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Multiple choice questions

Try the multiple choice questions below to test your knowledge of Chapter 7. Once you have completed the test, click on 'Submit Answers for Grading' to get your results.

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This activity contains 20 questions.

Question 1.
According to the accounting profession, which of the following would be considered a cash-flow item from a "financing" activity?


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Question 2.
If the following are the balance sheet changes:
$ 5,005 decrease in accounts receivable
$12,012 decrease in notes payable
$10,001 increase in accounts payable
$ 8,950 decrease in net fixed assets
a "use" of funds would be:


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Question 3.
Cash budgets are prepared from past:


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Question 4.
An examination of the sources and uses of funds is part of:


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Question 5.
Which of the following is not a cash outflow for the firm?


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Question 6.
If the following are balance sheet changes:
$ 5,005 decrease in accounts receivable
$ 7,000 increase in cash
$12,012 decrease in notes payable
$ 9,850 increase in inventories
a "source" of funds would be:


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Question 7.
According to the accounting profession, which of the following would be considered a cash-flow item from an "investing" activity?


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Question 8.
If the following are balance sheet changes:
$ 7,000 decrease in cash
$12,012 increase in notes payable
$ 9,850 increase in inventories
$10,001 increase in accounts payable
a "use" of funds would be:


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Question 9.
According to the accounting profession, which of the following would be considered a cash-flow item from an "operating" activity?


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Question 10.
The sustainable growth rate (SGR) can be expressed as:


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Question 11.

A firm receives cash for 30% of its sales with the remaining 70% being credit sales. Of the credit sales, 20% are collected in the month of sale, 60% in the month following the sale, and 20% in the second month following the sale. Forecasted sales for January through April are $400,000, $500,000, $600,000, and $400,000 respectively. What are total cash receipts in the month of April?

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Question 12.

A firm makes all purchases on credit. Cash payment on this trade credit is required in the month following purchase on 70% of all purchases. The firm takes a 2% cash discount and makes payment for the remaining 30% of all purchases in the month of purchase. Forecasted purchases for January through April are $300,000, $375,000, $450,000, and $300,000 respectively. In the month of March, what is the total cash disbursement for purchases?

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Question 13.

Assume that total cash receipts for January through June are $100, $120, $80, $60, $120, and $190 respectively. Also assume that total cash disbursements for January through June are $80, $100, $80, $150, $150, and $70 respectively. Your firm has a beginning cash balance at the beginning of January of $55. At the end of what month is the firm forecasting a negative cash balance?

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Question 14.

Assume that total cash receipts for January through June are $100, $120, $80, $60, $120, and $190 respectively. Also assume that total cash disbursements for January through June are $80, $100, $80, $150, $150, and $70 respectively. Your firm has a beginning cash balance at the beginning of January of $20 and requires a minimum cash balance of $30. At the end of what month is the firm forecasting a cash balance below the minimum?

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Question 15.
Which of the following statements regarding forecasted ending cash balances?


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Question 16.
Information that goes into __________ can be used to help prepare __________.


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Question 17.
In preparing a forecast balance sheet, it is likely that either cash or __________ will serve as a "plug figure" or balancing factor to ensure that assets equal liabilities plus shareholders' equity.


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Question 18.
The accounting statement of cash flows reports a firm's cash flows segregated into what categorical order?


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Question 19.
The firm paid $800,000 in dividends over the last period. The beginning and ending retained earnings account balances were $10,100,000 and $12,500,000 respectively. Assuming a 40% average tax rate, what was the firm's net income (net profit after taxes)?


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Question 20.

The firm had a net increase of $800,000 in net fixed assets over the last period. The beginning and ending net fixed asset account balances were $9,100,000 and $9,900,000 respectively. If the firm purchased $2,000,000 in additional fixed assets and sold $100,000 of fixed assets at book value, what was the firm's depreciation expense over the period?

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