Chapter 2 HW

Gino's Winery has net working capital of $29,800, net fixed assets of $64,800, current liabilities of $34,700, and long-term debt of $23,000. What is the value of the owners' equity?

$71,600 ($29,800 + 64,000 - 23,000)

Which one of the following has nearly the same meaning as free cash flow?

Cash flow from assets

The passage of the Tax Cuts and Jobs Act of 2017 created a revised progressive tax structure, which applies to all of the following except

Corporations

Net Capital Spending is equal to

Ending net fixed assets minus beginning net fixed assets plus depreciation

Cash flow to creditors is defined as

Interest paid minus net new borrowing

Generally Accepted Accounting Principles, as they relate to the Income Statement includes the recognition principle: to recognize revenue when the earnings process is virtually complete and the value of an exchange of goods or services is known or can be reliably determined. Which of the following statements is true with regard to this principle?

Revenue is recognized at the time of sale. Costs associated with the sale of that product likewise would be recognized at that time

The recognition principle states that

Sales should be recorded when the earnings process is virtually completed and the value of the sale can be determined

The matching principle states that

The costs of producing an item should be recorded when the sale of that item is recorded as revenue

The financial statement that summarizes a firm's accounting value as of a particular date is called the

balance sheet

The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the

income statement