C214 Supplemental Study Questions and Answers 1.Trading on the NYSE is executed without a specialist (i.e. a market maker).True/False 2.Stocks and bonds are two types of financial instruments True/False
3.The matching principle in accrual accounting requires that:
a.Revenues be recognized when the earnings process is complete and matches expenses to revenues recognized.b.Expenses are matched to the year in which they are incurred c.Revenues are matched to the year in which they are booked d.Revenues should be large enough to match expenses 4.A high-quality customer just purchased $500,000 worth of product from your company. The contract calls for immediate delivery of the product with a cash payment of $300,000 today and $200,000 to be paid 60 days. The expense associated with the product is $300,000, of which $100,000 has not been paid to your supplier. Under accrual
based accounting system, you will most likely report:
a.revenues of $300,000 and expenses of $300,000.b.revenues of $300,000 and expenses of $200,000.c.revenues of $500,000 and expenses of $300,000.d.revenues of $500,000 and expenses of $200,000. 1 / 3
5.A firm reported retained earnings of $300 in 12/31/20x2. For 12/31/20x3, the firm reports retained earnings of $400 and pays dividends of $25. What was net income in 20x3?
- 300
- 400
- 125
- 100
6.The basic equation for the balance
sheet is: A=L+E
a.Equity = Assets – Liabilities b.Liabilities = Equity + Assets c.Assets = Liabilities – Equity d.Assets = Equity – Liabilities there are 4 statements. Income statement, cash flow, and retained earning statement prepared for period of time *the balance sheet used to measure at a point in time
Formula you need to know to calculate cash flow:
7.Intel reported the following for
2014: Net Income 100,000
Depreciation 20,000 Change in
A/R 10,000
What is the cash flow from operating activities a. 100,000 2 / 3
- 110,000
- 120,000
- (130,000)
8.Intel reported the following for 2014:
Equipment (1/1/14) 50,000 Equipment (12/31/14) 65,000 Net income 100,000 Depreciation 20,000 What is the cash flow from investing activities for 2014 a. 100,000
- 80,000
- 15,000
- (15,000)
- (100)
- (900)
- 100
- (700)
- / 3
9.Last year a firm recorded Net PP&E of $4,600 while this year the same firm recorded Net PP&E of $4,500. If the depreciation expense for last year and this year are $500 and $800 respectively, what is the CFI of the company? (assume no asset disposals)
10.The statement of cash flows a.serves as the replacement for the income statement and balance sheet b.explains the change in cash balance at one point in time- balance sheet only c.explains the change in cash balance for one period of time d.both (a) and (b) above