Term
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Definition
| annual filings made by a company with the SEC |
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Term
| a plot of land could appear on the balance sheet in each of the following categories except |
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Definition
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Term
|
Definition
| a company's own stock that it has repurchased |
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Term
| which of the following is reported in the equity section of the balance sheet |
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Definition
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Term
| which of the following would not be classified as a current asset |
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Definition
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Term
| a classified balance sheet has sections for all of the following except |
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Definition
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Term
| according to your textbook, valuations of firms on the basis of present value could be based on all o fthe following except |
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Definition
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Term
| the best definition of an asset is |
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Definition
| something with future value |
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Term
| which of the following economic characteristics is consist with a grocery store chain |
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Definition
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Term
| on a common size basis, which of the following assets is normally largest for an electric utility? |
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Definition
| property plant and equipment |
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Term
| on a common size basis, which o fhte following assets its normally largest for a commercial bank? |
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Definition
| cash and mktble securities |
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Term
| which of the following would not appear as a liability on the balance sheet? |
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Definition
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Term
| which of the following would not inhibit new entrants into a market |
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Definition
| lack of rivalry amongst current participants |
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Term
| current assets are defined as |
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Definition
| cash and other assests that the firm expects to sell or consume during the normal operating cycle of a business, usually one year |
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Term
| which of these is not an intangible asset |
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Definition
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Term
| which sec form may be the best place to start learning about the econs of an industry and the particular strategy a firm has selected for competing in the industry |
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Definition
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Term
| the primary purpose of the balance sheet is to |
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Definition
| report the financial position of the reporting entity at a particular point in time |
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Term
| which of the following is not considered to be a current liability? |
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Definition
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Term
| assets for a particular business might include |
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Definition
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Term
| the two categories of shareholders equity usually found on the balance sheet of a corporation are |
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Definition
| common stock and retained earnings |
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Term
| accumulated other comprehensive income is listed on the liabilities and equity side of the balance sheet |
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Definition
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Term
| treasure stock is the company's own stock that has been repurchased |
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Definition
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Term
| treausry stock is shown as an investment on the balance sheet |
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Definition
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Term
| minority intereest on a balance sheet represents the ownership of the assets that relate to stockholders of subsidiaries where the parent company does not own 100% of the stock |
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Definition
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Term
| accumulated other comprehensive income is the running total for some special gains and losses that have been realized in a sale |
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Definition
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Term
| one step in the financial statement analysis is to identify the economic characteristics of the industry in which a firm participates |
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Definition
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Term
| the higher the value added from any activity, the higher should be the profitability from engaging in that activity |
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Definition
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Term
| the threat of new entrants is measured by whether there are entry barriers such as capital investment, technological expertise, patents or regulation that inhibit new entrants |
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Definition
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Term
| resources that have the potential for providing a firm with future economic benefits are called reserves |
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Definition
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Term
| statements that express all items in a particular financial statement as a percentage of some common base are called unit-size statements |
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Definition
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Term
| consumer power relates to the relative number of buyers and sellers in a particular industry |
