The acid-test ratio of a firm would be unaffected by which of the following? A) Inventories are sold on a short-term credit basis. B) Common stock is sold and the money is invested in marketable securities. C) Inventories are sold for cash. D) Accounts payable are reduced by obtaining a short-term loan. ANSWER […]
Date: September 19th, 2020
Robert purchased an unendorsed Homeowners 3 policy. He is concerned that if his personal property is destroyed, the insurer will take depreciation into consideration when determining the loss settlement and will pay him less than the amount needed to purchase new property. Which endorsement can Robert add to his Homeowners 3 policy to address this […]
Date: September 19th, 2020
Which of the following accounts belongs in the liability section of a balance sheet? A) interest expense B) preferred stock C) accumulated depreciation D) accounts payable ANSWER D
Date: September 19th, 2020
The ________ is the critical connection between the pro forma income statement and the pro forma balance sheet. A) change in net working capital B) change in cost of goods sold C) change in dividends D) change in retained earnings ANSWER D
Date: September 19th, 2020
________ depends on any excess cash that a firm has above and beyond day-to-day working capital needs, as well as a firm’s capacity to issue more debt while maintaining its current credit rating. A) Financial flexibility B) Shareholder control C) Risk and timing D) Impact and cost ANSWER A
Date: September 19th, 2020
Jane would like to save money on her homeowners premium. All of the following steps will help her to reduce her homeowners premium EXCEPT A) raising the deductible in the homeowners policy to a higher amount. B) shopping around a homeowners policy. C) installing burglar alarms, smoke detectors, and dead-bolt locks. D) adding a personal […]
Date: September 19th, 2020
Negative historical returns are not possible during periods of high volatility (high standard deviations of returns) due to the risk-return trade-off. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Gail lives near a fault line. She added an earthquake endorsement to her Homeowners 3 policy. All of the following statements about the endorsement are true EXCEPT A) The deductible is expressed as a percentage of the coverage limit rather than as a dollar amount. B) The endorsement also covers landslides and volcanic eruptions. C) […]
Date: September 19th, 2020
Reynolds, Inc. needs to raise $5 million by selling common stock. Reynolds sells 1 million shares of stock at $5 each to Goldman Sachs, who then is responsible for selling the shares to investors. This is an example of a A) privileged subscription. B) commission or best-efforts agreement. C) standby agreement. D) negotiated purchase. […]
Date: September 19th, 2020
In constructing a pro forma balance sheet, which of the following fills the role of being the “plug” figure to balance the balance sheet? A) external financing B) the change in retained earnings C) accounts payable D) accounts receivable ANSWER A
Date: September 19th, 2020
