Page 1 of 170,//Exam Prep 2025/ 2026
Test Bank-Fundamentals of Corporate
Finance 10th Edition Ross-FIN 10
Chapter 02
Financial Statements, Taxes, and Cash Flow
Multiple Choice Questions
1. Which one of the following is the financial statement that shows the accounting
value of a firm's equity as of a particular date?
A. income statement
B. creditor's statement
C. balance sheet
D. statement of cash flows
E. dividend statement
,Page 2 of 170,//Exam Prep 2025/ 2026
2. 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.
,Page 3 of 170,//Exam Prep 2025/ 2026
3. 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.
D. Financial Accounting Reporting Principles.
E. Standard Accounting Value Guidelines.
4. Which one of the following is the financial statement that summarizes a firm's
revenue and expenses over a period of time?
A. income statement
B. balance sheet
C. statement of cash flows
D. tax reconciliation statement
E. market value report
, Page 4 of 170,//Exam Prep 2025/ 2026
5. 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.
6. The percentage of the next dollar you earn that must be paid in taxes is referred to
as the tax rate.
A. mean
B. residual
C. total
D. average
E. marginal
7. The tax rate is equal to total taxes divided by total taxable income.
A. deductible
B. residual
C. total
D. average
E. marginal
Test Bank-Fundamentals of Corporate
Finance 10th Edition Ross-FIN 10
Chapter 02
Financial Statements, Taxes, and Cash Flow
Multiple Choice Questions
1. Which one of the following is the financial statement that shows the accounting
value of a firm's equity as of a particular date?
A. income statement
B. creditor's statement
C. balance sheet
D. statement of cash flows
E. dividend statement
,Page 2 of 170,//Exam Prep 2025/ 2026
2. 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.
,Page 3 of 170,//Exam Prep 2025/ 2026
3. 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.
D. Financial Accounting Reporting Principles.
E. Standard Accounting Value Guidelines.
4. Which one of the following is the financial statement that summarizes a firm's
revenue and expenses over a period of time?
A. income statement
B. balance sheet
C. statement of cash flows
D. tax reconciliation statement
E. market value report
, Page 4 of 170,//Exam Prep 2025/ 2026
5. 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.
6. The percentage of the next dollar you earn that must be paid in taxes is referred to
as the tax rate.
A. mean
B. residual
C. total
D. average
E. marginal
7. The tax rate is equal to total taxes divided by total taxable income.
A. deductible
B. residual
C. total
D. average
E. marginal
