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    Increasing Assets, Ratio Categories, Cash Budgets, etc.

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    My professor presented me with this study guide for an upcoming exam. I'd like to double check my answers against yours. Any help would be greatly appreciated! Thanks!

    4. Increasing an asset is a
    a) debit
    b) credit

    5. What are the four basic categories of financial ratios?

    6. Assets = Owner's Equity + ________________________

    7. __________________________ provides a financial summary of firms' operating results during a specified period.

    8. __________________________ presents a summary statement of the firm's financial position at a given point in time.

    9. The Statement of Cash flows provides insight into firm's _________________, investment and _________________ cash flows.

    1. 10. Price/Earnings Ratio is calculated by
    a) Par Value/Net Income
    b) Market Price/Earnings per Share
    c) Market Price/Net Income
    d) Par Value/Earnings per Share

    2. A Cash Budget
    a) contains investing activities
    b) is a pro forma statement
    c) is planned inflows and outflows of cash

    3. Treasury Stock is
    a) shares repurchased by firm
    b) shares with no voting rights
    c) shares owned by small group of owners

    4. An example of the over the counter exchange is
    a) NASDAQ
    b) NYSE
    c) AMEX
    d) Chicago Stock Exchange

    5. Which input is not required for preparing a pro forma statement
    a) financial statements for preceding year
    b) sales forecast for coming year
    c) cash budget

    6. Primary Market represents
    a) a financial market where preowned securities are traded
    b) a financial market where new securities are traded
    c) short term funds

    7. Operating budgets start with
    a) operating expense budget
    b) financial statements
    c) sales budget

    8. Liquidity Risk relates to
    a) unfavorable change in tax law
    b) issuer not paying debt
    c) ease of conversion to cash
    d) longer maturity

    9. Which is not a benefit of budgeting
    a) motivated employees
    b) promotes coordination and communication
    c) planning
    d) provide raises for employees

    10. Preferred Stock does not have
    a) voting rights
    b) call features
    c) conversion features

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    Solution Preview

    Answer 4: (A) Debit
    Increase as asset is a debit and increase in liability (and stockholder's equity) is a credit.

    Answer 5:
    5 Categories of financial ratios are:
    1) Profitability or Return on Investment
    2) Liquidity
    3) Leverage ...

    Solution Summary

    The solution provides excellent answer to the problem below. A study guide for an upcoming exam is examined.

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