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Definition
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Term
| how easily can new firms enter a markt is a question that one might ask when assessing threats of new entrants |
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Definition
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Term
| financial statement analysis is an exact science |
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Definition
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Term
| the explanatory notes accompanying the financial statements are generally of little calue in aiding the financial analyst when interpreting the financial statements |
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Definition
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Term
| in a common size balance sheet total assets can be expressed as 100% |
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Definition
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Term
| companies which spend large amounts of R&D can have no intangibles on their balance sheet |
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Definition
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Term
| a common size income statement would typically be prepared by dividing |
|
Definition
| all items on income statement in year t by sales in year t |
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Term
| which of the following statements concerning deferred taxes is correct? |
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Definition
| deferred taxes arising from the depreciation of a specific asset will ultimately reduce to zero as the item is depreciated |
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Term
| which of the following statements is true? Under gaap comprehensive income |
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Definition
| may be reported instead of net income |
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Term
| differences in taxable income and pretax accounting income that will not be offset by corresponding differences or turn around in future periods are called |
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Definition
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Term
| firms may not include all income taxes for a period on the line for income tax expense in the statement. Other places that income tax expenses may occur include all of the following excpet |
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Definition
|
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Term
| reporting financial assets and liabilities at fair values is also refered to as |
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Definition
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Term
| depending on the circumstances, the sale of the piece of land could be classified in each o fthe following sections of an income statement except |
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Definition
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Term
| for an item to be classified as an extraordinary item on the income statement it needs to be |
|
Definition
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Term
| discontinued operations as a line item on the income statement would |
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Definition
| include the gain or loss from operating the discontinued operation during the year, the gain or loss from the sale of the discontinued operation, and the tax effect of both of these |
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Term
| why might income tax expense ont he income statement differ from actual income taxes paid to the govt |
|
Definition
| there are timing differences to when income is recognized and there are items that may or may not be subject to taxation |
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Term
| shareholders equity consists of what three components |
|
Definition
| contributed capital, accumulated other comprehensive income, and retained earnings |
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Term
| the use of the acquisition cost as a valuation method is justified on the basis that the acquisition cost is |
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Definition
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Term
| the net amount a firm would receive if it sold an asset or the net amount it would pay to settle a liability is referred to as |
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Definition
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Term
| when income tax expense fo r aperiod is greater than income tax payable due to a timing difference the difference will be reported how and on which fin statement |
|
Definition
| deferred tax liability and balance sheet |
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Term
| permanent tax diffs are revenues and expenses that firms include in the income statement but do not appear in income tax returns |
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Definition
|
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Term
| the tradiional accting model delays the recognition of value changes of asssets and liabilities until what event occrus |
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Definition
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Term
| which of hte following is not one of the methods used by gapp for ttreating value changes |
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Definition
| recognize clalue changes in the income statemetn when the value changes occur over time but recognize them on the balance sheet when they are realized in a market transaction |
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Term
| which of the following transactions is consistent with recognizing value changes on the balance sheet |
|
Definition
| selling land at a cost greater than it sorginial purchase price |
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Term
| Plaxo corp has a tax rate of .35 and straigjht line depreciation....etc. What amount will plaxo record as a deferred tax asset or liability in 2014? |
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Definition
| straightline depreciation amount for one period x tax rate |
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Term
| which of the following is not an expense of a business |
|
Definition
|
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Term
| which of the following is not a characteristic of an extraordinary item |
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Definition
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Term
| when timing differences result in future tax deductions but current expense for finl reporting, the result i s adefferrred tax libaility on the balance sheet |
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Definition
