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