Fin 320 final

Convex Industries has inventories of $200 million, current assets of $1.4 billion, and current liabilities of $530 million. What is its quick ratio? A) 0.38 B) 0.44 C) 2.12 D) 2.26

Answer: D Explanation: D) (1.4 - 0.2) / 0.53 = 2.26 when doing calculation convert the numbers because it is written in millions

What is the effective annual rate (EAR)?

The interest rate that would earn the same interest with annual compounding

Which of the following is not an operating expense? A) interest expense B) depreciation and amortization C) selling, general, and administrative expenses D) research and development

interest expense

Which of the following best describes the annual percentage rate?

the quoted interest rate which considered with the compounding period gives the effective interest rate

t or f The income statement reports the firm's revenues and expenses, and it computes the firm's bottom line of net income, or earnings.

true

What are the four financial statements that all public companies must produce?

1. balance sheet 2. income statement 3. statement of cash flows 4. statement of shareholders equity

The major components of stockholders' equity are:

1. the common stick, 2. paid in surplus and retained earnings

The effective annual rate (EAR) for a loan with a stated APR of 8% compounded monthly is closest to: A) 8.30% B) 8.33% C) 8.00% D) 8.24%

A) EAR = (1 + APR / k)k - 1 = (1 + 0.08 / 12)12 - 1 = 0.083 or 8.3%

U.S. public companies are required to file their annual financial statements with the U.S. Securities and Exchange Commission on which form? A) 10-A B) 10-K C) 10-Q D) 10-SEC

B) 10-k

The effective annual rate (EAR) for a savings account with a stated APR of 4% compounded daily is closest to: A) 4.00% B) 4.10% C) 4.08% D) 4.06%

C) EAR = (1 + APR / k)k - 1 = (1 + 0.04 / 365)365 - 1 = 0.04088 or 4.08%

The effective annual rate (EAR) for a loan with a stated APR of 10% compounded quarterly is closest to: A) 10.52% B) 10.25% C) 10.38% D) 10.00%

C) EAR = (1 + APR / k)k - 1 = (1 + 0.10 / 4)4 - 1 = 0.1038 or 10.38%

A bank offers an account with an APR of 6% and an EAR of 6.09%. How does the bank compound interest for this account? A) weekly compounding B) monthly compounding C) semiannual compounding D) annual compounding

C) Using an APR = 6%, calculate the EAR for the compounding periods given in each choice: A = 6.18%; B = 6.17%; C = 6.09%; D = 6%.

Emma runs a small factory that needs a vacuum oven for brazing small fittings. She can purchase the model she needs for $180,000 up front, or she can lease it for five years for $4200 per month. She can borrow at 7% APR, compounded monthly. Assuming that the oven will be used for five years, should she purchase the oven or should she lease it? A) Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven. B) Lease, since the present value (PV) of the lease is $8642 less than the cost of the oven. C) Lease, since the present value (PV) of the lease is $2212 less than the cost of the oven. D) Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven.

D) Calculate PV lease payments = $212,108; subtract $180,000 to get $32,108. ANSWER= D) Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven.

Which of the following would be LEAST likely to lower the interest rate that a bank offers a borrower? A) the number of borrowers seeking funds is low B) the expected inflation rate is expected to be low C) The borrower is judged to have a low degree of risk D) The investment will be for a long period of time

D) the investment will be for a long period of time

In which of the following relationships is an agency conflict problem LEAST likely to arise? A) the relationship between a hire-car company and the persons who hire that company's cars regarding the treatment of those cars B) the relationship between high-level military officers and the soldiers who serve under them regarding the willingness of the soldiery to take risks C) the relationship between a restauranter and the suppliers of produce to that restaurant regarding the freshness of the produce supplied D) the relationship between a driver and the passengers in a car regarding the safe driving of that car

D) the relationship between a driver and the passengers in a car regarding the safe driving of that car

Drew receives an inheritance that pays him $50,000 every three months for the next two years. Which of the following is closest to the present value (PV) of this inheritance if the interest rate is 8.5% (EAR)?

First calculate the APR with quarterly compounding, which equals 8.24%; then using a periodic interest rate of 8.24/4%, calculate the present value (PV) of an annuity of $50,000 for eight periods.

COMPUTE PV

I = 0.4917 FV = 0 N = 60 PMT = 617.16 PV= $31,999.86

What is the main reason that it is necessary for public companies to follow the rules and format set out in the Generally Accepted Accounting Principles (GAAP) when creating financial statements?

