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Accounting 2 Exam 1 Review Flashcards | StudBud
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Accounting 2 Exam 1 Review
Accounting 2 Exam 1 Review
18 terms
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Cash flow, ratios, and global accounting
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Answers
1
Which of the following indicates a high quality of earnings?
declaration of stock dividends
earnings from new products
conservative accounting methods
sales to major customers
2
Company buys a future contract in foreign currency as a hedging strategy.The company likely has
extra money that they are investing in foreign currency
foreign accounts rec. and expects exchange rates to fall
foreign accounts pay. and expects the exchange rates to fall
foreign accounts pay. and expects rates to rise
3
what is true about foreign trade zones
they are special tax zones located outside of the US
goods imported are duty free until they leave the zone
NAFTA does not apply to the zones
they are illegal
4
which of the following indicates a cash receipt
decrease in accounts payable
decrease in account receivable
increase in inventory
increase in prepaid expenses
5
the measurement of the relative size of each item included in a total is called
percent ratio
Component percentage
Trend percentage
comparative percentage
6
Where on the cash flow statement would you find: Issue capital stock and payment of dividends
Both are financing activities
Investing and operating respectively
Financing and Investing respectively
Investing and financing respectively
7
In general terms, which of the following is a desirable current ratio?
2:1
.2:1
20:1
1:2
8
the statement of cash flows is not intended to help investors in evaluating
a company's profitability from operations
a company's investment strategy
a company's ability to pay dividends
a company's ability to make payment on liabilities
9
which of the following does NOT cause net income to differ from net cash
depreciation
timing differences (accrual vs cash)
increase in accounts receivable
gains and losses on sale of plant assets
10
the bottom line in a cash flow statement shows...
cash flow from financing activities
cash on the balance sheet at year end
Net income for a cash basis company
net increase (decrease) in cash during the accounting period
11
Which of the following measures short-term liquidity
Return on equity
Earnings per share
Debt Ratio
Quick ratio
12
on a statement of cash flows, CASH includes...
Cash on hand, bank accts., and cash equiv.
Cash on hand and bank account balances
only bank account balances
Only cash on hand
13
The debt ratio is used to measure
return on investment
cash available for payment of debt
long term liquidity
short term liquidity
14
when equipment is purchased entirely by a loan...
equipment is shown as a decrease in investing activities
equipment is shown as an increase in investing activities
this transaction would not affect the cash flow statement
loan is shown as an increase in financing activities
15
Changes in finances that compare a base year to following years
Trend Percentage
Net income
Component Percentage
Ratio
16
which of the following is not one of the forces that affects globalization
Economic Systems
Management diversity
Culture
Technology and Infrastructure
17
one currency stated in terms of another currency
currency rate
exchange rate
clearing price
current ratio
18
A contract that gives a company the right to receive a specified amount of foreign currency is
Futures contract
Strategic Contract
Foreign Currency Contract
Hedging Contract
