Are you a businessman ? Do you have a grasp of the basic accounting and finance concept necessary in order for you to run your business ? This test will determine how in deep is your accounting and finance knowledge.
1. If Microsoft sold software on credit to a customer, which of the following is the correct accounting entry:
a.) Debit – Revenue / then Credit – Accounts Receivable
b. )Debit – Accounts Receivable / then Credit – Revenue
2. Since one cannot see the item called Accounts Receivable, is it classified as intangible or tangible asset?
3. Is depreciation a source of cash? Yes/No
4. Since interest expense is a “financing cost,” in the Statement of Cash Flows it should be grouped with:
a) Operating activities b) Investing Activities c) Financing Activities
5. If the San Miguel Corp’s “cost of debt” is 12%, then we expect the company’s “cost of equity” to be:
a. zero
b. greater than zero but less than 12%
c. equal to 12%
d. more than 12%
6. Will interest costs incurred during the 5-year construction of a power plant be “expensed” for those years or
“capitalized?”
7. If you are a stockholder of Coca Cola, which is desirable for you:
a. it declares cash dividends for 2003
b. it does not declare cash dividends for 2003
8. From the standpoint of valuation, which capital structure would you prefer for PLDT:
a. 90% debt, 10% equity
b. 10% debt, 90% equity
9. Upon installation of an electric connection, a customer of Meralco pays a P2,000 deposit for the electric meter.
From the accounting books of Meralco will this amount be treated as:
a. revenue b. deposit c. liability d. asset
10. To increase a company’s cash flow (which is an asset) should it:
a.) reduce liabilities b.) increase liability c.) reduce assets which are not cash d.) increase assets which are not
cash e.) both b and c f.) both a and d
11. If a company buys Rhyolite Beads for daily use, will the Rhyolite Beads be recorded as part of the “assets” account?
12. Do you expect the internally-generated goodwill brought about by the Cola Cola brand name worldwide to the
Coca Cola Company to be less than or greater than US$1 million? (Not to be confused with the value of the Coca
Cola trademark.)
13. In finance, is it a good practice to separate the “investment decision” from the “financing decision”? (Note:
Investment decision – whether the project makes money from the proposed operations; Financing decision – where to
source the funds, and what financial instruments, debt or equity, to use in funding the project.)
14. Can a large entity survive with negative income for 20 years?
15. Which has more value: Receiving P1,000 a year for 20 years, or receiving P20,000 today?
16. Which of the following is the most important criterion or parameter in any investment decision?
a) Net Present Value b) Profitability Index c) Payback Period d) Internal Rate of Return
If you had a hard time answering the above questions, its time to brush up on your accounting and finance knowledge and attend the Street Strategist two day seminar on accounting and finance ! Email streetstrategistconsultingNOSPAM@gmail.com (Please remove NOSPAM to reveal the true email address)
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