Foundations of Business Finance
(Peregrine)
True or false: The one fixed asset that is not depreciated is land because it
seldom declines in value. - CORRECT ANSWER-True
__________ liabilities are those due within one year. - CORRECT
ANSWER-Current
__________-__________ __________ liabilities are due after more than a year,
and may include bonds, mortgages, and long-term loans. - CORRECT
ANSWER-Long-term debt
Name the three types of accounts listed as current liabilities on balance sheets. -
CORRECT ANSWER-(1) Accounts Payable
(2) Notes Payable
(3) Accrued Expenses
Accounts payable - CORRECT ANSWER-The amounts owed for credit
purchases by a firm
Notes payable - CORRECT ANSWER-Outstanding short-term loans, typically
from commercial banks
Accrued expenses - CORRECT ANSWER-Costs 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. - CORRECT ANSWER-Stockholders' equity
The Stockholders' equity section of the balance sheet is reflected in four types of
accounts. These include __________ __________, __________ __________,
__________-__________-__________ __________ ___________ __________
, __________, and __________ __________. - CORRECT 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. - CORRECT ANSWER-Preferred stock
__________-__________-__________ __________ __________ __________
__________ equals the number of shares outstanding multiplied by the original
selling price of the shares, net of the par value. - CORRECT
ANSWER-Paid-in-capital in excess of par
__________ __________ equals the number of outstanding common shares
multiplied by the par value per share. - CORRECT ANSWER-Common 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. - CORRECT ANSWER-Par value
__________ __________ are the cumulative total of the earnings that the firm
has reinvested in its assets and operations since its inception. - CORRECT
ANSWER-Retained 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). - CORRECT ANSWER-common stock, paid-in-capital
The __________ __________ entry on a balance sheet records the value of
common shares that a firm currently holds in reserve. - CORRECT
ANSWER-treasury 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,
(Peregrine)
True or false: The one fixed asset that is not depreciated is land because it
seldom declines in value. - CORRECT ANSWER-True
__________ liabilities are those due within one year. - CORRECT
ANSWER-Current
__________-__________ __________ liabilities are due after more than a year,
and may include bonds, mortgages, and long-term loans. - CORRECT
ANSWER-Long-term debt
Name the three types of accounts listed as current liabilities on balance sheets. -
CORRECT ANSWER-(1) Accounts Payable
(2) Notes Payable
(3) Accrued Expenses
Accounts payable - CORRECT ANSWER-The amounts owed for credit
purchases by a firm
Notes payable - CORRECT ANSWER-Outstanding short-term loans, typically
from commercial banks
Accrued expenses - CORRECT ANSWER-Costs 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. - CORRECT ANSWER-Stockholders' equity
The Stockholders' equity section of the balance sheet is reflected in four types of
accounts. These include __________ __________, __________ __________,
__________-__________-__________ __________ ___________ __________
, __________, and __________ __________. - CORRECT 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. - CORRECT ANSWER-Preferred stock
__________-__________-__________ __________ __________ __________
__________ equals the number of shares outstanding multiplied by the original
selling price of the shares, net of the par value. - CORRECT
ANSWER-Paid-in-capital in excess of par
__________ __________ equals the number of outstanding common shares
multiplied by the par value per share. - CORRECT ANSWER-Common 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. - CORRECT ANSWER-Par value
__________ __________ are the cumulative total of the earnings that the firm
has reinvested in its assets and operations since its inception. - CORRECT
ANSWER-Retained 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). - CORRECT ANSWER-common stock, paid-in-capital
The __________ __________ entry on a balance sheet records the value of
common shares that a firm currently holds in reserve. - CORRECT
ANSWER-treasury 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,
