ch3 - Question 1 (1 point) Which of the following...

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Unformatted text preview: Question 1 (1 point) Which of the following statements is CORRECT? Student response: Student Response Answer Choices a. The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets. b. The statement of cash flows shows where the firm's cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit. c. The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital. d. The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock. e. The statement of cash flows shows how much the firm's cash--the total of currency, bank deposits, and short-term liquid securities (or cash equivalents)--increased or decreased during a given year. Score: 1 / 1 Question 2 (1 point) Below are the 2005 and 2006 year-end balance sheets for Wolken Enterprises: Assets: 2006 2005 Cash $ 200,000 $ 170,000 Accounts receivable 864,000 700,000 Inventories 2,000,000 1,400,000 Total current assets $ 3,064,000 $2,270,000 Net fixed assets 6,000,000 5,600,000 Total assets $ 9,064,000 $7,870,000 Liabilities and equity: Accounts payable $ 1,400,000 $1,090,000 Notes payable 1,600,000 1,800,000 Total current liabilities $ 3,000,000 $2,890,000 Long-term debt 2,400,000 2,400,000 Common stock 3,000,000 2,000,000 Retained earnings 664,000 580,000 Total common equity $ 3,664,000 $2,580,000 Total liabilities and equity $ 9,064,000 $7,870,000 Wolken has never paid a dividend on its common stock, and it issued $2,400,000 of 10- year non-callable, long-term debt in 2005. As of the end of 2006, none of the principal on this debt had been repaid. Assume that the companys sales in 2005 and 2006 were the same. Which of the following statements must be CORRECT? Student response: Score: 1 / 1 Question 3 (1 point) The Nantell Corporation just purchased an expensive piece of equipment. Assume that the firm planned to depreciate the equipment over 5 years on a straight-line basis, but Congress then passed a provision that requires the company to depreciate the equipment on a straight-line basis over 7 years. Other things held constant, which of the following will occur as a result of this Congressional action? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes. Student response: Score: 0 / 1 Question 4 (1 point) Below are the 2005 and 2006 year-end balance sheets for Wolken Enterprises: Assets: 2006 2005 Cash $ 200,000 $ 170,000 Accounts receivable 864,000 700,000 Inventories 2,000,000 1,400,000 Total current assets $ 3,064,000 $2,270,000 Net fixed assets 6,000,000 5,600,000 Total assets $ 9,064,000 $7,870,000 Liabilities and equity: Accounts payable $ 1,400,000 $1,090,000 Notes payable 1,600,000 1,800,000 Total current liabilities $ 3,000,000 $2,890,000 Long-term debt 2,400,000 2,400,000 Common stock 3,000,000 2,000,000 Retained earnings 664,000...
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ch3 - Question 1 (1 point) Which of the following...

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