Exam 2 Flashcards
(45 cards)
A financial statement that summarizes a firm’s revenues and expenses over a period of time.
Income Statement
Each of the following items represents a liability with the exception of:
1) Long-term debt
2) Prepaid expenses
3) Notes payable
4) Accrued expenses
Prepaid expenses
Purchase of marketable securities appears on:
The statement of cashflows
The common equity section of the balance sheet includes each of the following except:
1) Common stock
2) Preferred stock
3) Capital in excess of par
4) Retained earnings
Preferred stock
Earnings per share formula is:
(Net Income - Preferred Dividends Paid) / (Common Stock Outstanding)
Which of the following is a source of cash that would appear on the statement of cash flows?
1) Increase in marketable securities
2) Decrease in notes payable
3) Increase in gross fixed assets
4) Increase in accrued expenses
Increase in accrued expenses
(True of False) Operating expenses during the year are tied to revenues they helped to generate.
True
Total assets - fixed assets - current liabilities=
Net Working Capital
Accumulated depreciation appears on the ______ as a ______.
balance sheet; contra asset
(Stock Sold For - Share Price) x Number of Shares =
Capital Excess of Par
Accrued wages are:
Current Liabilities
If Company A has a net income of $500,000 and decides to pay out $700,000 in dividends, what happens to retained earnings?
Retained earnings will decrease by $200,000. You can give out more in dividends than net income as long as you have the cash
The cost of new debt and its impact on forecasting retained earnings is a:
Balancing problem in forecasting
Which of the following items on the income statement and balance sheet is least likely vary spontaneously with sales?
- plant and equipment
- accounts payable
- accrued expenses
- cost of goods sold
Plant and equipment
Each of the following items on the income statement and balance sheet tend to vary spontaneously with sales except?
- cost of goods sold
- accumulated depreciation
- selling expenses
- taxes
Accumulated Depreciation
Sales will grow from $100,000 this year to $150,000 next year. Preferred dividends were $10,000 this year. What is the new projected amount of preferred dividends?
$10,000; PROJECTED
What on the income statement and balance sheet is most likely to vary spontaneously with sales?
Accrued Expenses
Additional funds needed represents:
the amount needed to achieve the necessary asset growth
The first accounting variable that needs to be estimated so that the pro forma financial statements can be prepared is:
Sales
The capital budget would include which of the following items:
- plant and equipment
- accounts receivable
- inventory
- retained earnings
Plant and equipment
A company that is growing rapidly:
Will usually need more additional funding than a slow growing firm
When doing the first set of pro forma statements the balance sheet:
May not balance
The Modified DuPont equation is most accurately described as a function of:
Return on assets and debt load
A significantly higher average collection period than the industry average suggests (ceteris paribus):
Poor credit decisions
