Financial Management
591. The volume of sales is influenced by ______________ of a firm.
- finance policy
- credit policy
- profit policy
- fund policy
Correct answer: (D)
fund policy
592. Inventory management is essential because investments in stock are ______________.
- high
- low
- medium
- fixed
Correct answer: (A)
high
593. The difference between selling price and present book value of machinery is called
- Capital income
- Revenue income
- Revenue Receipt
- Capital Receipt
Correct answer: (A)
Capital income
594. The primary purpose of the statement of cash flows is to
- provide information about the investing and financing activities during a period
- prove that revenues exceed expenses if there is a net income
- provide information about the cash receipts and cash payments during a period
- facilitate banking relationships
Correct answer: (C)
provide information about the cash receipts and cash payments during a period
595. The category that is generally considered to be the best measure of a company's ability tocontinue as a going concern is
- cash flows from operating activities
- cash flows from investing activities
- cash flows from financing activities
- usually different from year to year
Correct answer: (A)
cash flows from operating activities
596. Which of the following would be subtracted from net income using the indirect'method?
- Depreciation expense
- An increase in accounts receivable
- An increase in accounts payable
- A decrease in prepaid expenses
Correct answer: (B)
An increase in accounts receivable
597. An asset is a
- Source of fund
- Use of fund
- Inflow of funds
- none of the above
Correct answer: (B)
Use of fund
598. Properietory ratio is calculated by
- Total assets/Total outside liability
- Total outside liability/Total tangible assets
- Fixed assets/Long term source of fund
- Properietor'sFunds/TotalTangible Assets
Correct answer: (D)
Properietor'sFunds/TotalTangible Assets
599. Financial leverage means
- Use of more debt capital to increase profit
- High degree of solvency
- Low bank finance
- None of the above
Correct answer: (A)
Use of more debt capital to increase profit
600. What relationship exists between the average collection period and accounts receivable turnover?
- Both ratios are expressed in number of days
- Both ratios are expressed in number of times receivables are collected per year
- As average collection period increases (decreases) the accounts receivable turnover decreases (increases)
- There is a direct and proportional relationship
Correct answer: (C)
As average collection period increases (decreases) the accounts receivable turnover decreases (increases)