BUSI 408 Midterm
According to GAAP, costs are: matched with revenues
Accounting profits and cash ...generally not the same since GAAP allows for revenue
flows are... recognition separate from the receipt of cash flows
All else constant, the net present the rate of return decreases
value of a typical investment
project increases when:
The annual percentage rate the effective annual rate when the rate on an account is
equals: designated as simple interest
An annuity stream of cash flow level cash flows occurring each time period for a fixed length of
payments is a set of: time
An annuity stream where the a perpetuity
payments occur forever is called:
Art's Boutique has sales of Taxable income = $640,000 - $480,000 - $40,000 - $60,000 =
$640,000 and costs of $480,000. $60,000; Tax = .34($60,000) = $20,400; Net income = $60,000 -
Interest expense is $40,000 and $20,400 = $39,600
depreciation is $60,000. The tax
rate is 34%. What is the net
income?
As seen on an income statement: depreciation reduces both the pretax income and the net income
A _______ asset is one which can be Liquid
quickly converted into cash
without significant loss in value
Assets= Liabilities + Stockholder's equity
Assets are listed on the balance decreasing liquidity
sheet in order of:
Assets that have short lives, such Current Assets
as inventory
Assets that will last a long time, Fixed Assets
such as buildings
Book value: is based on historical cost
Brad's Company has equipment Liquid assets = $400 + $50 + $300 = $750
with a book value of $500 that
could be sold today at a 50%
discount. Its inventory is valued at
$400 and could be sold to a
competitor for that amount. The
firm has $50 in cash and
customers owe it $300. What is
the accounting value of its liquid
assets?
, BUSI 408 Midterm
The _____ breaks down return on Du Pont identity
equity into three component
parts.
A business owned by one person A sole proprietorship
A capital budgeting decision Deciding whether or not to open a new store
could be...
Capital spending= Ending net fixed assets—Beginning net fixed assets
The carrying value or book value is determined under GAAP and is based on the cost of the asset
of assets:
The cash flow of the firm must be cash flow to stockholders plus cash flow to debtholders
equal to:
The cash flows of a new project erosion costs
that come at the expense of a
firm's existing projects are called:
The changes in a firm's future incremental
cash flows that are a direct
consequence of accepting a
project are called ________ cash
flows
A constant stream of cash flows Perpetuity
without end
A correct statement concerning Balance sheet accounts are listed in order of decreasing liquidity
liquidity?
Current Assets—Current Net working capital
Liabilities=
cash, accounts receivable, inventory, marketable securities,
Current Assets include: prepaid expenses and other liquid assets that can be readily
converted to cash.
The current ratio is measured as: Current Assets divided by Current Liabilities
The debt-equity ratio is measured debt divided by total equity
as total:
The decisions made by financial market value of the existing owners' equity
managers should all be ones
which increase the..
The depreciation method MACRS
currently allowed under U.S. tax
law governing the accelerated
write-off of property under
various lifetime classifications is
called _____ depreciation.
discounting all expected future cash flows to reflect the time value
Discounting cash flows involves:
of money
According to GAAP, costs are: matched with revenues
Accounting profits and cash ...generally not the same since GAAP allows for revenue
flows are... recognition separate from the receipt of cash flows
All else constant, the net present the rate of return decreases
value of a typical investment
project increases when:
The annual percentage rate the effective annual rate when the rate on an account is
equals: designated as simple interest
An annuity stream of cash flow level cash flows occurring each time period for a fixed length of
payments is a set of: time
An annuity stream where the a perpetuity
payments occur forever is called:
Art's Boutique has sales of Taxable income = $640,000 - $480,000 - $40,000 - $60,000 =
$640,000 and costs of $480,000. $60,000; Tax = .34($60,000) = $20,400; Net income = $60,000 -
Interest expense is $40,000 and $20,400 = $39,600
depreciation is $60,000. The tax
rate is 34%. What is the net
income?
As seen on an income statement: depreciation reduces both the pretax income and the net income
A _______ asset is one which can be Liquid
quickly converted into cash
without significant loss in value
Assets= Liabilities + Stockholder's equity
Assets are listed on the balance decreasing liquidity
sheet in order of:
Assets that have short lives, such Current Assets
as inventory
Assets that will last a long time, Fixed Assets
such as buildings
Book value: is based on historical cost
Brad's Company has equipment Liquid assets = $400 + $50 + $300 = $750
with a book value of $500 that
could be sold today at a 50%
discount. Its inventory is valued at
$400 and could be sold to a
competitor for that amount. The
firm has $50 in cash and
customers owe it $300. What is
the accounting value of its liquid
assets?
, BUSI 408 Midterm
The _____ breaks down return on Du Pont identity
equity into three component
parts.
A business owned by one person A sole proprietorship
A capital budgeting decision Deciding whether or not to open a new store
could be...
Capital spending= Ending net fixed assets—Beginning net fixed assets
The carrying value or book value is determined under GAAP and is based on the cost of the asset
of assets:
The cash flow of the firm must be cash flow to stockholders plus cash flow to debtholders
equal to:
The cash flows of a new project erosion costs
that come at the expense of a
firm's existing projects are called:
The changes in a firm's future incremental
cash flows that are a direct
consequence of accepting a
project are called ________ cash
flows
A constant stream of cash flows Perpetuity
without end
A correct statement concerning Balance sheet accounts are listed in order of decreasing liquidity
liquidity?
Current Assets—Current Net working capital
Liabilities=
cash, accounts receivable, inventory, marketable securities,
Current Assets include: prepaid expenses and other liquid assets that can be readily
converted to cash.
The current ratio is measured as: Current Assets divided by Current Liabilities
The debt-equity ratio is measured debt divided by total equity
as total:
The decisions made by financial market value of the existing owners' equity
managers should all be ones
which increase the..
The depreciation method MACRS
currently allowed under U.S. tax
law governing the accelerated
write-off of property under
various lifetime classifications is
called _____ depreciation.
discounting all expected future cash flows to reflect the time value
Discounting cash flows involves:
of money
