A. They are not recognized.

B. They fl ow through retained earnings.

C. As a separate line item (valuation gains/losses).

15. Under IFRS, the minority interest in consolidated subsidiaries is presented on the balance

sheet

A. as a long - term liability.

B. separately, but as a part of shareholders ’ equity.

C. as a mezzanine item between liabilities and shareholders ’ equity.

16. Retained earnings are a component of

A. liabilities.

B. minority interest.

C. owners ’ equity.

17. When a company buys shares of its own stock to be held in treasury, it records a reduction

in

A. both assets and liabilities.

B. both assets and shareholders ’ equity.

C. assets and an increase in shareholders ’ equity.

18. A common - size analysis of the balance sheet is most likely to signal investors that the

company

A. has increased sales.

B. is using assets effi ciently.

C. is becoming more leveraged.

19. An investor concerned whether a company can meet its near - term obligations is most

likely to calculate the

A. current ratio.

B. debt - to - equity ratio.

C. return on total capital.

20. The most stringent test of a company ’ s liquidity is its

A. cash ratio.

B. quick ratio.

C. current ratio.

21. An investor worried that a company may go bankrupt would most likely examine its

A. current ratio.

B. return on equity.

C. debt - to - equity ratio.

22. Using the information presented in Exhibit 5 - 8 in the chapter, the quick ratio for Sony

Corp. on 31 March 2005 is closest to

A. 0.44.

B. 0.81.

C. 0.84.

23. Applying common - size analysis to the Sony Corp. balance sheets presented in Exhibit 5 - 8,

which one of the following line items increased in 2005 relative to 2004?

A. Goodwill

B. Securities investments and other

C. Deferred insurance acquisition costs

24. Using the information presented in Exhibit 5 - 8, the fi nancial leverage ratio for Sony

Corp. on 31 March 2005 is closest to

A. 2.30.

B. 2.81.

C. 3.31.

Chapter 6

1. The three major classifi cations of activities in a cash fl ow statement are

A. infl ows, outfl ows, and balances.

B. beginning balance, ending balance, and change.

C. operating, investing, and fi nancing.

2. The sale of a building for cash would be classifi ed as what type of activity on the cash

fl ow statement?

A. Operating

B. Investing

C. Financing

3. Which of the following is an example of a fi nancing activity on the cash fl ow statement

under U.S. GAAP?

A. Payment of dividends

B. Receipt of dividends

C. Payment of interest

4. A conversion of a face value $1 million convertible bond for $1 million of common

stock would most likely be

A. reported as a $1 million fi nancing cash outfl ow and infl ow.

B. reported as supplementary information to the cash fl ow statement.

C. reported as a $1 million fi nancing cash outfl ow and a $1 million investing cash infl ow.

5. Interest expense may be classifi ed as an operating cash fl ow

A. under U.S. GAAP, but may be classifi ed as either operating or investing cash fl ows

under IFRS.

B. under IFRS, but may be classifi ed as either operating or investing cash fl ows under

U.S. GAAP.

C. under U.S. GAAP, but may be classifi ed as either operating or fi nancing cash fl ows

Under IFRS.

6. Tax cash flows

Date: 2016-03-03; view: 913