5 From a creditor's point of view, the lower the debt ratio; the safer the creditor's position. A) True False 2 Points Riff Raff plc reported the following cash flow information for year 2010: Cash generated in operating activities 35,000 Cash used in investing activities (28,000) Cash generated from finance activities 23.000 Net cash inflow 30,000 Which of the following balance sheet extracts for Riff Raff plc is correct? O 2009 2010 Cash 7,000 27,000 Cash 2009 (7,000) Cash Cash 2010 23,000 2009 10,000 2009 10,000 2010 30,000 2010 (20,000) The measurement of profit is useful: A As a guide to dividend decisions B As a basis for taxation Statements A and B are both correct D None of the above Astoria Co. had the following transactions during the month of August: -Cash received from bank loans was 20,000 -Dividends of 2,500 were paid to stockholders in cash -income received from sale of fixed assets 3,000 -Revenues earned amounted to 33,500 -Expenses incurred 26,000 What amount of net income will be reported on an income statement for the month of August? A) 5,000. B 7,500. 10,500. D) 33,500. One way of assessing if debt is too high is to compare it with equity A True B) False Question 10 2 Points The principle prescribing that financial statements reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue is the: Going-concern principle B Business entity principle Objectivity principle D Cost Principle Monetary unit principle