ACC 227 ACC227 Module 1 Check Your Understanding Answers (AAU Online)

ACC 227 ACC227 Module 1 Check Your Understanding Answers (AAU Online)

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1.What is the purpose of the cash flow statement?

2.What types of activity are reported on the statement of cash flows?

3.The sale of equipment would be classified as what type of activities?

4.Quenton Company purchased a building with cash during the current year.  This transaction will result in a decrease in cash from which type of activity

5.If depreciation expense is $85,000 and beginning and ending Accumulated Depreciation balances are $375,000 and $440,000, respectively, how much cash was paid for depreciation?

6.If sales revenue for the period is $200,000 and beginning and ending Accounts Receivable balances are $15,000 and $20,000, respectively, cash collected from customers is:

7.If net purchases are $200,000 and beginning and ending accounts payable balances are $25,000 and $20,000, respectively, cash paid for purchases is:

8.The indirect method of presenting a cash flow statement involves:

9.An increase in accounts _________ would be added to net income on a statement of cash flows prepared by the indirect method?

10.In order for a company to succeed in the long-term, it must generate ____________ cash flows from ____________ activities.

11.What is the term for predicting how a company will perform in the future?

12.As a general rule of thumb, all industries believe the debt ratio should be around ___ percent:

13.Which ratio is calculated using numbers from both the income statement and the balance sheet?

14.Financial statements that result from dividing all financial statement numbers by total sales for the year are called:

15.Which methods of financial statement analysis represent a systematic approach for breaking down return on equity into three ratios?

16.Which ratio is a measure of the number of dollars of assets a company is able to acquire using each dollar of equity?

17.Which ratio calculates the number of days it takes to collect receivables?

18.When computing a debt-to-equity ratio, a number ________ than one signifies that liabilities are greater than stockholders’ equity.

19.During the current year, Hudson Company reported a record loss but had a positive cash flow from operations.  It is likely that:

20.What are the reasons why a decision should not be based on financial statement analysis only?


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