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Term
| us gaap and ifrs and other major acctg stanadards are best characterized a smixed attribute acctg models |
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Definition
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Term
| use of acquision costs generally results in more reliabe asset and libaility valuations than do curent values |
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Definition
|
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Term
| relevant asset valuations are always subjective |
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Definition
|
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Term
| other comprehensive income items are usually reported on the statement of changes in shareholders equity |
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Definition
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Term
| earnings per share are required to be on the income statement |
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Definition
|
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Term
| extraordinary items are on the IS are not usually report net of their tax effect |
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Definition
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Term
| the amount initially paid to acquire an asset is called acquistion cost |
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Definition
|
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Term
| the amount that a company would have to pay today to acquire an asset it now holds is called book value |
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Definition
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Term
| the difference between income tax payable and income tax expense is reported ont he bs as either deferred tax assest or deferred tax liability |
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Definition
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Term
| tems, such as interest revenue on municipal bond holdings that do not affect taxable income or income taxes paid in any year are referred to as permanent differences. |
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Definition
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Term
| Revenues and expenses that firms include in both net income to shareholders and in taxable income, but in different periods are referred to as conjoint differences. |
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Definition
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Term
| Stockholders’ equity on a balance sheet can be expanded into the following three accounts: contributed capital, retained earnings, and comprehensive income. |
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Definition
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Term
| The payment of dividends by a firm reduces cash and accumulated other comprehensive income. |
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Definition
|
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Term
| Acquisition costs include all costs necessary to get an asset ready for its intended use. |
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Definition
|
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Term
| In a common size income statement net income is generally expressed as 100 percent. |
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Definition
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Term
| If revenue is recognized for financial reporting purposes but deferred for tax purposes this results in a deferred tax liability |
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Definition
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Term
| If an expense is recognized for financial reporting purposes but not allowed as a bona-fide deduction for tax purposes, this results in a deferred tax asset. |
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Definition
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Term
| Comprehensive income differs from net income in that it reflects certain unrealized holding gains and losses from foreign currency translation adjustments, and minimum pension liability adjustments. |
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Definition
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Term
| Deferred taxes arise due to temporary timing differences in recognizing items for tax and financial reporting purposes. |
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Definition
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Term
| If a company depreciates an asset at a faster rate for tax purposes than for financial reporting purposes this will give rise to a deferred tax liability |
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Definition
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Term
| Some items appear on a company's income statement but never appear on its tax return. |
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Definition
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Term
| All of the following are the types of firms that may experience a long lag between the expenditures of cash and the receipt of cash from customers, except |
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Definition
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Term
| Academic research has found that market rates of return on common stock are the most highly correlated with |
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Definition
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Term
| Which of the following transactions would not create a cash flow? |
|
Definition
| payment of a stock dividend |
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Term
| Which of the following would be a cash flow from investing activities? |
|
Definition
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Term
| Which of the following is a cash flow from operating activities? |
|
Definition
| Purchase of merchandise for resale |
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Term
| A cash inflow from financing activities includes: |
|
Definition
| proceeds from issuance of bonds payable |
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Term
| One rationale for the statement of cash flows is to |
|
Definition
| calculate the company’s free cash flow |
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Term
| Which of the following is not one of the reasons why net income differs from cash flows from operations under the indirect method of calculating cash flows? |
|
Definition
| sale or repurchase of capital stock |
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Term
| If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities, its cash flow from operation will normally be |
|
Definition
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Term
