Finance Homework

Wages are considered

an operating expense.

An obligation the firm is expected to meet within the next year is called

A current liability

A firm's blank are the value of the firm's long term assets (including property, plant and equipment) minus the assets' blank.

A firm's net fixed assets are the value of the firm's long term assets minus the assets' accumulated depreciation.

The firm issued new long term bonds at their par value of 100,000. Blank will increase by 100 Blank will increase by 100

Cash will increase by 100 Long term debt will increase by 100

This month's sales are 200, although the firm has received only 150 in cash. Blank will increase by 150 Blank will increase by 50 Blank will increase by 200

Cash will increase by 150 Accounts payable by 50 Sales revenue will increase by 200

A customer pays 75 to settle its account with the firm. Blank will increase by 7500. Blank will decrease by 7500.

Cash will increase by 75 Accounts payable will decrease by 75.

The account labeled blank represents an ownership stake in the company.

Common stock

If you add up all the depreciation expenses from each year of a firm's existence, that equals accumulated depreciation.

False. Accumulated depreciation represents the sum of expenses taken on the firms fixed assets however, depreciation expenses are retired and go off the balance sheet.

Buys back shares of common stock

Financing

Preferred stock common stock Notes payable

Financing

Issues new notes payable

Financing.

The firm buys land with 100,000 in cash to use in a future project: Blank will increase by 100000. Blank will decrease by 100000

Fixed assets will increase by 100 Cash will decrease by 100

Buys new equipment and machinery:

Investing

Land, equiptment and machinery

Investing

Sells tract of land it has held for years:

Investing

Issues new shares of perferred stock

financing

On the income statement, interest expense is blank, preferred dividends and common dividends are blank

interest expense is tax deductible and reduces income tax. Common dividends and preferred dividends are not Tax deductible and are after tax.

With its earnings, a firm has a decision to make about whether to pay common dividends or

reinvest in future growth.

If a firm buys materials on credit from a supplier, blank has been created.

Account payable

The firm uses credit to purchase raw materials for production worth 15,000. Blank will increase by 15000 Blank will increase by 15000

Accounts payable increases by 15,000. Inventory will increase by 15

The firm sells inventory valued at 40 to a customer for 50 in cash. Blank will decrease by 40 Blank will increase by 4o Blank will increase by 5o Blank will increase by 50

Cost of goods sold increase by 40 Inventory will decrease by 40. Cash wiill increase Sales rev will incresae by 50

Improves profit margin and increases net income:

Operating

Increases its use of trade credit from suppliers

Operating

Tightens its credit policy with its customers:

Operating

The firm pays monthly rent and utilities of 6000 in cash. Blank will increase by 6. Blank will decrease by 6.

Operating expense will increase by 6 Cash will decrease by 6

buying on credity (account payable) Earning net income Changing credit policy (accounts receivable)

Operating.

A company usually expenses a blank when it incurs them, because the future benefits that this spending is expected to bring are very uncertain and difficult to time.

Research and development expense.