Texas university commerce Finance 510Chapter 14 - Financial Statement Analysis

Multiple Choice Questions
1. Which of the following assets is most liquid?
A. Cash equivalents
B. Receivables
C. Inventories
D. Plant and equipment
A
Difficulty: Easy
2. Cost of goods sold refers to ___________.
A. direct costs attributable to producing the product sold by the firm
B. salaries, advertising and selling expenses
C. payments to the firm's creditors
D. payments to federal and local governments
A
Difficulty: Easy
3. Many observers believe that firms "manage" their income statements to _______.
A. minimize taxes over time
B. maximize expenditures
C. smooth their earnings over time
D. generate level sales
C
Difficulty: Medium
4. Depreciation expense is in what broad category of expenditures?
A. Cost of goods sold
B. General and administrative expenses
C. Debt interest expense
D. Tax expenditures
A
Difficulty: Easy