Finance test 1 chapter 2

net working capital is defined as current assets minus current liabilities
the accounting statement which measures the revenues, expenses and net income of a firm over a period of time is called the income statement
the financial statement that summarizes a firms accounting value as a particular date is called the balance sheet
which one of the following decreases net income but does not affect the operating cash flow of a firm which owes no taxes for the current year noncash item
which one of the following terms is defined as the total tax paid divided by the total taxable income average tax rate
which of the following is the tax rate that applies to the next dollar of taxable income that a firm earns marginal tax rate
cash flow assets is defined as operating cash flow minus the change in net working capital minus net capital spending
operating cash flow is defined as the cash that a firm generates from its normal business activities
which one of the following has nearly the same meaning as free cash flow cash flow from assets
cash flow to creditors is defined as interest paid minus net new borrowing
cash flow to stockholders is defined as dividends paid minus net new equity raised
which one of the following is an intangible fixed asset copyright
delivery trucks are classified as tangible fixed assets
which one of the following is included in net working capital accounts payable
over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm’s net working capital: had to decrease
which one of the following is included in net working capital invoice from a supplier for inventory purchased
shareholders equity is equal to net fixed assets minus long-term debt plus net working capital
which one of the following is an equity account paid in surplus
which one of the following statements is correct shareholders equity is the residual value of a firm
all else equal, an increase in which one of the following will decrease owners equity increase in accounts payable
which one of the following will decrease the net working capital of a firm making a payment on a long-term debt
which one of the following will decrease the liquidity level of a firm cash purchase of inventory
highly liquid assets can be sold quickly at close to full value
financial leverage increases the potential return to the shareholders
which one of the following statements concerning market and book values is correct the market value tends to provide a better guide to the actual worth of an asset than does the book value
which one of the following is included in the market value of a firm but not in the book value reputation of the firm
the market value of a firms fixed assets: is equal to the estimated current cash value of those assets
which one of the following statements is correct concerning a firms fixed assets? the market value is the expected selling price in today’s economy
which one of the following statements concerning the balance sheet is correct assets are listed in descending order of liquidity
an income statement prepared according to GAAP records expenses based on the matching principle
an increase in which one of the following will increase net income revenue
which two of the following determine when revenue is recorded on the financial statements based on the recognition principle the earnings process is virtually complete the value of a sale can be reliably determined
depreciation does which one of the following for a profitable firm lowers taxes
the recognition principle states that sales should be recorded when the earnings process is virtually completed and the value of the sale can be determined
the matching principle states that the costs of producing an item should be recorded when the sale of that item is recorded as revenue
which one of the following statements related to the income statement is correct net income is distributed either to dividends or retained earnings
firms that compile financial statements according to GAAP can still manipulate their earnings to some degree
the concept of marginal taxation is best exemplified by which one of the following Mitchells grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes
The corporate tax structure in the U.S. is based on a modified flat-rate tax
which one of the following will increase the cash flow from assets for a tax-paying firm, all else constant an increase in depreciation
a negative cash flow to stockholders indicates a firm received more from selling stock than it paid out to shareholders
if a firm has a negative cash flow from assets every year for several years, the firm may be continually increasing in size
an increase in which one of the following will increase operating cash flow for a profitable, tax-paying firm depreciation
tressler industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend. The cash flow statement for last year must have which one of the following assuming that no new shares were issued positive cash flow to stockholders
net capital spending is equal to ending net fixed assets minus beginning net fixed assets plus depreciation
which one of the following relates to a negative change in net working capital increase in current liabilities with no change in current assets for the period
which one of the following will increase cash flow from assets but not affect the operating cash flow sale of a fixed asset
cash flow to creditors is equal to beginning long-term debt minus ending long-term debt plus interest paid
which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period positive cash flow from assets

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