| Normally, cash flows from operations will peak during which phase of the product life cycle? |
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Definition
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Term
| Normally, cash flows from investing activities will start providing cash during which phase of the product life cycle? |
|
Definition
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Term
| Normally, cash flows from financing will start using cash during which phase of the product life cycle? |
|
Definition
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Term
| When preparing the statement of cash flows using the indirect method, an increase in inventories would appear as |
|
Definition
| a subtraction in the operating activities section b. an addition in the operating activities section |
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Term
| When preparing the statement of cash flows using the indirect method, the payment of dividends would appear as |
|
Definition
| a use of cash in the financing activities section |
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Term
| When preparing the statement of cash flows using the indirect method, the purchase of equipment would appear as |
|
Definition
| a use of cash in the investing activities section |
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Term
| In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from |
|
Definition
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Term
| Outback Corp. recorded sales of $1,300,000. In addition the company’s accounts receivable balance grew from $120,000 at the beginning of the year to $165,000 at the end of the year. How much cash did Outback collect from customers during the year |
|
Definition
| sales minus the change in receivables from period a to b |
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Term
| Fizzzle Inc. sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale. How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method? |
|
Definition
| . The gain is subtracted from net income in the operating activities section |
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Term
| Which of the following activities reported in the Statement of Cash Flows is not a financing activity? |
|
Definition
| Buying the equity securities of another company. |
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Term
| How much did the company collect in cash from debtors during 2014 |
|
Definition
| sales minus the change in receivables from period a to b |
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Term
| How much sales would have been reported by the company in 2014 if Byfort would have been using cash accounting and not accrual accounting |
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Definition
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|
Term
| Accounting Standards are best described as: |
|
Definition
| b. presentation standards mandated by the Securities and Exchange Commission |
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Term
| The matching principle requires that |
|
Definition
| revenues earned and expenses incurred in generating those revenues should be reported in the same income statement |
|
|
Term
| . The management of a company wishes to window-dress its cash flow from operations. Which of the following will improve cash flow from operations |
|
Definition
| sekking accounts receivable & deferring payment of taxes |
|
|
Term
| . As products move through the maturity phase, companies invest to increase productive capacity. |
|
Definition
|
|
Term
| Under the indirect method of preparing the statement of cash flows, depreciation expense would be an add back to net income. |
|
Definition
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Term
| The statement of cash flows highlights accounting accruals, which can provide insight into the overall sustainability and quality of a firm’s reported earnings. |
|
Definition
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Term
| Under the direct method, firms begin with net income to calculate cash flow from operations for the period. |
|
Definition
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Term
| An increase in accounts receivable during a period indicates that a firm did not collect as much cash as the amount of revenues included in net income. |
|
Definition
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Term
| Cash flows from investing activities will normally be positive during the introduction and growth phases of the product life cycle |
|
Definition
|
|
Term
| Cash flows from financing activities will normally be negative during all of the introduction and growth phase of the product life cycle. |
|
Definition
|
|
Term
| Operating activities relate to the normal operations of the firm, selling goods and providing services. |
|
Definition
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|
Term
| Interest expense and interest revenue would be classified as investing activities in the statement of cash flows. |
|
Definition
|
|
Term
| The receipt of dividends would be included as part of the total operating activities in the statement of cash flows although it would not usually be reported in a separate line on the statement |
|
Definition
|
|
Term
| The payment of dividends would be classified as part of financing activities in the statement of cash flows. |
|
Definition
|
|
Term
| The receipt of cash when employees exercise stock options is a financing activity. 1 |
|
Definition
|
|
Term
| Under the accrual basis of accounting, a firm recognizes revenue when it performs all or a substantial portion of the services it expects to perform and receives either cash or a receivable. |
|
Definition
|
|
Term
| The statement of cash flows is separated into four parts: operating, investing, financing and planning |
|
Definition
|
|
Term
| Under GAAP accounting, a company has the choice of using cash or accrual accounting in preparing its financial statements. |
|
Definition
|
|
Term
| A gain on sale of an operating asset would require adjusting net income in the operating section if preparing the statement of cash flows using the indirect method |
|
Definition
|
|
Term
| . If a corporation sells a division of the company for a large gain in an all cash transaction, cash flows from operating activities will under-state the true cash flow from normal day to day operations. |
|
Definition
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|
Term
| When calculating diluted earnings per share, the adjustment to the weighted average number of shares outstanding presumes that the dilutive securities are converted to common shares |
|
Definition
| . as of the beginning of the year. |
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Term
| Firms with simple capital structures can have which of the following? |
|
Definition
| declared preferred stock dividends |
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Term
