MBA Prep CFIN Exam Questions and
Answers
Analysts within a company are more likely to fall into the "false accuracy trap" when they
develop pro formas than would external analysts because insiders have access to more detailed
information - Answer-True
When making financial projections, if a pa...
If projected assets exceed liabilities and OE, it is assumed that the difference is funded through
excess cash - Answer✔✔-False
What is the most compelling reason to project a firm's income statement before projecting its
balance sheet? - Answer✔✔-The change in retained earnings is determined by net income and
dividend payments, working capital account balances are affected by sales levels
When doing a comprehensive financial forecast, which account warrants the most thorough
relational and trend analysis? - Answer✔✔-Sales
The most significant difference between projecting balance sheets and projecting cash flow is
that - Answer✔✔-The cash flow statement shows the periodic increase or decrease in the plug
figure
Companies are concerned about shareholders' interests because - Answer✔✔-firms like high
share value, shareholders own the firm
As long as owners perceive that managers are creating value in the firm, they are likely to hold
on to their shares - Answer✔✔-True
Value is created in a firm through - Answer✔✔-Asset acquisition, which improve earnings or
efficiencies, capitalization decisions, the reduction of operational and financial risks
A firm's dividend policy can usually be established independently of its growth plans -
Answer✔✔-False
Dividends are the sole source of returns for shareholders - Answer✔✔-false
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