It makes it easier to compare the financial results of different firms.

COMPUTE PMT: PV = 255,000 (2 points) I = 0.50 FV = 0 N = 360 (30 years × 12 months)

PMT= $1528.85

Compute PMT: PV = 250,000 (no points) I = 0.5208 FV = 0 N = 360 (30 years × 12 months)

PMT= $1539.29

Compute PMT: PV = 28000 I = 0.4083 FV = 0 N = 60

PMT= $527.11

compute PMT: PV = 34000 I = 0.1583 FV = 0 N = 48

PMT= $736.15

Which of the following is not a role of financial institutions?

Printing money for borrowers.

What is the term for the applicable price that the seller gets when he sells a stock on the exchange?

The seller gets the bid price when he sells a stock on the exchange.

On August 19, 2004 Google IPO offered 19,605,052 shares at a price of U.S. $85 per share, which were sold in an online auction in a bid to make the shares more widely available. Which of the following statements best describes why these are considered a primary market transaction?

The transaction was between the corporation and investors.

market value of equity formula

number of shares outstanding X price per share

Compute PV: Now we can apply the PVA formula to calculate the PV of the lease or by calculator: I = 0.4975 N = 60 (5 years × 12 months/yr) FV = 0 PMT = $4000

pv= 207,051.61

How does a firm select the date for preparation of its balance sheet?

the balance sheet is prepared on the fiscal closing date for the accounts of a firm that may or not coincide with the calendar year end of dec 31

A graphic designer needs a laptop for audio/video editing, and notices that they can elect to pay $2900 for a Dell laptop, or lease from the manufacturer for monthly payments of $79 each for four years. The designer can borrow at an interest rate of 7% APR compounded monthly. What is the cost of leasing the laptop over buying it outright?

using a periodic rate of 7/12% per month, calculate the present value (PV) of an annuity of $79 for 48 months, then subtract $2900 to calculate the advantage of leasing

Gross profit is calculated as

Total sales - Cost of sales

What is a firm's net income? A) the difference between the sales and other income generated by the firm, and all costs, taxes, and expenses incurred by the firm in a given period B) the last or "bottom" line of the income statement C) a measure of the firm's profitability over a given period D) all of the above

- the difference between the sales and other income generated by the firm, all costs, taxed and expenses incurred by the firm in a given period -the last or bottom line of the income statement -a measure of the firms profitability over a given time

What is the role of an auditor in financial statement analysis?

1. to ensure that the annual financial statements are prepared accurately 2. ensure annual financial statements are prepared according to the generally accepted accounting principles 3. to verify that the information being used in preparing the annual financial statement is reliable

Which of the following best describes why firms produce financial statements? A) to use as a tool when planning future investments within the firm B) to provide a means of enticing new investors to a firm C) to provide interested parties, both inside and outside the company, with an overview of the short and long term financial condition of a business D) to show what activities the company has undertaken in the previous financial year, and what activities are planned for the near future

C) To provide interested parties, both inside and outside the company, with an overview of the short and long term financial condition of the company

The exchanges in which of the following countries or regions do NOT accept the International Financial Reporting Standards set out by the International Accounting Standards Board? A) Germany B) France C) United States D) United Kingdom

C) united states

What is the present value (PV) of an investment that pays $10,000 every year for four years if the interest rate is 7% APR, compounded quarterly? A) $33,730 B) $33,872 C) $38,680 D) $40,000

Calculate EAR = 7.1859%; Calculate PV Annuity = $33,730 Answer: A

A small foundry agrees to pay $250,000 two years from now to a supplier for a given amount of coking coal. The foundry plans to deposit a fixed amount in a bank account every three months, starting three months from now, so that at the end of two years the account holds $250,000. If the account pays 5.5% APR compounded monthly, how much must be deposited every three months? A) $29,770 B) $29,777 C) $29,740 D) $31,250

Calculate the EAR = 5.64%; calculate APR with quarterly compounding = 5.52%; calculate the payment for 8 quarters with $250,000 as future value (FV). ANSWER A

which of the following accounts has the highest EAR? A) on that pays 6.1% every six months B) one that pays 1.0 % per month C) one that pays 12.6% per year D) one that pays 3% every three months

