5. Why is the balance sheet known as the permanent statement? Correct
answers Because the other statements are reset at the end of the fiscal
year.
6. How do you calculate the change in retained earnings? Correct
answers Net income-dividends
7. Sales - Cost of Sales - other expenses =Correct answers Operating
Income or EBiT
,8. Name four accounts that are part of total assets? Correct answers
Cash, Accounts receivable, inventory, long term assets
9. Name three accounts that are part of total liabilities? Correct
answers Bonds, accounts payable and mortgage
10.Name four accounts that are part of current assets? Correct answers
Inventory, cash, accounts receivable and short term investments.
11.Name three accounts that are only included in cash flow from financing?
Correct answers Common stock, dividends paid and bonds payable
12.Define the statement of cash flows? Correct answers Calculated for
the same period of time as the incomes statement is calculated based on
the income statement and changes in the balance sheet is one of the three
basic accounting statements.
13.When fixed assets increase what happens to cash? Correct answers
Cash will decrease
14.What is the purpose of the statement of cash flows?Correct answers
Explains the change in cash over the course of the specified time frame.
15.Suppose the inventory turnover of a company is higher than the industry.
Based on this observation, which of the following is most likely?Correct
answers The firm has too little inventory resulting in lost sales or stock-
outs.
, 16.If a company wishes to obtain a bank loan, will it want to have a higher
current ratio or a lower current ratio?Correct answers Higher
17.The Operating Income Return on Investment (OIROI) uses what elements
on the income statement?Correct answers EBIT and total assets
18.Why would a company be interested in the Total Asset Turnover (TAT)
ratio?Correct answers To see how efficient are at producing sales
19.What annual interest will be paid for a zero coupon bond?Correct
answers 0%
20.What is the most significant characteristic of subordinated debt?Correct
answers Senior debt is paid off first
21.If a company wants to increase its debt capital, how will they raise the
funds?Correct answers Sell bonds
22.What is the lowest level investment bondCorrect answers BBB
23.What can cause the bond price to fluctuate?Correct answers A
change in the bond rating, a change in the financial condition, general
change in interest rates.
24.What does a company use as security for a bond?Correct answers
Credit worthiness
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Lectjoe. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $17.99. You're not tied to anything after your purchase.
