Accounting

A company had net cash flows from operations of $120,000, total cash flows of $500,000 and average total assets of $2,500,000. The cash flow on total assets ratio equals:

4.8%

5.0%

20.0%

20.8%

24.0%

 

37. An investment that is readily convertible to a known amount of cash and that is sufficiently close to its maturity date so that its market value is relatively insensitive to interest rate changes is a(n):

Short-term marketable equity security

Operating activity

Common stock

Cash equivalent

Financing activity

 

38. The average number of times a company’s inventory is sold during an accounting period, calculated by dividing cost of goods sold by the average inventory balance is equal to the:

Accounts receivable turnover

Inventory turnover

Days’ sales uncollected

Current ratio

 

39. The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts, such as receipts from customers and subtracts the major items of operating cash disbursements, such as cash paid for merchandise is referred to as the:

Direct method of reporting net cash provided or used by operating activities

Cash basis of accounting

Classified statement of cash flows

Indirect method of reporting net cash provided or used by operating activities

Net method of reporting cash flows from operating activities

 

40. External users of financial information:

Are those individuals involved in managing and operating the company

Include internal auditors and consultants

Are not directly involved in operating the company

Make strategic decisions for a company

Make operating decisions for a company

Solution:

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