Chapter 17 MC - CHAPTER SEVENTEEN Multiple Choice Questions...

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CHAPTER SEVENTEEN Multiple Choice Questions 17-1. Working capital includes all but which of the following: a. accounts payable b. accounts receivable c. marketable securities d. prepaid expenses 17-2. The level of net working capital is affected by all but which of the following: a. notes payable b. cash c. retained earnings d. marketable securities 17-3. Net working capital equals: a. total assets - (total liabilities + equity) b. current assets - current liabilities c. temporary current assets - permanent current assets d. total assets - total liabilities 17.4. Working capital is the amount of a. LT debt b. equity c. cash and near-cash assets d. current liabilities 17-5. A base level of inventory, cash, marketable securities, prepaid expenses, and accounts receivable is best described as: a. permanent current assets b. permanent net working capital c. fixed assets d. fluctuating assets 17-6. The trade off of holding cash versus a high returning fixed asset is called: a. the net working capital trade off b. profitability versus net working capital trade off c. liquidity versus permanent asset trade off d. liquidity versus profitability trade off 17-7. An optimal level of current assets is reached when: 204
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a. optimal levels of cash, inventory, and accounts receivable are achieved b. an optimal level of debt financing is achieved to fund current assets c. cash, a non-earning asset, is minimized d. minimum levels of all current assets are maintained 17-8. With respect to debt financing, which of the following statements is most accurate from the perspective of the firm seeking funds? a. short-term loans are more risky and usually less expensive than long-term loans b. short-term loans are more risky and usually more expensive than long-term debt c. short-term loans are more risky and usually more expensive than equity d. short-term loans are less risky and usually less expensive than equity 17-9. A firm that uses more short-term financing to finance most of its assets, all else equal, is: a. using a conservative approach b. using a moderate approach c. using an aggressive approach d. using a combination approach 17-10. Which of the following financing approaches is the most aggressive financing approach? a. financing temporary current assets, permanent current assets, and some long- term fixed assets with short-term debt b. financing temporary current assets with short-term debt, all other assets with long-term debt and/or equity c. financing temporary current assets, permanent current assets, and long-term fixed assets with long-term debt and/or equity d.
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This note was uploaded on 01/21/2011 for the course ACC 452 taught by Professor Mr.cula during the Spring '10 term at Abraham Baldwin Agricultural College.

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Chapter 17 MC - CHAPTER SEVENTEEN Multiple Choice Questions...

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