Fi504 Midterm

1. Question : (TCO A, B, C) External users want answers to all of the following questions except:

Student Answer: Is the company earning satisfactory income?

Will the company be able to pay its debts as they come due?

Did the company use a budget to plan its expenses?

How does the company compare in profitability with competitors? Instructor Explanation: Chapter 1 page 6

Points Received: 3 of 3 Comments:

2. Question : (TCO C) Debt securities sold to investors that must be repaid at a particular date some years in the future are called:

Student Answer: accounts payable.

notes receivable.

taxes payable.

bonds payable.

Instructor Explanation: Chapter 1 page 9

Points Received: 3 of 3 Comments:

3. Question : (TCO C) Which activities involve putting the resources of the business into action to generate a profit?

Student Answer: Delivering

Financing

Investing

Operating

Instructor Explanation: Chapter 1 page 10

Points Received: 3 of 3 Comments:

4. Question : (TCO A) The best definition of assets is, the

Student Answer: cash owned by the company.

collections of resources belonging to the company and the claims on these resources. Owners' investment in the business.

resources belonging to a company that offer future benefits to the company. Instructor Explanation: Chapter 1 page 9

Points Received: 3 of 3 Comments:

5. Question : (TCO C) Edwards Company recorded the following cash transactions for the year:

Paid $45,000 for salaries.
Paid $20,000 to purchase office equipment.
Paid $5,000 for utilities.
Paid $2,000 in dividends.
Collected $75,000 from customers.

What was Edwards' net cash provided by operating activities?

Student Answer: $25,000

$5,000

$30,000

$23,000

Instructor Explanation: $75,000 - 45,000 - 5,000 =