Calculate the EAR for each choice and pick the highest A= 12.57% B=12.68% C=12.6% D=12.55% Answer= B 12.68%

Investment: A B C D Rate of Return: A.5.7% B. 5.6% C. 5.5% D. 5.5% Compounding A. Yearly B. Semiannually C. Monthly D. Weekly The table above shows the rate of return (APR) for four investment alternatives. Which offers the highest EAR? A) Investment A B) Investment B C) Investment C D) Investment D

Calculate the EAR for each; A = 5.70% B = 5.68% C = 5.64% D = 5.65% ANSWER= A

T or F When you borrow money, the interest rate on the borrowed money is the price you pay to be able to convert your future loan payments into money today ?

True

Which of the following statements is FALSE? A) Because interest rates may be quoted for different time intervals, it is often necessary to adjust the interest rate to a time period that matches that of our cash flows. B) The effective annual rate indicates the amount of interest that will be earned at the end of one year. C) The annual percentage rate indicates the amount of simple interest earned in one year. D) The annual percentage rate indicates the amount of interest including the effect of compounding.

D) The annual percentage rate indicates the amount of interest including the effect of compounding.

Investment Rate Compounding A 6.25% Annual B 6.10% Daily C 6.125 Quarterly D 6.120 Monthly The highest effective rate of return you could earn on any of these investments is closest to: A) 6.250% B) 6.267% C) 6.300% D) 6.310%

EAR (A) = (1 + APR / k)k - 1 = (1 + 0.0625 / 1)1 - 1 = 0.0625 or 6.250% EAR (B) = (1 + APR / k)k - 1 = (1 + 0.0610 / 365)365 - 1 = 0.06289 or 6.289% EAR (C) = (1 + APR / k)k - 1 = (1 + 0.06125 / 4)4 - 1 = 0.06267 or 6.267% EAR (D) = (1 + APR / k)k - 1 = (1 + 0.0612 / 12)12 - 1 = 0.06295 or 6.300% ANSWER = C

Investment Rate Compounding A 6.25% Annual B 6.10% Daily C 6.125 Quarterly D 6.120 Monthly The lowest effective rate of return you could earn on any of these investments is closest to: A) 6.250% B) 6.267% C) 6.100% D) 6.300%

EAR (A) = (1 + APR / k)k - 1 = (1 + 0.0625 / 1)1 - 1 = 0.0625 or 6.250% EAR (B) = (1 + APR / k)k - 1 = (1 + 0.0610 / 365)365 - 1 = 0.06289 or 6.289% EAR (C) = (1 + APR / k)k - 1 = (1 + 0.06125 / 4)4 - 1 = 0.06267 or 6.267% EAR (D) = (1 + APR / k)k - 1 = (1 + 0.0612 / 12)12 - 1 = 0.06295 or 6.300% ANSWER=A

Investment Rate Compounding A 6.25% Annual B 6.10% Daily C 6.125 Quarterly D 6.120 Monthly Which alternative offers you the lowest effective rate of return? A) Investment A B) Investment B C) Investment C D) Investment D

EAR (A) = (1 + APR / k)k - 1 = (1 + 0.0625 / 1)1 - 1 = 0.0625 or 6.250% EAR (B) = (1 + APR / k)k - 1 = (1 + 0.0610 / 365)365 - 1 = 0.06289 or 6.289% EAR (C) = (1 + APR / k)k - 1 = (1 + 0.06125 / 4)4 - 1 = 0.06267 or 6.267% EAR (D) = (1 + APR / k)k - 1 = (1 + 0.0612 / 12)12 - 1 = 0.06295 or 6.300% ANSWER=A

Investment Rate Compounding A 6.25% Annual B 6.10% Daily C 6.125 Quarterly D 6.120 Monthly 23) Which alternative offers you the highest effective rate of return? A) Investment A B) Investment B C) Investment C D) Investment D

EAR (A) = (1 + APR / k)k - 1 = (1 + 0.0625 / 1)1 - 1 = 0.0625 or 6.250% EAR (B) = (1 + APR / k)k - 1 = (1 + 0.0610 / 365)365 - 1 = 0.06289 or 6.289% EAR (C) = (1 + APR / k)k - 1 = (1 + 0.06125 / 4)4 - 1 = 0.06267 or 6.267% EAR (D) = (1 + APR / k)k - 1 = (1 + 0.0612 / 12)12 - 1 = 0.06295 or 6.300% ANSWER=D

Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month). Your firm can borrow at 6% APR with quarterly compounding. The effective annual rate on your firm's borrowings is closest to: A) 6.00% B) 6.24% C) 6.17% D) 6.14%

EAR = (1 + APR / k)k - 1 = (1 + 0.06 / 4)4 - 1 = 0.06136 or 6.14% ANSWER D

Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month). Your firm can borrow at 6% APR with quarterly compounding. The monthly discount rate that you should use to evaluate the truck lease is closest to: A) 0.487% B) 0.512% C) 0.498% D) 0.500%

EAR = (1 + APR / k)k - 1 = (1 + 0.06 / 4)4 - 1 = 0.06136 or 6.14% Monthly rate = (1 + EAR)(1/12) - 1= (1.06136)(1/12) - 1 = 0.004975 = 0.498% ANSWER C

A bank offers a loan that will require you to pay 6% interest compounded monthly. Which of the following is closest to the EAR charged by the bank?

EAR= {(1+ APR)/m}m}-1 EAR= {1+0.06)/12}12-1 EAR= 0.0617 x 100= 6.17%

Financial statements are accounting reports issued periodically by a firm which present information on the past performance of the firm, a summary of the firm's assets and the financing of those assets, and a prediction of the firm's future performance.

False

T or F The annual percentage rate indicates the amount of interest, including the effect of any compounding?

False

T or F When there are large numbers of people looking to save their money and there is little demand for the loans, one would expect interest rates to be high ?

False

Howard is saving for a long holiday. He deposits a fixed amount every month in a bank account with an EAR of 7.5%. If this account pays interest every month then how much should he save from each monthly paycheck in order to have $10,000 in the account in 2 years' time?

First calculate the APR using an EAR of 7.5% and monthly compounding, which comes to 7.25%. Then using the periodic rate of 7.25/12, calculate the payment over 24 months that gives a future value (FV) of 10,000 C ($388)

A bank pays interest quarterly with an EAR of 8%. What is the periodic interest rate applicable per quarter?

First convert the EAR to APR with quarterly compounding, which equals 7.77%, now divide this by 4 to get the periodic interest rate = 1.94%

What are the main differences between the NYSE and NASDAQ stock markets?

The NYSE has a physical location, NYSE has one specialist in each stock, NASDAQ is an electronic market, NASDAQ has multiple market makers serving the functions of both matching buyers and sellers and trading on their own account.

You are considering purchasing a new truck that will cost you $34,000. The dealer offers you 1.9% APR financing for 48 months (with payments made at the end of the month). Assuming you finance the entire $34,000 and finance through the dealer, your monthly payments will be closest to: A) $708 B) $594 C) $736 D) $1086

First we need the monthly interest rate = APR / k = 0.019 / 12 = 0.001583 or 0.1583%. answer c $736

You are considering purchasing a new automobile that will cost you $28,000. The dealer offers you 4.9% APR financing for 60 months (with payments made at the end of the month). Assuming you finance the entire $28,000 and finance through the dealer, your monthly payments will be closest to: A) $1454 B) $527 C) $467 D) $478

First we need the monthly interest rate = APR / k = 0.049 / 12 = 0.004083 or 0.4083%. Answer B

Two years ago you purchased a new SUV. You financed your SUV for 60 months (with payments made at the end of the month) with a loan at 5.9% APR. You monthly payments are $617.16 and you have just made your 24th monthly payment on your SUV. The amount of your original loan is closest to: A) $37,000 B) $32,000 C) $20,300 D) $31,250

First we need the monthly interest rate = APR / k = 0.059 / 12 = 0.004917 or 0.4917%. ANSWER B

Assuming you pay the points and borrow from the mortgage lender at 6.00%, then your monthly mortgage payment (with payments made at the end of the month) will be closest to: A) $1540 B) $1530 C) $1570 D) $1500

First we need the monthly interest rate = APR / k = 0.0600 / 12 = 0.005000 or 0.50%. ANSWER B

You are purchasing a new home and need to borrow $250,000 from a mortgage lender. The mortgage lender quotes you a rate of 6.25% APR for a 30-year fixed rate mortgage. The mortgage lender also tells you that if you are willing to pay two points, they can offer you a lower rate of 6.0% APR for a 30-year fixed rate mortgage. One point is equal to 1% of the loan value. So if you take the lower rate and pay the points, you will need to borrow an additional $5000 to cover points you are paying the lender. Assuming you do not pay the points and borrow from the mortgage lender at 6.25%, then your monthly mortgage payment (with payments made at the end of the month) will be closest to: A) $1570 B) $1530 C) $1540 D) $1500

