SmartBook Exam Questions With All
Correct Answers 2025 Latest Update
The short run is a period when there are ______ costs. CORRECT ANSWERS Both
fixed and variable
Earnings management is a controversial practice in which corporations ________ or
___________ their earnings to "smooth out" dips and surges and keep investors calm.
CORRECT ANSWERS Overstate; understate
True or false: With the passage of the Tax Cuts and Jobs Act of 2017, corporate tax
rates went up. CORRECT ANSWERS FALSE; Taxes were reduced to a flat 21% rate
How is the average income tax rate computed? CORRECT ANSWERS Total tax
bill/Total taxable income
The price at which willing buyers and sellers would trade is called ______ value.
CORRECT ANSWERS Market
True or false: Current assets plus current liabilities equals net working capital
CORRECT ANSWERS FALSE; CA-CL
The more debt a firm has, the greater its: CORRECT ANSWERS Degree of financial
leverage
Net earnings refers to income earned ______. CORRECT ANSWERS After interest and
taxes
Which of the following is an example of a non-cash item on an income statement?
CORRECT ANSWERS Depreciation
U.S.corporations pay a tax rate of ______ percent. CORRECT ANSWERS 21
The market value of an item is: CORRECT ANSWERS The cash value you'd get if you
sold it
The short run is ______. CORRECT ANSWERS An imprecise period of time
Non-cash items do not affect: CORRECT ANSWERS Cash flow
In the long-run, costs may be considered as ________. CORRECT ANSWERS All
variable
, A balance sheet reflects a firm's: CORRECT ANSWERS Accounting value on a specific
date
According to GAAP, when is revenue recognized on an income statement? CORRECT
ANSWERS - When the value of an exchange of goods or services is known or reliably
determined
- When the earnings process is virtually completed
The last item (or "bottom line") on the income statement is typically the _________.
CORRECT ANSWERS Net income
Financial leverage refers to a firm's _________. CORRECT ANSWERS Use of debt in
its capital structure
When a firm smooths earnings to please investors, it is called ________. CORRECT
ANSWERS Earnings management
The ______ tax rate is the tax rate paid on the next dollar of income. CORRECT
ANSWERS Marginal
Assets can be categorized as: CORRECT ANSWERS - Current and fixed assets
- Tangible and intangible assets
A company's ______ tax rate is its tax bill divided by its total taxable income, and its
______ tax rate is the tax rate it pays on the next dollar of income. CORRECT
ANSWERS Average; marginal
Liquidity has two dimensions which are the ability to: CORRECT ANSWERS Quickly
convert assets into cash without significant loss in value
Which of the following is (are) true of financial ratios? CORRECT ANSWERS - They are
developed from a firm's financial information.
- They are used for comparison purposes.
Which of the following are traditional financial ratio categories? CORRECT ANSWERS -
Turnover ratios
- Profitability ratios
- Financial leverage ratios
Long-term solvency ratios measure what aspect of the firm's financial position?
CORRECT ANSWERS Its financial leverage
True or false: The debt-equity ratio equals the total assets minus total equity all over
total assets. CORRECT ANSWERS TRUE
Correct Answers 2025 Latest Update
The short run is a period when there are ______ costs. CORRECT ANSWERS Both
fixed and variable
Earnings management is a controversial practice in which corporations ________ or
___________ their earnings to "smooth out" dips and surges and keep investors calm.
CORRECT ANSWERS Overstate; understate
True or false: With the passage of the Tax Cuts and Jobs Act of 2017, corporate tax
rates went up. CORRECT ANSWERS FALSE; Taxes were reduced to a flat 21% rate
How is the average income tax rate computed? CORRECT ANSWERS Total tax
bill/Total taxable income
The price at which willing buyers and sellers would trade is called ______ value.
CORRECT ANSWERS Market
True or false: Current assets plus current liabilities equals net working capital
CORRECT ANSWERS FALSE; CA-CL
The more debt a firm has, the greater its: CORRECT ANSWERS Degree of financial
leverage
Net earnings refers to income earned ______. CORRECT ANSWERS After interest and
taxes
Which of the following is an example of a non-cash item on an income statement?
CORRECT ANSWERS Depreciation
U.S.corporations pay a tax rate of ______ percent. CORRECT ANSWERS 21
The market value of an item is: CORRECT ANSWERS The cash value you'd get if you
sold it
The short run is ______. CORRECT ANSWERS An imprecise period of time
Non-cash items do not affect: CORRECT ANSWERS Cash flow
In the long-run, costs may be considered as ________. CORRECT ANSWERS All
variable
, A balance sheet reflects a firm's: CORRECT ANSWERS Accounting value on a specific
date
According to GAAP, when is revenue recognized on an income statement? CORRECT
ANSWERS - When the value of an exchange of goods or services is known or reliably
determined
- When the earnings process is virtually completed
The last item (or "bottom line") on the income statement is typically the _________.
CORRECT ANSWERS Net income
Financial leverage refers to a firm's _________. CORRECT ANSWERS Use of debt in
its capital structure
When a firm smooths earnings to please investors, it is called ________. CORRECT
ANSWERS Earnings management
The ______ tax rate is the tax rate paid on the next dollar of income. CORRECT
ANSWERS Marginal
Assets can be categorized as: CORRECT ANSWERS - Current and fixed assets
- Tangible and intangible assets
A company's ______ tax rate is its tax bill divided by its total taxable income, and its
______ tax rate is the tax rate it pays on the next dollar of income. CORRECT
ANSWERS Average; marginal
Liquidity has two dimensions which are the ability to: CORRECT ANSWERS Quickly
convert assets into cash without significant loss in value
Which of the following is (are) true of financial ratios? CORRECT ANSWERS - They are
developed from a firm's financial information.
- They are used for comparison purposes.
Which of the following are traditional financial ratio categories? CORRECT ANSWERS -
Turnover ratios
- Profitability ratios
- Financial leverage ratios
Long-term solvency ratios measure what aspect of the firm's financial position?
CORRECT ANSWERS Its financial leverage
True or false: The debt-equity ratio equals the total assets minus total equity all over
total assets. CORRECT ANSWERS TRUE
