5 Written questions
5 Matching questions
- Income statement
- Sales forecast
- Percent-of-sales method
- Current liabilities
- a include obligations that are payable within a year, including accounts payable, accrued expenses, and the current portion of long-term debt.
- b reflects the results of the operations of a firm over a specified period of time.
- c a projection of a firm's sales for a specified period.
- d an estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.
- e a method for expressing each expense item as a percentage of sales.
5 Multiple choice questions
- a company's ability to meet its short-term financial obligations.
- if a firm uses percent-of-sales method, then the net result that each expense item (except depreciation) on its income statement will grow at the same rate as sales.
- how productively a firm utilizes its assets relative to its revenue and its profits.
- calculated by dividing its long-term debt by its shareholders' equity, if it gets too high, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth.
- a snapshot of the company's assets, liabilities, and owner's equity at a specific point in time.
5 True/False questions
Fixed assets → assets used over a longer time frame, such as real estate, buildings, equipment, and furniture.
Budgets → itemized forecasts of a company's income, expenses, and capital needs and are also an important tool for financial planning and control.
Accounts receivable → an estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.
Current assets → equals the firm's current assets divided by its current liabilities, can tell us about the firm's ability to pay its short-term debts.
Pro forma income statement → projections for future periods based on forecasts and are typically completed for two to three years in the future.