CH02TBV7 - CHAPTER 2 Financial Statements, Taxes, and Cash...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 2 Financial Statements, Taxes, and Cash Flow I. DEFINITIONS BALANCE SHEET b 1. The financial statement showing a firm’s accounting value on a particular date is the: a. income statement. b. balance sheet. c. statement of cash flows. d. tax reconciliation statement. e. shareholders’ equity sheet. CURRENT ASSETS c 2. A current asset is: a. an item currently owned by the firm. b. an item that the firm expects to own within the next year. c. an item currently owned by the firm that will convert to cash within the next 12 months. d. the amount of cash on hand the firm currently shows on its balance sheet. e. the market value of all items currently owned by the firm. LONG-TERM DEBT b 3. The long-term debts of a firm are liabilities: a. that come due within the next 12 months. b. that do not come due for at least 12 months. c. owed to the firm’s suppliers. d. owed to the firm’s shareholders. e. the firm expects to incur within the next 12 months. NET WORKING CAPITAL e 4. Net working capital is defined as: a. total liabilities minus shareholders’ equity. b. current liabilities minus shareholders’ equity. c. fixed assets minus long-term liabilities. d. total assets minus total liabilities. e. current assets minus current liabilities. LIQUID ASSETS d 5. A(n) ____ asset is one which can be quickly converted into cash without significant loss in value. a. current b. fixed c. intangible d. liquid e. long-term
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
CHAPTER 2 FINANCIAL LEVERAGE a 6. Financial leverage refers to the: a. amount of debt used in a firm’s capital structure. b. ratio of retained earnings to shareholders’ equity. c. ratio of paid-in surplus to shareholders’ equity. d. ratio of cost-of-goods-sold to total sales. e. amount of receivables present in the firm’s asset structure. GAAP c 7. The common set of standards and procedures by which audited financial statements are prepared is known as the: a. matching principle. b. cash flow identity. c. Generally Accepted Accounting Principles (GAAP). d. Freedom of Information Act (FOIA). e. 1993 Omnibus Budget Reconciliation Act. INCOME STATEMENT a 8. The financial statement summarizing a firm’s performance over a period of time is the: a. income statement. b. balance sheet. c. statement of cash flows. d. tax reconciliation statement. e. shareholders’ equity sheet. NONCASH ITEMS d 9. Noncash items refer to: a. the credit sales of a firm. b. the accounts payable of a firm. c. the costs incurred for the purchase of intangible fixed assets. d. expenses charged against revenues that do not directly affect cash flow. e. all accounts on the balance sheet other than cash on hand. MARGINAL TAX RATES e 10. Your _____ tax rate is the amount of tax payable on the next taxable dollar you earn. a.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 21

CH02TBV7 - CHAPTER 2 Financial Statements, Taxes, and Cash...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online