in compliance with SEC reporting rules, a company will typically file a Form 10-Q how many times during its fiscal year?

Three times Form 10-Q is used for quarterly financial reporting. However, even though there are four quarters in an accounting year, only three forms are filed. This is because the Form 10-K, the annual report, takes the place of the fourth quarterly report.

Under SEC rules, Form 8-K must be filed

within 4 business days of the event.

What are two indicators of current liquidity?

working capital and current ratio

An analyst wishing to check on the most recent financial performance of an SEC-registered issuer would probably examine the

Form 10-Q Financial reporting is done on Forms 10-K and 10-Q: the former annually and the latter quarterly. Therefore, unless it is shortly after the end of the company's fiscal year, the most recent information is going to be on Form 10-Q. For test-taking purposes, note that the question uses the term probably. With three Form 10-Qs filed each year and only one Form 10-K filed yearly, the probability is higher that Form 10-Q will be the most recent one available. The moral of this story is that you don't look for exceptions unless that is what the question is aiming for.

When an analyst adds back the current year's depreciation to the net income, she is computing the company's

cash flow from operations.

An analyst wishing to view a good consolidated indicator of a business's cash inflow and outflow would most likely ask to look at

the statement of cash flows

An analyst reviewing a company's financial statements would examine the footnotes to A) discover any pending legal action against the company. B) compute the net worth. C) identify the authors of quoted information. D) determine the average age of the receivables.

A) discover any pending legal action against the company. Footnotes to the financial statements are used to convey off-book information such as pending lawsuits.