Foundations of Business Finance (Peregrine) Exam Questions With 100% Verified Answers

Foundations of Business Finance (Peregrine) Exam Questions With 100% Verified Answers True or false: The one fixed asset that is not depreciated is land because it seldom declines in value. - answerTrue __________ liabilities are those due within one year. - answerCurrent __________-__________ __________ liabilities are due after more than a year, and may include bonds, mortgages, and long-term loans. - answerLong-term debt Name the three types of accounts listed as current liabilities on balance sheets. - answer(1) Accounts Payable (2) Notes Payable (3) Accrued Expenses Accounts payable - answerThe amounts owed for credit purchases by a firm Notes payable - answerOutstanding short-term loans, typically from commercial banks Accrued expenses - answerCosts that have been incurred by a firm which have not yet been paid; examples of accruals include taxes owed to the government and unpaid wages The __________ __________ section of a balance sheet provides information about the claims against a firm held by investors who own preferred and common shares. - answerStockholders' equity The Stockholders' equity section of the balance sheet is reflected in four types of accounts. These include __________ __________, __________ __________, __________-__________- __________ __________ ___________ __________ __________, and __________ __________. - answer(1) preferred stock (2) common stock (3) paid-in-capital excess of par (4) retained earnings __________ __________ shows the total proceeds from the sale of preferred stock. - answerPreferred stock __________-__________-__________ __________ __________ __________ __________ equals the number of shares outstanding multiplied by the original selling price of the shares, net of the par value. - answerPaid-in-capital in excess of par __________ __________ equals the number of outstanding common shares multiplied by the par value per share. - answerCommon stock __________ __________ (often $1) is an artifact of earlier pre-computer accounting methods used to track the number of outstanding shares. It has no relation to the actual value of the shares. - answerPar value __________ __________ are the cumulative total of the earnings that the firm has reinvested in its assets and operations since its inception. - answerRetained earnings The combined value of __________ __________ and __________-__________-__________ equals the proceeds the firm received when it originally sold shares to investors (including initial public offerings and rights offerings). - answercommon stock, paid-in-capital The __________ __________ entry on a balance sheet records the value of common shares that a firm currently holds in reserve. - answertreasury stock The __________ __________ __________ __________ provides a summary of what cash has gone into and out of a firm because of its operations, investments, and financing activities during a year. It isolates the firm's operating, investment, and financing cash flows and reconciles them with changes in its cash and marketable securities during the year. - answerstatement of cash flows A firm's total cash flows can be conveniently divided into three categories. These include __________ flows, __________ flows, and __________ flows. - answeroperating, investment, financing Operating flows - answerCash inflows and outflows directly related to the production and sale of products or services Investment flows - answerCash flows associated with the purchase or sale of fixed assets and business equity Financing flows - answerCash flows which result from debt and equity financing transactions __________ __________ __________ is the amount of cash flow available to investors - the providers of debt and equity capital. It represents the net amount of cash flow remaining after the firm has met all operating needs and has made all required payments on both long-term (fixed) and short-term (current) investments. - answerFree cash flow