Q1. Which of the following sections from the statement of cash flows includes the issuance of stock and the payment of dividends?

The issuance of stock and the payment of dividends are included in the investing section.

The issuance of stock and the payment of dividends are included in the financing section.

The issuance of stock and the payment of dividends are included in the operating section.

The issuance of stock and the payment of dividends are not included in any of the above-mentioned sections.

Q2. Which of the following sections from the statement of cash flows includes borrowing money and paying off loans?

Borrowing money and paying off loans are included in the investing section.

Borrowing money and paying off loans are included in the operating section.

Borrowing money and paying off loans are included in the financing section.

Borrowing money and paying off loans are not included in any of the above-mentioned sections.

Q3. Which of the following sections from the statement of cash flows would include the purchase of a building totally financed by a mortgage if the intent of the purchase is as a long-term asset?

The purchase of the building would be included in the investing section.

The purchase of the building would be included in the operating section.

The purchase of the building would be included in the financing section.

The purchase of the building would not be included in any of the above- mentioned sections.

Q4. A company uses the indirect method to prepare the statement of cash flows. How will depreciation be presented on the statement?

Depreciation expense will be added to net income in the financing activities section.

Depreciation expense will be subtracted from net income in the operating section.

Depreciation expense will be added to net income in the operating activities section.

Depreciation expense will be added to net income in the investing activities section.

Q5. A company uses the indirect method to prepare the statement of cash flows. How will the adjustment to reflect the amount of cash received from customers be presented on the statement?

The adjustment will be for the increase or decrease in accounts receivable for the period and will adjust net income in the operating activities section.

The adjustment will be for the increase or decrease in accounts payable for the period and will adjust net income in the operating activities section.

The adjustment will be for the increase or decrease in accrued expenses for the period and will adjust net income in the operating activities section.

The adjustment will be for the increase or decrease in inventory for the period and will adjust net income in the operating activities section.

Q6. Which of the following ratios is a measure of a company's ability to pay all current liabilities if they come due immediately?

The inventory turnover ratio is a measure of a company's ability to pay all current liabilities if they come due immediately.

The current ratio is a measure of a company's ability to pay all current liabilities if they come due immediately.

The acid-test ratio is a measure of a company's ability to pay all current liabilities if they come due immediately.

The day's sales in receivables is a measure of a company's ability to pay all current liabilities if they come due immediately.

Q7. Which of the following ratios is a measure of a company's ability to collect receivables?

The inventory turnover ratio is a measure of a company's ability to collect receivables.

The current ratio is a measure of a company's ability to collect receivables.

The day's sales in receivables is a measure of a company's ability to collect receivables.

The acid-test ratio is a measure of a company's ability to collect receivables.

Q8. Which of the following ratios is a measure of a company's ability to pay liabilities with current assets?

The inventory turnover ratios is a measure of a company's ability to pay liabilities with current assets.

The day's sales in receivables is a measure of a company's ability to pay liabilities with current assets.

The current ratio is measure of a company's ability to pay liabilities with current assets.

The acid-test ratio is a measure of a company's ability to pay liabilities with current assets.

Q9. Which of the following ratios is a measure of a company's ability to sell Inventory?

The inventory turnover ratio is a measure of a company's ability to sell Inventory.

The acid-test ratio is a measure of a company's ability to sell inventory.

The current ratio is a measure of a company's ability to sell inventory.

The day's sales in receivables is a measure of a company's ability to sell inventory.

Q10. Which of the following is the formula to compute inventory turnover?

The formula is net credit sales / average inventory.

The formula is net credit sales / average net accounts receivable.

The formula is cost of goods sold / average inventory.

The formula is average net accounts receivable / one day's sales.

Q11. Which of the following is the formula to compute accounts receivable turnover?

The formula is net credit sales / average net accounts receivable.

The formula is average net accounts receivable / one day's sales.

The formula is cost of goods sold / average inventory.

The formula is net credit sales / average inventory.

Q12. Which of the following is the formula to compute day's sales in receivable?

The formula is cost of goods sold / average inventory.

The formula is net credit sales / average net accounts receivable.

The formula is net credit sales / average inventory.

The formula is average net accounts receivable / one day's sales.

Q13. Which of the following is the formula to compute the debt ratio?

The formula is total assets / total liabilities.

The formula is income from operations / interest expense.

The formula is interest expense / income from operations.

The formula is total liabilities / total assets.

Q14. Which of the following is the formula to compute the price/earnings ratio?

The formula is dividend per share of common stock/ market price per share of common stock.

The formula is net income/net shares of common stock.

The formula is market price per share of common stock/ earnings per share.

The formula is issued stock - treasury stock.