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Chap002Practice - Chapter 02 Financial Statements Taxes and...

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Chapter 02 Financial Statements, Taxes, and Cash Flow 1. Noncash items refer to: A. accrued expenses. B. inventory items purchased using credit. C. the ownership of intangible assets such as patents. D. expenses which do not directly affect cash flows. E. sales which are made using store credit. 2. The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the: A. operating cash flow. B. net capital spending. C. net working capital. D. net cash flow. E. cash flow to stockholders. 3. Which one of the following is included in a firm's market value but yet is excluded from the firm's accounting value? 4. Which one of the following will increase the value of a firm's net working capital? 5. Which one of the following statements concerning net working capital is correct? 6. Shareholders' equity: A. increases in value anytime total assets increases. B. is equal to total assets plus total liabilities. C. decreases whenever new shares of stock are issued. D. includes long-term debt, preferred stock, and common stock. E. represents the residual value of a firm. 2-1
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7. The higher the degree of financial leverage employed by a firm, the: 8. The book value of a firm is:
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