CH02 Finance
What is treasury stock?
Stock the firm has repurchased
A balance sheet shows what a firm owns and how it is financed (T or F)
True
(easiest to hardest) Rank the ease of turning the following assets into cash. 1.Plant and equipment 2.Cash equivalents 3.Inventory 4.Accounts receivable
1. Cash Equivalents 2.Accounts receivable 3.Inventory 4. Plants and Equipment
EBIT stands for
Earnings before interest and taxes
EPS stands for...
Earnings per share
What can balance sheets answer?
How much debt is used to finance a firm What is the total amount of assets the firm owns.
Assets are listed on a balance sheet in which order?
In order of time it would take an ongoing firm to convert them into cash.
What are two classifications of costs used by financial accountants?
Product and Period
What is included in a firm's inventory?
Raw materials Finished goods Work in progress
One of the most important limitations of a ______ _____________ is that it shows only __________________, rather than market value
balance sheet ; cost
On a balance sheet, total assets must always equal total liabilities plus ________.
equity
the activity of making net payments to creditors and owners is called a(n) _____________ activity in the accounting statement of cash flows
financing
_________ refers to the ease in which assets can be turned into ________
liquidity;cash
The accounting equation shows that stockholders' equity equals assets _____ liabilities.
minus
The short run for a firm is the period of time during which
output can vary some costs are fixed
The last claimants to be paid by a firm are the ______
stockholders
Cash flows from operations is calculated by adding depreciation to EBIT and _____________ current taxes.
subtracting
What does a balance sheet reflect about a firm?
Accounting value on a specific date
What is on the left side of a balance sheet?
Assets
A(n) __________ refers to a decline in the value of a company's assets.
write-off
What does a stockholders' equity represent?
A residual claim against firms' assets
A balance sheet reflects a firm's ________ value on a particular date.
accounting
When a customer purchases an item on credit, the purchase amount is recorded in the books of the seller in which account?
accounts receivable