First we need the monthly interest rate = APR / k = 0.0625 / 12 = 0.005208 or 0.5208%. ANSWER C

Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an upfront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month). Your firm can borrow at 6% APR with quarterly compounding. The present value (PV) of the lease payments for the delivery truck is closest to: A) $206,900 B) $207,050 C) $207,680 D) $198,420

First we need to calculate the monthly discount rate for the lease arrangement. EAR = (1 + APR / k)k - 1 = (1 + 0.06 / 4)4 - 1 = 0.06136 or 6.14% Monthly rate = (1 + EAR)(1/12) - 1= (1.06136)(1/12) - 1 = 0.004975 = 0.4975% ANSWER B

What will be the effect on the balance sheet if a firm buys a new processing plant through a new loan?

The Assets side will increase under Net property, plant, and equipment with the net effect of the new processing plant while the Liabilities side will correspondingly show the new debt that was incurred in paying for the plant.

Which of the following statements regarding the income statement is INCORRECT? A) The income statement shows the earnings and expenses at a given point in time. B) The income statement shows the flow of earnings and expenses generated by the firm between two dates. C) The last or "bottom" line of the income statement shows the firm's net income. D) The first line of an income statement lists the revenues from the sales of products or services.

a. The income statement shows the earnings and expenses at a given point in time.

Company A has current assets of $42 billion and current liabilities of $31 billion. Company B has current assets of $2.7 billion and current liabilities of $1.8 billion. Which of the following statements is correct, based on this information? A) Company A is less likely than Company B to have sufficient working capital to meet its short-term needs. B) Company A has greater leverage than Company B. C) Company A has less leverage than Company B. D) Company A and Company B have roughly equivalent enterprise values.

a. company A is less likely than company B to have sufficient working capital to meet its short term needs company A has a ratio of 1.35 Company b has a ratio of 1.5 working capital indicates whether a company has enough short term assets to cover its short term debt. the company with a greater ratio is more sufficient in paying short term, debt

Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage? A) debt-equity or equity multiplier ratio B) market-to-book ratio C) market debt-equity ratio D) current or quick ratio

a. debt-equity or equity multiplier ratio

A small company has current assets of $112,000 and current liabilities of $117,000. Which of the following statements about that company are most likely to be true? A) Since net working capital is negative, the company will not have enough funds to meet its obligations. B) Since net working capital is high, the company will likely have little difficulty meeting its obligations. C) Since net working capital is very high, the company will have ample money to invest after it meets its obligations. D) Since net working capital is nearly zero, the company is well run and will have little difficulty attracting investors.

a. since net working capital (assets- liabilities) is negative, the company will not have enough funds to meet its obligations

What is the main problem in using a balance sheet to provide an accurate assessment of the value of a company's equity? A) Valuable assets such as the company's reputation, the quality of its work force, and the strength of its management are not captured on the balance sheet. B) The balance sheet does not accurately represent the book value of assets held by the company. C) The equity shown on the balance sheet does not reflect the market capitalization of the company. D) Knowing at a single point in time what assets a firm possesses and the liabilities a firm owes does not give any indication of what those assets can produce in the future.

a. valuable assets such as company reputation, the quality of workforce, and the strength of its management are not captured on the balance sheet

What are the terms for the two types of prices quoted for a stock on an exchange?

ask price and bid price

A company's board of directors chooses to provide a comprehensive health care plan for the families of all employees, despite the large cost. They argue that this will not only increase the number of employees who stay with the firm, and thus reduce some costs involved in employee turnover, but also increase the employees' diligence and industry. What general principle is being argued by the board of directors? A) In a conflict between stakeholders in a company, the most important stakeholder is not always the stockholders. B) Some activities that decrease shareholders' wealth may have intangible benefits which increase the strength of the company overall. C) When a conflict of interest arises between shareholders and other stakeholders, in general, the correct solution is the one that creates the greatest good for the greatest number of stakeholders. D) Ethical decisions should be assessed on their moral value, not on their value in dollars and cents.

b) Some activities that decrease shareholders' wealth may have intangible benefits which increase the strength of the company overall.

