pg. 1 HBX – Financial Accounting Exam 1/ Actual Exam Questions with Correct Verified Answers/ Latest Update 2024/ Rated A+
Accounting Equation - ANSWER - Assets = Liabilities + Owner's Equity
- types of financial statements - ANSWER - balance sheet, income statement,
statement of cash flows
Accounts Payable Turnover - ANSWER - COGS/Average Accounts Payable
Accounts Receivable Turnover - ANSWER - Credit Sales/Average Accounts Receivable
asset turnover formula - ANSWER - Annual revenue/average total assets
Average Collection Period - ANSWER - 365/accounts receivable turnover or average accounts receivable/average daily credit sales
Business in decline cash flow - ANSWER - Negative cash from operating activity, positive cash from investing, either positive or negative in cash flow from financing
Cash Conversion Cycle (CCC) - ANSWER - = days inventory + average collection period - days purchases outstanding
Period between distributing cash and collecting funds associated with a given operation (e.g., sales).
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pg. 2 cash flows from financing activities - ANSWER - cash inflows and outflows related to external sources of financing (owners/investors and creditors) for the enterprise. Under GAAP, dividends paid is in this section. Under IFRS, dividends paid may be in operating section an interest paid my be here.
cash flows from investing activities - ANSWER - cash inflows and outflows related to the acquisition or sale of productive facilities, investments in the securities of other companies, and loans to 3rd parties
cash flows from operating activities - ANSWER - cash inflows and outflows directly related to earnings from normal operations. Under US GAAP, interest paid is included here. Result is net cash flow from operating activities.
Current Ratio - ANSWER - Current assets / current liabilities Measure of business's ability to pay short term obligations
Days in Inventory - ANSWER - 365/inventory turnover = avg inventory / COGS / 365
Days Purchases Outstanding - ANSWER - Days Purchases Outstanding is a measure related to accounts payable turnover that shows the number of days it takes a business to pay its vendors. It = average accounts payable / (COGS/365) = 365 / Accounts Payable Turnover.
Debt to Equity Ratio - ANSWER - Average Total Liabilities/Average Stockholder's Equity
Gordon Growth Model - ANSWER - Present value of infinite cash flows = cash flows in final year of projection / (discount rate - growth rate)
Gross Profit - ANSWER - net sales (aka revenue) - cost of goods sold
Gross Profit Margin - ANSWER - Gross Profit (sales - COGS)/Sales
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