Free CFA-Level-I Exam Braindumps (page: 482)

Page 482 of 991

Which of the following types of receivables is generally the most liquid?

  1. Trade receivables
  2. Receivables due from affiliated companies
  3. None of these answers
  4. Notes receivable
  5. Receivables due from corporate officers

Answer(s): A

Explanation:

Trade receivables are generally the most liquid type of receivable because they are generated from the sale of the firm's goods or services. Other forms of receivables are less liquid because the terms of repayment may vary such as the case with those due from corporate officers and/or affiliated companies. Of particular interest is notes receivable. The analyst should take care to understand the terms of these arrangements.



Typical features attached to preferred stock include all of the following except:

  1. Demand redemption rights.
  2. Dividend distribution preferences.
  3. Liquidation priorities.
  4. Non-voting rights.

Answer(s): A

Explanation:

Preferred shareholders hold a security that looks very similar to a bond, but they are very rarely allowed to demand redemption of their shares. On the other hand, many bonds are callable.



In a period of rising prices, the inventory method that gives the lowest possible value for ending inventory is:

  1. gross profit
  2. LIFO
  3. FIFO
  4. weighted average

Answer(s): B

Explanation:

The ending inventory under LIFO is priced at the earliest, and thus the lowest prices (in a period of rising prices) than any of the other methods.



The cash spent on replacing operating capacity used up in the normal course of business is classified as:

  1. investing cash flow.
  2. operating cash flow.
  3. either operating cash flow and investing cash flow.
  4. financing cash flow.

Answer(s): A

Explanation:

Operating cash flow does not include cash outlays for replacement of depreciation of capacity. The cash used for this purpose is classified as an investment cash flow.



Page 482 of 991



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Can someone confirm if this is for the 7th edition or not?
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Out of curiosity (I thought the 1101 had 90 questions and the 1102 has 90 questions) which questions exactly on this test rotation or is it random?
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