FRL 300 Chp 2

which on of the following represents the most liquid asset?

$100 of inventory that is sold today for $100 cash

the cash flow of a firm which is available for distribution to the firms creditors and stockholders is called the

cash flow from assets

which of the following is true according to GAAP?

COGS are recorded based on the matching principle

the common set of standards and procedures by which audited financial statements are prepared is known as the

GAAP

net capital spending

is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense

which one of the following statements concerning net working capital is correct

a decrease in the cash balance also decreases net working capital

as of 2008, which one of the following statements concerning corporate income taxes is correct?

a firm's tax is computed on an incremental basis

which one of the following statements related to the cash flow to creditors is correct

a positive cash flow to creditors represents a net cash outflow form the firm

which one of the following accounts is the most liquid?

accounts receivable

which one of the following statements is correct concerning a corporation with taxable income of ___

an increase in depreciation will increase the operating cash flow

The ______ tax rate is equal to total taxes divided by total taxable income

average

which one of the following is the financial statements that shows the accounting value of a firms equity as of a particular date

balance sheet

The book value of a firm is:

based on historical cost

the cash flow related to interest patents less any net new borrowing is called the

cash flow to creditors

Which one of the following is most apt to cause the market value of this store to be lower than the book value?

construction of a new restricted access highway located between the store and the surrounding residential area

net working capital is defined as

current asserts minus current liabilities

which one of the following will increase the cash flow from assets, all else equal?

decrease in net capital spending

an increase in the depreciation expense will do which of the following

decrease net income, increase the cash flow form assets

which one of the following costs is most apt to be a fixed cost

deprecation

for a tax-paying firm, an increase in___ will cause the cash flow from assets to increase

depreciation

cash flow to stockholders is defined as

dividend payments less net new equity raised

noncash items refer to

expenses which do not directly affect cash flows

cash flow from assets is also known as the firm's

free cash flow

which one of the following is included in a firm's market value but yet is excluded from the firm's accounting value?

good reputation of the company

the higher degree of financial leverage employed by a firm, the :

higher the probability that the firm will encounter financial distress

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

income sheet

which one of the following is not included in cash flow from assets

interest expense

which of the following are expenses for accounting purposes but are not operating cash flows for financial purposes

interest expense and depreciation

which one of the following are current assets

inventory and cash

which one of the following statements regarding liquidity is correct?

liquid assets are valuable to a firm

the percentage of the next dollar you earn must be paid in taxes is referred to as the _____ tax rate

marginal

which one of the following statements concerning net working capital is correct?

net working capital increases when inventory is sold for cash at a a profit

which one of the following are included in current liabilities

note payable to a supplier in 8 months and loan payable to the bank in 14 months

Which one of these is the most apt to be a fixed cost

office salaries

which term relates to the cash row which results from a firm's ongoing, normal business activities?

operating cash flow

depreciation

reduces both taxes and net income

shareholders equity

represents the residual value of a firm

which one of the following will increase the value of a firm's net working capital?

selling inventory at a profit

which one of the following statements related to an income statement is correct?

taxes reduce both net income and operationg cash flow

a positive cash flow to stockholders indicates which one of the following

the dividends paid exceeded the net new equity raised

which one of the following must be true if a firm had a negative cash flow from assets

the firm utilized outside funding

which one of the following statements related to an income statement is correct? assume accrual accounting

the labor costs for producing a product are expenses when the product is sold

which one of the following statements related to taxes is correct

the marginal tax rate fir a firm can be wither higher or lower than the average tax rate

which one of the following is classified as an intangible fixed asset?

trademark

which of the following are included in the market value of a firm but are excluded from the firms book value?

value of management skills, value of a firms reputation and value of a employees experience