Business Finance Chapter 2

Which one of the following accounts is the most liquid?

Accounts receivable

Total income taxes divided by total taxable income equals the ______ tax rate.

Average

Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?

Balance sheet

The book value of a firm is:

Based on historical transactions

Which of the following actions could cause a company's change in net working capital to be negative for a given year?

Borrow money from the bank using a note payable in nine months

Net working capital is defined as:

Current assets minus current liabilities

Which one of the following determines the standards and procedures with which audited financial statements are prepared?

Generally accepted accounting principles

Which one of the following financial statements summarizes a firm's revenue and expenses during a period of time?

Income statement

Which one of the following is an expense for accounting purposes, but is not an operating cash flow for financial purposes?

Interest expense

The ______ tax rate is the percentage of the last dollar you earned that must be paid in taxes.

Marginal

The cash flow that results from a company's ongoing, normal business activities is called:

Operating cash flow

A positive cash flow to stockholders indicates which one of the following with certainty?

The dividends paid exceeded the net new equity raised

The balance sheet

It is a convenient means of organizing and summarizing what a firm owns (its assets), what a firm owes (its liabilities), and the difference between the two (the firm's equity) at a given point in time.