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WorksheetsMid-Terms: Fin Analysis & Reporting
Total questions: 65
Worksheet time: 3hrs 15mins
Anything that is purchased with the hope that it will generate income or be more valuable at a future date.
investment
loan
income
expense
Comparing the cost of two or more goods or services in an effort to find the best value.
interest
investment
Cost Benefit Analysts
Cost Comparison
Which ONE of the following relates to the ability of a business to pay its debts as they fall due?
growth
liquidity
efficiency
profitability
The managers of a business pursue an objective of having adequate cash flow.
What possible conflict of objectives can result from this action?
a conflict between the objectives of efficiency and growth
a conflict between the objectives of profitability and growth
a conflict between managers and shareholders of the business
a conflict between managers and short-term creditors of the business
Which term refers to the extent to which the current assets of a business exceed the current liabilities of that business?
growth
liquidity
solvency
profitability
A company issues shares directly to investors,usually an institution, rather than making a public offering.
What type of equity finance is this?
placement
new issue
rights issue
share purchase plan
Which of the following is a characteristic of equity finance?
The finance must be repaid at a future date
The returns to the suppliers of finance are called dividends
Suppliers of finance have no rights of ownership over the business
Suppliers of finance have prior claim on assets in the event of liquidation
Which of the following is a type of short-term external source of funds?
leasing
overdraft
mortgages
debentures
Which financial institution is most likely to issue debentures as a method of raising finance?
unit trust
investment bank
public company
superannuation fund
What is the role of the Australian Securities Exchange (ASX)?
to supervise the banking system
to regulate the operation of companies
to investigate breaches of the Corporations Act
to make markets for the sale and purchase of shares
Which ONE of the following items would be found in the income statement of a business?
equipment
investments
gross profit
accounts payable
A business has current liabilities of $200 000 million and current assets of $250 000 million.
Which of the following statements correctly describes the position of the business?
The business has a current ratio of 0.8:1 and has a liquidity problem
The business has a current ratio of 1.25:1 and has a liquidity problem
The business has a current ratio of 0.8:1 and does not have a liquidity problem
The business has a current ratio of 1.25:1 and does not have a liquidity problem
Bill's Building Supplies has sold goods totaling $50 000 to a number of builders on 90 days' credit. The business now finds that it has a short-term cash flow problem.
What is the appropriate solution to this problem?
extend trade credit to the builders
sell the debts and lease them back
negotiate a term loan with a finance company
sell the accounts receivable to a finance company
What is ONE method of controlling current liabilities?
selling accounts receivable at a discount
having a tight policy on allowing trade credit
making interest and loan repayments on time
offering discounts for cash and early payment
Which ONE of the following is a cost control?
sales mix
pricing policy
sales objectives
expense minimisation
5) Equity financing (or funding) means ________.
A) exchanging partial ownership in a firm, usually in the form of stock, for funding
B) getting a grant or outright gift
C) getting a loan
D) getting a lease
E) getting a loan guarantee
2) For startup firms, the cost of buying real estate, building facilities, and purchasing equipment often exceeds the firm's ability to provide funds for those needs on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?
A) Lengthy product development cycles
B) Costs associated with building a brand
C) Cash flow challenges
D) Capital investments
E) Personnel costs
Which of the following is NOT one of the 3 categories of employee benefits?
Benefits added as a perk
Benefits that are required by law
Benefits the employee must get on their own
Benefits that are considered a standard
Date of lease : 1 Jan 2017
Lease term: 5 years
Annual Rental : $11.5 million
First instalment : 31 Dec 2017
Present Value of minimum lease payments: $50 m
Interest rate implicit in the lease: 5%
Liability in SOFP at 31 Dec 2018 is ?
$31,550,000
$30,371,250
$41,000,000
$40,425,000
This decision is about the quantum of finance to be raised from various long-term sources.
Investment decision
Financing decision
Dividend decision
Capital budgeting decision
Generally, investments are classified in the balance sheet as
Current asset
Non-current asset
either current asset or non-current assets
none of the above
What is the initial measurement of the financial asset
Fair Value
Face Value
At Cost
Amortized Cost
When a director decides to take an asset for personal use it will be regarded as drawings.
True
False
When an asset is depreciated at a cost of 20%, the useful life of that asset is expected to be
3 years
5 years
7 years
10 years
Which of the following is NOT a stock index?