| Which of the following industries would you expect to have the highest inventory turnover |
|
Definition
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Term
| A company is planning a major expansion for which it needs $5 million in external funding. It has various options to finance this expansion. Which of the following is correct? |
|
Definition
| Future net income will be higher if it uses common stock rather than preferred stock to finance expansion |
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Term
| Variability in earning numbers increases if a company increases its operating leverage |
|
Definition
|
|
Term
|
Definition
| The ability to generate sales from a particular investment in assets |
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Term
| Which of the following factors does not explain differences or changes in ROA? |
|
Definition
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|
Term
| Which of the following industries would you expect to have, on average, high asset turnover and low profit margin? |
|
Definition
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|
Term
| Firms with high levels of operating leverage experience which of the following in comparison to firms with low levels of operating leverage |
|
Definition
| Higher levels of risk in operations |
|
|
Term
| . Return on common equity can be disaggregated into three components; which of the following is not one of the components? |
|
Definition
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|
Term
| What is the rate of return on assets for Net Devices for 2014 |
|
Definition
| ROA = TOP Ni + (1- tax rate)(interest expense)+minority interest and eearnings BOTTOM average total assets |
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Term
| What is the profit margin for ROA for Net Devices for 2013? |
|
Definition
| prof marg = TOP NI + INterest expense (net of taxes) BOTTOM sales |
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|
Term
| What is the accounts receivable turnover ratio for Net Devices for 2014 |
|
Definition
| top net sales on account bottom average accts receivable |
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|
Term
| What is the inventory turnover for Net Devices for 2014? |
|
Definition
| top cost of good solds bottom avg inventories |
|
|
Term
| . What is Net Devices’ Return on Common Shareholders’ Equity for 2014 |
|
Definition
| ROCE = top NI - preferred stock dividends Bottom average common shareholders equity |
|
|
Term
| . What is Net Devices’ Earnings per Share for 2014? |
|
Definition
| eps = top NI - preferred stock dividends Bottom weighted average number of common shares outstanding |
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|
Term
| Which of the following might an analyst not want to eliminate from past earnings when using past earnings to forecast future earnings |
|
Definition
| revenue from the sale of inventory. 1 |
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|
Term
| Sustainable earnings represent |
|
Definition
| . the level of earnings and the growth in the levels of earnings expected to persist in the future |
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|
Term
| The profit margin for ROA indicates the ability of a firm to generate earnings for a particular level |
|
Definition
|
|
Term
| To calculate diluted earnings per share, the accountant will add back to net income any interest expense (net of taxes) on convertible bonds. |
|
Definition
|
|
Term
| To calculate basic earnings per share, the accountant will add back to net income the dividends on convertible preferred stock. |
|
Definition
|
|
Term
| One weakness of earnings per share as a measure of profitability is that it does not consider the assets necessary to generate the earnings. |
|
Definition
|
|
Term
| A company with a simple capital structure can have convertible securities or stock options or warrants outstanding. |
|
Definition
|
|
Term
| A company with a high proportion of variable costs in its cost structure is better off than a company with a high proportion of fixed costs if they operate in an area with significant cyclical sales |
|
Definition
|
|
Term
| The numerator of the return on assets ratio is net income from operations excluding the effects of any financing costs. |
|
Definition
|
|
Term
| The incremental effect of interest expense on net income equals one minus the marginal tax rate times the interest expense. |
|
Definition
|
|
Term
| . Return on assets can be disaggregated into profit margin for return on assets and inventory turnover. |
|
Definition
|
|
Term
| Return on assets can be disaggregated into asset turnover and return on equity. |
|
Definition
|
|
Term
| . The ability of a firm to generate income from operations given a particular level of sales is measured by the return on assets. |
|
Definition
|
|
Term
| The ability of a firm to manage the level of investment in assets for a particular level of sales is measured by the profit margin. |
|
Definition
|
|
Term
| Return on assets can be a misleading ratio when analyzing technology firms because two important assets, their employees and their technologies do not appear on their balance sheets. |
|
Definition
|
|
Term
| When calculating return on common stockholders’ equity, the financial analyst subtracts preferred dividends from net income. |
|
Definition
|
|
Term
| When an analyst uses measures of past profitability to forecast the firm’s future profitability, the emphasis is those revenues, gains, expenses and losses that will persist |
|
Definition
|
|
Term
| Which of the following ratios is not generally considered to be helpful in assessing short-term liquidity? |
|
Definition
|
|
Term
| Liquidity of a company is generally defined as a measure of: |
|
Definition
| . the ability to pay current liabilities. |
|
|
Term
| Which of the following is true concerning bond covenants |
|
Definition
| bond covenants are legal restrictions placed in order to minimize the risk of default on bonds. |
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|
Term
| A company's current ratio is 1.5. If the company uses cash to retire short term notes payable due within six months, would this transaction increase or decrease the current ratio and return on assets ratio? |
|
Definition
current ratio = current assets/current liabilites
ROA = NI/total assets
. Current Ratio: Increase; Return on Assets: Increase |
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|
Term
| A Corporation wants to increase its current ratio from its present level of 1.2 before it ends the fiscal year. The action having the desired effect is: |
|
Definition
| selling furniture for cash. |
|
|
Term
| Which of the following situations is most likely to explain an accounts receivable turnover ratio that is lower than the industry norm? |
|
Definition
| The company makes less credit sales than industry |
|
