1. Which of the following is a source of cash? A. Issuance of long term debt B.

Question

1. Which of the following is a source of cash?

A. Issuance of long term debt

B. Increase in inventories

C. Decrease in accounts payable

D. Increase in accounts receivable

E. None of the above

I choose 4 as an increase in accounts receivable is an increase in owners equity. I could be wrong

2. Information that can make a difference to the decision at hand is considered to be

A. Reliable

B. Relevant

C. None of the above

I choose C as Relevance fits the description here not relevant

3. Which ratio is wall streets favorite?

A. Inventory Turnover

B. Receivable Turnover

C. Current

D. Price-Earnings

E. None of the above

I choose D

4. A gain on the sale of an asset is subtracted from net income to determine cash flow from operating activities because of

A. Double Counting

B. Asset Sales requires a basis

C. Loses are cash flow neutral

D. None of the above

I believe that this answer is B. Asset sales requires a basis

5. Which of the following increases cash

A. Issuance of long term debt

B. Acquisition of PPE

C. Payment of dividends

D. Decrease in short term debt

E. None of the above

I guessed E because I believe it comes down to either A or E and that depends on who issued the debt

6. The stock market values a company based on which of the following accounts

A. Assets

B. Liabilities

C. Capital Stock

D. Retained Earnings

E. None of the above

7. AGR Corporation signed a two-year lease for the building that the company occupies. The account that should be debited is

A. Prepaid expenses

B. Cash

C. Accounts Payable

D. Building

E. None of the above

I answered C as the corporation doesn’t own the building and it’s a true lease.

8. Which of the following ratios measures operating performance?

A. Price-Earnings

B. Current

C. Receivable Turnover

D. Operating cycles

E. None of the above

I choose D here.

I know this is a lot so I appreciate the time who ever is taking on this, Thanks in advance!

Explanation / Answer

1. Issuance of long term debt is the answer as while issuing of debt by the company than company will get the amount from debt holder.

2.Information that can make a difference to the decision at hand is considered to be none of the above.

3.Price to earning ratio is the favorite ratio becasuse its shows the how much price investor should pay for the earning of $1 of the company.

4. Because of double counting the gain on sale of assets would be subscrated as the same should be shown under the head of cash flow from investing actitivity.

5.Issuance of long term debt would increase in cash for the company because issuing a debt would result the inflow of cash from debtholder.

6.the market value of the stock would be depends on the retain earning of the company becasue retain earning shows the total shareholder funds available for the stakeholder of the company or market capitalization of the company.

7.You debit or credit an account when a transaction takes place. In accounting, a transaction is an exchange where you give something and receive something. signing a contract is not an accountable transaction i.e. answer would be none of the above.

8.operating cycle ratio is measure of oprating performance of the company.

Hope you find above in order.

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