1. A creditor is reviewing Hoffman Electronicsâ statements ofretained earnings for the last 3 years. The creditor is trying todetermine whether a substantial loan should be given to HoffmanElectronics. Which question will most likely be answered byreviewing the statement of retained earnings?
a. Does Hoffman Electronics make risky investments that impedethe cash flow of the firm?
b. What was the ending permanent account balance for HoffmanElectronics last quarter?
c. What assets owned by Hoffman Electronics are valuable enoughto cover debt repayment?
d. Does Hoffman Electronics have enough earnings to pay bothdividends and debts?
2. True or false. By reviewing a companyâs statement of retainedearnings over multiple reporting periods, an investor can evaluatethe companyâs future growth potential based on net incomechanges.
3. A creditor would most likely be interested in reviewing afirmâs statement of retained earnings to determine if the firm
a. exhibits liquidity.
b.can repay its debt obligations.
c.makes risky investments.
d.has sufficient receivables.
4. On statement of cash flow, the repayment of loans iscategorized as a cash flow from ____activities.
a. operating
b. financing
5."Fill in the blank" question: select the correct answer.
In a statement of cash flows, cash inflows that result fromproviding goods to customers are included in the section calledâcash flows from_______ activities.
a. investing
b. operating
c. sales
d. investing
6. Creditors want to know whether Photon, Inc. uses itsavailable cash to purchase new equipment. Which section of thestatement of cash flows would provide this information?
a.Cash flows from operating activities
b.Cash flows from sales activities
c.Cash flows from financing activities
d.Cash flows from investing activities
7. Creditors are examining the statement of cash flows forPhoton, Inc. Which of the following questions can be answered byreviewing the statement of cash flows?
a. What is the average net income of Photon?
b.What type of assets does Photon possess?
c.Does Photon reset its temporary accounts?
d.Does Photon pay its bills when they are due?
1. A creditor is reviewing Hoffman Electronicsâ statements ofretained earnings for the last 3 years. The creditor is trying todetermine whether a substantial loan should be given to HoffmanElectronics. Which question will most likely be answered byreviewing the statement of retained earnings?
a. Does Hoffman Electronics make risky investments that impedethe cash flow of the firm?
b. What was the ending permanent account balance for HoffmanElectronics last quarter?
c. What assets owned by Hoffman Electronics are valuable enoughto cover debt repayment?
d. Does Hoffman Electronics have enough earnings to pay bothdividends and debts?
2. True or false. By reviewing a companyâs statement of retainedearnings over multiple reporting periods, an investor can evaluatethe companyâs future growth potential based on net incomechanges.
3. A creditor would most likely be interested in reviewing afirmâs statement of retained earnings to determine if the firm
a. exhibits liquidity.
b.can repay its debt obligations.
c.makes risky investments.
d.has sufficient receivables.
4. On statement of cash flow, the repayment of loans iscategorized as a cash flow from ____activities.
a. operating
b. financing
5."Fill in the blank" question: select the correct answer.
In a statement of cash flows, cash inflows that result fromproviding goods to customers are included in the section calledâcash flows from_______ activities.
a. investing
b. operating
c. sales
d. investing
6. Creditors want to know whether Photon, Inc. uses itsavailable cash to purchase new equipment. Which section of thestatement of cash flows would provide this information?
a.Cash flows from operating activities
b.Cash flows from sales activities
c.Cash flows from financing activities
d.Cash flows from investing activities
7. Creditors are examining the statement of cash flows forPhoton, Inc. Which of the following questions can be answered byreviewing the statement of cash flows?
a. What is the average net income of Photon?
b.What type of assets does Photon possess?
c.Does Photon reset its temporary accounts?
d.Does Photon pay its bills when they are due?
