Test Bank for Fundamentals of Corporate Finance 10th-Edition by Ross (chapter 2)
Chapter 02
Financial Statements, Taxes, and Cash Flow
Multiple Choice Questions
1. Which one of the following is the financial statement that shows the
accounting value of a firm's equity as of a particular date?
A. income
statement
B. creditor's
statement
C. balance
sheet
D. statement of cash
flows
E. dividend
statement
2. Net working capital is defined as:
A. total liabilities minus shareholders'
equity.
B. current liabilities minus shareholders'
equity.
C. fixed assets minus long-term
liabilities.
D. total assets minus total
liabilities.
E. current assets minus current
liabilities.
, Test Bank for Fundamentals of Corporate Finance 10th-Edition by Ross (chapter 2)
3. The common set of standards and procedures by which
audited financial statements are prepared is known as the:
A. matching
principle.
B. cash flow
identity.
C. Generally Accepted Accounting
Principles.
D. Financial Accounting Reporting
Principles.
E. Standard Accounting Value
Guidelines.
4. Which one of the following is the financial statement that summarizes a
firm's revenue and expenses over a period of time?
A. income
statement
B. balance
sheet
C. statement of cash
flows
D. tax reconciliation
statement
E. market value
report
, Test Bank for Fundamentals of Corporate Finance 10th-Edition by Ross (chapter 2)
5. Noncash items refer to:
A. accrued
expenses.
B. inventory items purchased using
credit.
C. the ownership of intangible assets such
as patents.
D. expenses which do not directly affect cash
flows.
E. sales which are made using
store credit.
6. The percentage of the next dollar you earn that must be paid in taxes is
referred to as the tax rate.
A. mea
n
B. residu
al
C. tot
al
D. averag
e
E. margin
al
, Test Bank for Fundamentals of Corporate Finance 10th-Edition by Ross (chapter 2)
7. The tax rate is equal to total taxes divided by total taxable
income.
A. deductib
le
B. residu
al
C. tot
al
D. averag
e
E. margin
al
8. The cash flow of a firm which is available for distribution to the firm's
creditors and stockholders is called the:
A. operating cash
flow.
B. net capital
spending.
C. net working
capital.
D. cash flow from
assets.
E. cash flow to
stockholders.
Chapter 02
Financial Statements, Taxes, and Cash Flow
Multiple Choice Questions
1. Which one of the following is the financial statement that shows the
accounting value of a firm's equity as of a particular date?
A. income
statement
B. creditor's
statement
C. balance
sheet
D. statement of cash
flows
E. dividend
statement
2. Net working capital is defined as:
A. total liabilities minus shareholders'
equity.
B. current liabilities minus shareholders'
equity.
C. fixed assets minus long-term
liabilities.
D. total assets minus total
liabilities.
E. current assets minus current
liabilities.
, Test Bank for Fundamentals of Corporate Finance 10th-Edition by Ross (chapter 2)
3. The common set of standards and procedures by which
audited financial statements are prepared is known as the:
A. matching
principle.
B. cash flow
identity.
C. Generally Accepted Accounting
Principles.
D. Financial Accounting Reporting
Principles.
E. Standard Accounting Value
Guidelines.
4. Which one of the following is the financial statement that summarizes a
firm's revenue and expenses over a period of time?
A. income
statement
B. balance
sheet
C. statement of cash
flows
D. tax reconciliation
statement
E. market value
report
, Test Bank for Fundamentals of Corporate Finance 10th-Edition by Ross (chapter 2)
5. Noncash items refer to:
A. accrued
expenses.
B. inventory items purchased using
credit.
C. the ownership of intangible assets such
as patents.
D. expenses which do not directly affect cash
flows.
E. sales which are made using
store credit.
6. The percentage of the next dollar you earn that must be paid in taxes is
referred to as the tax rate.
A. mea
n
B. residu
al
C. tot
al
D. averag
e
E. margin
al
, Test Bank for Fundamentals of Corporate Finance 10th-Edition by Ross (chapter 2)
7. The tax rate is equal to total taxes divided by total taxable
income.
A. deductib
le
B. residu
al
C. tot
al
D. averag
e
E. margin
al
8. The cash flow of a firm which is available for distribution to the firm's
creditors and stockholders is called the:
A. operating cash
flow.
B. net capital
spending.
C. net working
capital.
D. cash flow from
assets.
E. cash flow to
stockholders.
