Test Bank For M Finance Marcia Cornett 4th Edition

M: Finance, 4e (Cornett)

Chapter 2 Reviewing Financial Statements

1) Which financial statement reports a firm’s assets, liabilities, and equity at a particular point in time?

A) balance sheet

B) income statement

C) statement of retained earnings

D) statement of cash flows

Answer: A

Difficulty: 1 Easy

Topic: Balance sheet

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-01 Recall the major financial statements that firms must prepare and provide.

2) Which financial statement shows the total revenues that a firm earns and the total expenses the firm incurs to generate those revenues over a specific period of time–generally one year?

A) balance sheet

B) income statement

C) statement of retained earnings

D) statement of cash flows

Answer: B

Difficulty: 1 Easy

Topic: Income statement

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-01 Recall the major financial statements that firms must prepare and provide.

3) Which financial statement reports the amounts of cash that the firm generated and distributed during a particular time period?

A) balance sheet

B) income statement

C) statement of retained earnings

D) statement of cash flows

Answer: D

Difficulty: 1 Easy

Topic: Statement of cash flows

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-01 Recall the major financial statements that firms must prepare and provide.

4) Which financial statement reconciles net income earned during a given period and any cash dividends paid within that period using the change in retained earnings between the beginning and end of the period?

A) balance sheet

B) income statement

C) statement of retained earnings

D) statement of cash flows

Answer: C

Difficulty: 1 Easy

Topic: Statement of retained earnings

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-01 Recall the major financial statements that firms must prepare and provide.

5) On which of the four major financial statements would you find the common stock and paid-in surplus?

A) balance sheet

B) income statement

C) statement of cash flows

D) statement of retained earnings

Answer: A

Difficulty: 1 Easy

Topic: Balance sheet

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-01 Recall the major financial statements that firms must prepare and provide.

6) On which of the four major financial statements would you find the increase in inventory?

A) balance sheet

B) income statement

C) statement of cash flows

D) statement of retained earnings

Answer: C

Difficulty: 1 Easy

Topic: Statement of cash flows

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-01 Recall the major financial statements that firms must prepare and provide.

7) On which of the four major financial statements would you find net plant and equipment?

A) balance sheet

B) income statement

C) statement of cash flows

D) statement of retained earnings

Answer: A

Difficulty: 1 Easy

Topic: Balance sheet

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-01 Recall the major financial statements that firms must prepare and provide.

8) Financial statements of publicly traded firms can be found in a number of places. Which of the following is NOT an option for finding publicly traded firms’ financial statements?

A) Facebook

B) a firm’s website

C) Securities and Exchange Commission’s (SEC) website

D) websites such as finance.yahoo.com

Answer: A

Difficulty: 1 Easy

Topic: Financial statements

Bloom’s: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-01 Recall the major financial statements that firms must prepare and provide.

9) For which of the following would one expect the book value of the asset to differ widely from its market value?

A) cash

B) accounts receivable

C) inventory

D) fixed assets

Answer: D

Difficulty: 1 Easy

Topic: Market and book values

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-02 Differentiate between book (or accounting) value and market value.

10) Common stockholders’ calculating equity divided by number of shares of common stock outstanding is the formula for

A) earnings per share (EPS).

B) dividends per share (DPS).

C) book value per share (BVPS).

D) market value per share (MVPS).

Answer: C

Difficulty: 1 Easy

Topic: Per-share valuations

Bloom’s: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Learning Goal: 02-02 Differentiate between book (or accounting) value and market value.