Test Bank For M Finance 3rd Edition By Cornett

Chapter 02


Reviewing Financial Statements



Multiple Choice Questions



1. Which financial statement reports a firm's assets, liabilities, and equity at a particular point in

time?




A. Balance sheet

B. Income statement

C. Statement of retained earnings

D. Statement of cash flows


2. Which financial statement shows the total revenues that a firm earns and the total expenses the

firm incurs to generate those revenues over a specific period of time—generally one year?




A. Balance sheet

B. Income statement

C. Statement of retained earnings

D. Statement of cash flows




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,3. Which financial statement reports the amounts of cash that the firm generated and distributed

during a particular time period?




A. Balance sheet

B. Income statement

C. Statement of retained Earnings

D. Statement of cash Flows


4. Which financial statement reconciles net income earned during a given period and any cash

dividends paid within that period using the change in retained earnings between the beginning

and end of the period?




A. Balance sheet

B. Income statement

C. Statement of retained earnings

D. Statement of cash flows


5. On which of the four major financial statements would you find the common stock and paid-in

surplus?




A. Balance sheet

B. Income statement

C. Statement of cash flows

D. Statement of retained earnings




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,6. On which of the four major financial statements would you find the increase in inventory?




A. Balance sheet

B. Income statement

C. Statement of cash flows

D. Statement of retained earnings


7. On which of the four major financial statements would you find net plant and equipment?




A. Balance sheet

B. Income statement

C. Statement of cash flows

D. Statement of retained earnings


8. Financial statements of publicly traded firms can be found in a number of places. Which of the

following is NOT an option for finding publicly traded firms' financial statements?




A. Facebook

B. A firm's website

C. Securities and Exchange Commission's (SEC) website

D. Websites such as finance.yahoo.com




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, 9. For which of the following would one expect the book value of the asset to differ widely from its

market value?




A. Cash

B. Accounts receivable

C. Inventory

D. Fixed assets


10. Common stockholders' equity divided by number of shares of common stock outstanding is the

formula for calculating




A. Earnings per share (EPS).

B. Dividends per share (DPS).

C. Book value per share (BVPS).

D. Market value per share (MVPS).


11. When a firm alters its capital structure to include more or less debt (and, in turn, less or more
equity), it impacts which of the following?




A. The residual cash flows available for stock holders

B. The number of shares of stock outstanding

C. The earnings per share (EPS)

D. All of the choices




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McGraw-Hill Education.