DOW JONES
S & P 500
NASDAQ COMPOSITE
P/E RATIO
The SWOT diagram consists of
Strengths, Weaknesses, Opportunities, Threats
Strengths, Weaknesses, Options, Threats
The values statements and the vision and mission statements are the same
True
False
The ____ statement describes where the organization wants to be in the future; the ____ statement describes what the organization needs to do now to achieve the vision.
vision/mission
mission/vision
The company's objectives should be ethereal.
True
False
Comparative advantage is the accomplishment of a high level of productivity that is characterized by efficiency in the context of lean and quantifiable management.
YES
NO
Strategic thinking is:
is the cognitive process of competently and analytically weighing factors and arriving at critical decisions
consist of a systematic evaluation
is efficiently employed
is the capability of an organization to possess relevant and related knowledge, abilities and foresight
How do you calculate net cash flow?
Balance brought forward + Cash Inflows
Inflows - Outflows
Total cash available - cash outflows
None of the above
How do you calculate total cash available?
Inflows - Outflows
Net cash flow - outflows
Balance brought forward + cash inflows
Balance brought forward - cash inflows
Cash flow forecasts can show two of the following...
Whether a business will make a profit
Whether a business has sufficient cash to meet their debt obligations
Whether a business will be able to repay a loan
Whether a business has enough shareholders
Buying too many fixed assets drains cash, a possible solution is
Never renting
Increasing production
Reducing production
Leasing and renting
Which of these are methods that could be used to improve cash flow.
Reducing costs by buying from a different supplier.
Increasing its revenue by slightly raising its prices.
Selling off some fixed assets.
Paying back all of the refunds it owes customers
Expanding into a new range of products.
A fiscal period consists of ...
12 months
2 months
12 years
24 months
The word which means "writing off certain expenses by dividing them into fixed payments over a period of time" is ...
amortization
debentures
occupancy
premises
A kind of promissory notes to raise cash is ...
commercial paper
debentures
cash basis
equity
What is another name for a business' sales revenue?
Sales
Costs
Sales turnover, turnover or revenue
Profit and Loss
What does the money spent on materials affect?
Gross Profit figure only
Net Profit figure only
Both Gross Profit and Net Profit figures
The principles and procedures that together make up accepted accounting pratice at any given time are know as?
International financial reporting standards
Principle of periodicity
Generally accepted accounting principles
Time period principle
Various techniques used to discharge the functions of management accounting?
Marginal costing
Uniform costing
Budgetary control
All of the above
Which of the following is Gaap constraints?
Industry practices
Matching
Revenue/Expenses recognition
None of the above
The main source of Gaap is ?
Company law
Accounting standards
Both 1&2
None of the above
Equal to cash or will be converted into cash within a year; Used to fund immediate or current needs
assets
current assets
non-.current assets
liabilities
payable, long-term loans, deferred compensation, deferred revenues, deferred income taxes are
inventories
long-term liabilities
intangible assets
equity
Is the temporary acquisition of money with the intent to repay the amount borrowed
assets
Borrowings
non-current assets
expenses
What does GAAP stand for?
Globally Accepted Accounting Principles
Generally Acknowledge Accounting Principles
Generally Accepted Accounting Principles
Global Accepted Accounting Principles
The __________concept states that businesses should be treated as if they will continue to stay in business.
going concern
economic entity
According to the Revenue Recognition Principle, revenue should be brought into account only when good had change ownership
True
False
Revenues are matched with expenses in accordance with going concern concept.
True
False
Due to an incidence on 22nd February, 2019, a company's vital machinery is damaged completely. This will have adverse impact on its production capacity. As a result, the competitors are likely to take its advantage and capture the market. The company has not disclosed this fact in its annual report for the year ended 31st March 2019. Which principle of accounting is not compiled with?
economic Entity concept
Going Concern
monetary units concept
Full Disclosure concept
Concept of consistency means :
all the firm in the same industry should be identical accounting principles and procedures
all principle and procedures of accounting are utilised
accounting principles and methods should remain consistent from one year to another
all of the above
All properties and services acquired by the business must be recorded at their original acquisition cost. This principle pertains to..
Historical cost
economic Entity
materiality
Objectivity concept
Wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing.
Consumer
Seller
Capital
Demand
The primary goal of financial management is
to maximize the return
to minimize the risk
to maximize wealth of owners
to maximize profit
Capital budgeting related to
long term assets
short term assets
long term assets and short term assets
fixed assets
Dividend decision is concerned with
only distribution of dividend to shareholders
how much to be retained in business
how much profit earned is distributed to shareholders and how much to be retained in the business
none of the above
Owner's equity is the owner's claim to the asset of the business. It is NEVER referred to as the owner's capital in the business.
True
False
