Fundamentals of Corporate Finance Chapter 2 Exam Questions and Correct Answers Latest Update (Already Passed)

Fundamentals of Corporate Finance Chapter 2 Exam Questions and Correct Answers Latest Update (Already Passed) balance sheet - Answers snapshot of the firm. a convenient way of organizing and summarizing what a firm owns (assets), what a firm owes (liabilities), and the difference between the two (the firm's equity) at a given point in time. the assets of the firm - Answers on a balance sheet, what is listed on the left hand side? liabilities and equity - Answers what is listed on the right hand side of the balance sheet? current or fixed - Answers assets are classified as either ______ or ________. tangible or intangible - Answers fixed assets can either be tangible or intangible less than a year - Answers how long is the life of a current asset? accounts receivable - Answers money owed to the firm by its customers current or long-term - Answers liabilities are listed as either ______ or _________. less than one year (meaning they must be paid within one year) - Answers how long is the life of current liabilities? accounts payable - Answers money the firm owes to its suppliers long term liability - Answers a debt that is not due in the coming year is classified as a ______ ________ ________. bonds - Answers long-term debt bondholders - Answers long-term creditors shareholder's equity aka common equity - Answers the difference between the total value of the assets (current and fixed) and the total value of liabilities (current and long-term) assets - Answers liabilities + shareholder's equity = net working capital - Answers the difference between a firm's current assets and its current liabilities liquidity - Answers the speed and ease with which an asset can be converted to cash. illiquid asset - Answers an asset that cannot be quickly converted to cash without a substantial price reduction. assets - liabilities - Answers shareholder's equity = financial leverage - Answers the use of debt in a firm's capital structure Generally Accepted Accounting Principles (GAAP) - Answers The common set of standards and procedures by which audited financial statements are prepared.