Chapter Two Essay

652 WordsSep 24, 20123 Pages
• The financial statement showing a firm's accounting value on a particular date is the: balance sheet. • A current asset is: cash or an item currently owned by the firm that will convert to cash within the next 12 months. • The long-term debts of a firm are liabilities: that do not come due for at least 12 months. • Net working capital is defined as: current assets minus current liabilities. • A __ liquid __ asset is one which can be quickly converted into cash without significant loss in value. • The financial statement summarizing a firm's accounting performance over a period of time is the: income statement. • Noncash items refer to: expenses charged against revenues that do not directly affect cash…show more content…
• Which one of the following accounts is generally the most liquid? Accounts receivable • Which one of the following statements concerning liquidity is correct? Balance sheet accounts are listed in order of decreasing liquidity. • Liquidity is: valuable to a firm even though liquid assets tend to be less profitable to own. • Which of the following accounts are included in shareholders' equity? I. retained earnings IV. capital surplus • Book value: is based on historical cost. • When making financial decisions related to assets, you should: always consider market values. • As seen on an income statement: depreciation reduces both the pretax income and the net income. • The earnings per share will: increase as net income increases. • Dividends per share: are equal to the amount of net income distributed to shareholders divided by the number of shares outstanding. • According to Generally Accepted Accounting Principles, income is recorded based on the realization principle. • According to Generally Accepted Accounting Principles, costs are: matched with revenues. • Depreciation: is a non-cash expense that is recorded on the income statement. • When you are making a financial decision, the most relevant tax rate is the ___ marginal__ rate. • An increase in which one of the following will
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