ch.3 - 1. Net working capital is equal to current assets...

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1. Net working capital is equal to current assets minus accounts payable and accruals. Answer True False 10 points Question 2 1. Assume that two firms are both following generally accepted accounting principles. Both firms commenced operations two years ago with $1 million of identical fixed assets, and neither firm either sold any of those assets or purchased any new fixed assets. The two firms would be required to report the same amount of net fixed assets on their balance sheets as those statements are presented to investors. Answer True False 10 points Question 3 1. The annual report contains four basic financial statements: the income statement, the balance sheet, the cash flow statement, and statement of stockholders' equity. Answer True False 10 points Question 4 1. Which of the following statements is CORRECT? Answer The income of certain small corporations that qualify under the Tax Code is completely exempt from corporate income taxes. Thus, the federal government receives no tax revenue from these businesses, even though they report high accounting profits. All businesses, regardless of their legal form of organization, are taxed under the Business Tax Provisions of the Internal Revenue Code. Small corporations that qualify under the Tax Code can elect not to pay corporate taxes, but then each stockholder must report his or her pro rata shares of the firm’s income as personal
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ch.3 - 1. Net working capital is equal to current assets...

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