1.

Select the situation below that would cause an increase in shareholders' equity.

a.		Collection of an accounts receivable.
b.		The sale of inventory at a profit
c.		The payment of a loan.
d.		The payment of a dividend.
e.		The purchase of office equipment paid for by issuing a note payable.

2.

Which of the following is true regarding the liquidity of a firm.

a		Liquidity is good for a firm because liquid assets can be turned into cash quickly without much loss in value.
b		Liquidity for a firm is bad because the firm can then pay its bills easily, thereby avoiding financial distress.
c		Liquidity is good for a firm because it would allow a firm to borrow money by using its most liquid assets, property, plant and equipment, as collateral.
d		Assets are usually listed on a firm's balance sheet in order of liquidity.
e		Liquid assets generally earn a large return, especially in comparison to illiquid assets.

3.

Which heading on the statement of cash flows shows the payment of dividends?

a		cash activities
b		financing activities
c		investing activities
d		operating activities

4.

What yields the largest value?

a		the future value of an annuity of $1
b		the future value of a single sum of $1
c		the present value of an annuity of $1
d		the present value of a single sum of $1

5.

Which of the following best describes an annuity?

a		A series of annual payments of any amount.
b		A series of fixed payments
c		A series of identical payments at regular intervals
d		A retirement income fund