Which of the following is NOT a financial statement that every public company is required to produce? A) income statement B) statement of sources and uses of cash C) balance sheet D) statement of stockholders' equity

b. statement of sources and used of cash

A delivery company is creating a balance sheet. Which of the following would most likely be considered a short-term liability on this balance sheet? A) the depreciation over the last year in the value of the vehicles owned by the company B) revenue received for the delivery of items that have not yet been delivered C) a loan which must paid back in two years' time D) prepaid rent on the offices occupied by the company

b. the revenue received for the delivery of items that have not yet been delivered

A factory owner wants his workers to produce as many widgets as they can, so he pays his workers based on how many widgets they produce. However, in order to make sure that the workers do not rush and produce a large number of poorly made widgets, he checks the widgets at random at various stages of their manufacture. If a defect is found in a widget, the pay of the entire section of the factory responsible for that defect is docked. How is this factory owner seeking to solve the agency conflict problem in this case?

by supplying incentives so the agents act in the way principal desires

A company that produces drugs is preparing a balance sheet. Which of the following would be most likely to be considered a long-term asset on this balance sheet? A) commercial paper held by the company B) the inventory of chemicals used to produce the drugs made by the company C) a patent for a drug held by the company D) the cash reserves of the company

c. a patent for a drug held by the company

Which of the following balance sheet equations is INCORRECT? A) Assets - Liabilities = Shareholders' Equity B) Assets = Liabilities + Shareholders' Equity C) Assets - Current Liabilities = Long Term Liabilities D) Assets - Current Liabilities = Long Term Liabilities + Shareholders' Equity Answer: C

c. assets-current liabilities = long term liabilities

Which of the following amounts would NOT be included on the right side of a balance sheet? A) the value of government bonds held by the company B) the cash held by the company C) the amount of deferred tax liability held by the company D) the amount of money owed to the company by customers who have not yet paid for goods and services they have received

c. the amount of differed tax liability held by the company

Which of the following best describes why the left and right sides of a balance sheet are equal? A) In a properly run business, the value of liabilities will not exceed the assets held by the company. B) By definition, the assets plus the liabilities will be the same as the stockholders' equity. C) The assets must equal liabilities plus stockholders' equity, because stockholders' equity is the difference between the assets and the liabilities. D) By accounting convention, the assets of a company must be equal to the liabilities of that company.

c. the assets must equal the liabilities plus stockholders equity because stockholders equity is the difference between the assets and liabilities

An 8% APR with monthly compounding is closest to which of the following?

can use the financial calculator or the formula EAR= {(1+0.08 / 12} 12-1= 8.3%

Which of the following is NOT considered to be an operating expense on the income statement? A) administrative expenses and overhead B) corporate taxes C) salaries D) depreciation and amortization

corporate taxes

cash is a ?

current asset

The third party who checks annual financial statements to ensure that they are prepared according to Generally Accepted Accounting Principles (GAAP) and verifies that the information reported is reliable is the A) NYSE Enforcement Board. B) Accounting Standards Board. C) Securities and Exchange Commission (SEC). D) auditor.

d. auditor

Accounts payable is a A) Long-Term Liability. B) Current Asset. C) Long-Term Asset. D) Current Liability.

d. current liability

Which of the following statements regarding the balance sheet is INCORRECT? A) The balance sheet provides a snapshot of the firm's financial position at a given point in time. B) The balance sheet lists the firm's assets and liabilities. C) The balance sheet reports stockholders' equity on the right-hand side. D) The balance sheet reports liabilities on the left-hand side.

d. the balance sheet reports liabilities on the left hand side

International Financial Reporting Standards are taking root throughout the world. However, it is unlikely that the U.S. will report according to IFRS before the second half of the twenty-first century.

false

true or false The balance sheet shows the assets, liabilities, and stockholders' equity of a firm over a given length of time.`

false

What is a firm's gross profit?

the difference between sales revenue and the costs associated with those sales

Which of the following is NOT one of the financial statements that must be produced by a public company?

the statement of activities

The above diagram shows a balance sheet for a certain company. All quantities shown are in millions of dollars. What is the company's net working capital?

total current assets- total current liabilities

t or f Stockholders' equity is the difference between a firm's assets and liabilities, as shown on the balance sheet.

true

t or f In general, a successful firm will have a market-to-book ratio that is substantially greater than 1.

true