FIN301 practice ch.2 – Flashcards
41 test answers
Unlock all answers in this set
Unlock answers 41question
liquid
answer
A(n) ____ asset is one which can be quickly converted into cash without significant loss in value
Unlock the answer
question
income statement
answer
The financial statement summarizing a firm's accounting performance over a period of time is the
Unlock the answer
question
expenses charged against revenues that do not directly affect cash flow
answer
Noncash items refer to
Unlock the answer
question
Cash flow from operating activities
answer
refers to the cash flow that results from the firm's ongoing, normal business activities
Unlock the answer
question
Cash flow from investing
answer
refers to the changes in net capital assets
Unlock the answer
question
Net working capital
answer
refers to the difference between a firm's current assets and its current liabilities
Unlock the answer
question
Cash flow from operations
answer
is calculated by adding back non-cash expenses to net income and adjusting for changes in current assets and liabilities.
Unlock the answer
question
Cash flow to creditors
answer
refers to the firm's interest payments less any net new borrowing
Unlock the answer
question
Cash flow to stockholders
answer
refers to the firm's dividend payments less any net new equity raised
Unlock the answer
question
divided by the total number of shares outstanding
answer
Dividends per share is equal to dividends paid
Unlock the answer
question
II and IV only
answer
Which of the following are included in current assets? I. equipment II. inventory III. accounts payable IV. cash
Unlock the answer
question
II and III only
answer
Which of the following are included in current liabilities? I. note payable to a supplier in eighteen months II. debt payable to a mortgage company in nine months III. accounts payable to suppliers IV. loan payable to the bank in fourteen months
Unlock the answer
question
must be offset by an equal increase in liabilities and shareholders' equity.
answer
An increase in total assets
Unlock the answer
question
accounts receivable
answer
Which one of the following accounts is generally the most liquid
Unlock the answer
question
Balance sheet accounts are listed in order of decreasing liquidity
answer
Which one of the following statements concerning liquidity is correct?
Unlock the answer
question
valuable to a firm even though liquid assets tend to be less profitable to own
answer
Liquidity is
Unlock the answer
question
II and III only
answer
Which of the following accounts are included in shareholders' equity? I. interest paid II. retained earnings III. capital surplus IV. long-term debt
Unlock the answer
question
is based on historical cost
answer
Book value
Unlock the answer
question
always consider market values
answer
When making financial decisions related to assets, you should
Unlock the answer
question
depreciation reduces both the pretax income and the net income
answer
As seen on an income statement
Unlock the answer
question
matched with revenues
answer
According to Generally Accepted Accounting Principles, costs are
Unlock the answer
question
is a non-cash expense that is recorded on the income statement
answer
Depreciation
Unlock the answer
question
depreciation
answer
An increase in which one of the following will cause the operating cash flow to increase?
Unlock the answer
question
the ending net working capital can be positive, negative, or equal to zero
answer
A firm starts its year with a positive net working capital. During the year, the firm acquires more short-term debt than it does short-term assets. This means that
Unlock the answer
question
outflow when interest is paid on outstanding debt.
answer
The cash flow to creditors includes the cash
Unlock the answer
question
the dividends paid exceed the net new equity raised
answer
Cash flow to stockholders must be positive when
Unlock the answer
question
Assets = Liabilities + Stockholder's Equity
answer
Which equality is the basis for the balance sheet?
Unlock the answer
question
decreasing liquidity
answer
Assets are listed on the balance sheet in order of
Unlock the answer
question
requires a repayment of a stated amount and interest over the period. allows the bondholders to sue the firm if it defaults.
answer
Debt is a contractual obligation that
Unlock the answer
question
cost
answer
Under GAAP, a firm's assets are reported at
Unlock the answer
question
It measures performance over a specific period of time. It determines after-tax income of the firm. It includes deferred taxes. It treats interest as an expense.
answer
Which of the following statements concerning the income statement is true?
Unlock the answer
question
Interest paid
answer
Which of the following is not included in the computation of operating cash flow?
Unlock the answer
question
the net change in fixed assets
answer
Net capital spending is equal to
Unlock the answer
question
cash dividends plus repurchases of equity minus new equity financing
answer
Cash flow to stockholders is defined as
Unlock the answer
question
cash that the firm is free to distribute to creditors and stockholders
answer
Free cash flow is
Unlock the answer
question
cash flow to equity plus cash flow to debtholders
answer
The cash flow of the firm must be equal to
Unlock the answer
question
Cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities
answer
Which of the following are all components of the statement of cash flows?
Unlock the answer