|
Term
| Which of the following is the most useful in assessing short-term liquidity of a company? |
|
Definition
|
|
Term
| Gupta Corporation has forecasted its need for external funding in the following year. It needs to raise $2M in either debt or equity. It would like to minimize its need for external funding without decreasing its projected growth. Which of the following would reduce its need for additional funding? |
|
Definition
| An increase in accounts payable |
|
|
Term
| Which of the following statements is incorrect? |
|
Definition
| The lower a company's depreciation the greater its liquidity, all else equal. |
|
|
Term
| . Which of the following statements is incorrect? |
|
Definition
| If a company has a current |
|
|
Term
| Which of the following best describes the current ratio? |
|
Definition
|
|
Term
| Which of the following is not likely to be used to measure a company's liquidity? |
|
Definition
|
|
Term
| Which of the following is likely to be used to measure a company's solvency? |
|
Definition
|
|
Term
| Selling accounts receivable to a bank increases which of the following? |
|
Definition
| accounts receivable turnove |
|
|
Term
| Which of the following is not likely to be the cause of a company's low accounts receivable turnover? |
|
Definition
|
|
Term
| Which of the following is not a measure of a company's solvency |
|
Definition
|
|
Term
| The short-term liquidity of a company |
|
Definition
| is determinable by looking at the current ratio |
|
|
Term
| Which of the following is least likely to increase the overall risk of a company? |
|
Definition
| . increased variable costs while decreasing fixed costs |
|
|
Term
| Which of the following statements are correct with respect to the times interest earned ratio? |
|
Definition
| III. It is independent of the tax rate IV. It is independent of the amount of dividends paid |
|
|
Term
| Which of the following transactions or events would have no immediate effect on the times interest earned ratio but will cause debt/equity ratio to decrease? |
|
Definition
|
|
Term
| . Typical bond debt covenants would |
|
Definition
| Limit the issuance of additional debt senior to the obligation II. Specify minimum levels of selected financial ratios III. Specify minimum levels of earnings coverage IV. Prohibit excessive dividends or stock repurchases |
|
|
Term
| . Dallas Corp. has a current ratio of 6; under which of the following scenarios might this indicate a problem? |
|
Definition
| . Inventories are increasing and the industry in which Dallas Corp. operates is experiencing a recession |
|
|
Term
| Inventory turnover is generally a more important ratio for a manufacturing firm than a service firm |
|
Definition
|
|
Term
| . The current ratio will always be greater than or equal to the acid test ratio. |
|
Definition
|
|
Term
| The current ratio is used to evaluate the company's operating performance. |
|
Definition
|
|
Term
| Debt-to-equity ratio is a commonly used measure of liquidity. |
|
Definition
|
|
Term
| A bank with a loan to a company is generally exposed to greater risk than the shareholders of the company. |
|
Definition
|
|
Term
| If a company increases the amount of debt it has, all other things being equal, the risk to the shareholders increases. |
|
Definition
|
|
Term
| For a company to report a contingent loss on its balance sheet it should be either probable or reasonably estimable. |
|
Definition
|
|
Term
| Solvency refers to the ability of a company to meet its short-term obligations. |
|
Definition
|
|
Term
| An increasing accounts receivable balance is always a good sign as it means the company has more current assets and is more liquid. |
|
Definition
|
|
Term
| . It is possible for a profitable company to go out of business because of severe short-term liquidity problems. |
|
Definition
|
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Term
| . If a company takes longer to pay its suppliers than before, all other things being |
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Definition
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Term
| Cyclical companies often like to retain extra cash/marketable securities during "good" times in order to ensure that they have sufficient liquidity when the inevitable downturn in the business cycle arrives. |
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Definition
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Term
| . As cash is the most liquid of all assets and liquidity is crucial to a company, all companies should hold as much cash as possible |
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Definition
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Term
| . When analyzing the liquidity of a company the current ratio is a better indicator of liquidity than short-term cash forecasts. |
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Definition
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Term
| . Liquidity depends to a large extent on prospective cash flows and to a lesser extent on the level of cash and cash equivalents. |
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Definition
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Term
| If a company has a current ratio greater than one then there is no chance it will go bankrupt in the next year. |
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Definition
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Term
| An increase in the current ratio over time is always a good indication of increased liquidity of the firm. |
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Definition
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Term
| Determination of short-term liquidity is important to both investors and creditors. |
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Definition
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Term
| If accounts payable turnover decreases this could be an indication that suppliers are cutting off credit to the company. |
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Definition
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Term
| If a company's days receivables outstanding increases this could be an indication that there are problems with the quality of the company's products. |
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Definition
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Term
| An increase in the current ratio due to increased inventory and receivables could be consistent with a recession in the economy. |
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Definition
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Term
| Short-term obligations may be classified as long term if the company intends to refinance them on a long-term basis and can demonstrate the ability to do so |
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Definition
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