DOWNLOADgTHEgTestgBankgforgFundamentalsgofgCorporategFinanceg9thgEdit
iongRoss
TRUE/FALSE.g Writeg'T'gifg theg statementg isgtrueg andg'F'gifgtheg statementg isgfalse.
1) Statementgofgfinancialgpositiongisgbestgdescribedgasgagfinancialgstatementgsummarizinggagfirm'
sgperformancegovergagperiodgofgtime.gFormerlygcalledgthegincomegstatement.
Answer: True g False
2) Ifgangassetghasgagcarryinggvaluegofg$1,000gandgitsgrecoverablegamountgisg$750,gthengag$25
0gimpairmentglossghasgbeengincurred.
Answer:g g True False
3) Ifgangassetghasgagcarryinggvaluegofg$2,000gandgitsgrecoverablegamountgisg$2,500,gtheng$50
0gimpairmentglossghasgbeengincurred.
Answer: True g False
4) Impairmentglossgisgthegamountgbygwhichgthegcarryinggvaluegofgangassetgorgcash-
generatinggunitgexceedsgitsgrecoverablegamount.
Answer:g g True False
5) Accordinggtoggenerallygacceptedgaccountinggprinciplesg(GAAP),gassetsgareggenerallygshowngo
ngfinancialgstatementsgatgtheghighergofgcurrentgmarketgvaluegorghistoricalgcost.
Answer: True g False
6) AgfundamentalgdifferencegbetweengCanadiangGAAPgandgIFRSgisgthatgfairgvaluegaccountinggplaysg
agmoregimportantgrolegundergIFRS.
Answer:g g True False
7) Thegfinancialgstatementgsummarizinggthegvaluegofgagfirm'sgequitygongagparticulargdategisgthegstateme
ntgofgcomprehensivegincome.
Answer: True g False
8) Patentsgongnewganti-cholesterolgdruggaregconsideredgintangiblegfixedgassets.
Answer:g g True False
9) Thegdifferencegbetweengagfirm'sgcurrentgassetsgandgitsgcurrentgliabilitiesgisgcalledgnetgworkinggcapital.
Answer:g g True False
10) Statementgofgcomprehensivegincomegisgalsogreferredgtogasgthegbalancegsheet,gisgagsnapshotgofgtheg
firm.gItgisgagconvenientgmeansgofgorganizinggandgsummarizinggwhatgagfirmgownsg(itsgassets),gwhat
gagfirmgowesg(itsgliabilities),gandgthegdifferencegbetweengthegtwog(thegfirm'sgequity)gatgaggivengtim
e.gAnswer: True g False
11) Netgincomegdividedgbygthegtotalgnumbergofgoutstandinggsharesgisgreferredgtogasgthegprofitgmargin.
Answer: True g False
12) Non-cashgitemsgrefergtogexpensesgchargedgagainstgrevenuesgthatgdognotgdirectlygaffectgcashgflow.
Answer:g g True False
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13) Ifgagfirm'sgcashgflowgtogstockholdersgisgnegative,gthengtotalgdividendsgmustghavegexceededgthegval
uegofgnetgnewgequitygsoldgbygthegfirmgduringgthegyear.
Answer: True g False
14) Agfirm'sgmarginalgtaxgrategmaygdiffergfromgitsgaveragegtaxgrate.gHowever,gitgisgthegaveragegtaxgra
tegthatgisgrelevantgforgfinancialgdecision-makinggpurposes.
Answer: True g False
15) Thegfinancialgstatementgsummarizinggagfirm'sgperformancegovergagperiodgofgtimegisgthegstatementg
ofgcashgflows
Answer: True g False
16) Conceptually,gcapitalgcostgallowanceg(CCA)gisgequivalentgtogdepreciation.
Answer:g g True False
MULTIPLEgCHOICE.g Chooseg theg oneg alternativeg thatg bestg completesg theg statementg org answersg theg question.
17) JanexCorporationghadgOCFgofg$250,gnetgcapitalgspendinggofg$500gandgchangegingnetgworkinggcapit
algofg$150.gGivengthisginformation,gdeterminegitsgcashgflowgfromgassets.
A) $(400) B)g $(800) C)g $150 D)g $800 E)g $400
Answer:g A
18) Shareholders'gequitygingagfirmgisg$500.gThegfirmgowesgagtotalgofg$400gofgwhichg75gpercentgisgpayab
legthisgyear.gThegfirmghasgnetgfixedgassetsgofg$600.gWhatgisgthegamountgofgthegnetgworkinggcapital?
A) -$100 B)g $0 C)g -$200 D)g $200 E)g $100
Answer:g B
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19)
Whatgisgthegamountgofgnetgnewgborrowinggforg2015g($gingmillions)?
A) $0 B)g -$225 C)g $25 D)g $225 E)g -$25
Answer:g D
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20)
Whatgisgnetgcapitalgspendinggforg2015?
A) $477 B)g -$250 C)g $0 D)g $57 E)g -$57
Answer:g E
21)gRDJgManufacturingghadg300gmilliongsharesgofgstockgoutstandinggatgthegendgofg2015.gDuringg2015,g
thegcompanygreportedgnetgincomegofg$600gmillion,gretainedgearningsgofg$900gmillion,gandg$240gmi
lliongingdividendsgpaid.gWhatgisgRDJ'sgearningsgpergshare?
A)g $0.80 B)g $0.50 C)g $2.00 D)g $0.67 E)g $1.25
Answer:g C
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iongRoss
TRUE/FALSE.g Writeg'T'gifg theg statementg isgtrueg andg'F'gifgtheg statementg isgfalse.
1) Statementgofgfinancialgpositiongisgbestgdescribedgasgagfinancialgstatementgsummarizinggagfirm'
sgperformancegovergagperiodgofgtime.gFormerlygcalledgthegincomegstatement.
Answer: True g False
2) Ifgangassetghasgagcarryinggvaluegofg$1,000gandgitsgrecoverablegamountgisg$750,gthengag$25
0gimpairmentglossghasgbeengincurred.
Answer:g g True False
3) Ifgangassetghasgagcarryinggvaluegofg$2,000gandgitsgrecoverablegamountgisg$2,500,gtheng$50
0gimpairmentglossghasgbeengincurred.
Answer: True g False
4) Impairmentglossgisgthegamountgbygwhichgthegcarryinggvaluegofgangassetgorgcash-
generatinggunitgexceedsgitsgrecoverablegamount.
Answer:g g True False
5) Accordinggtoggenerallygacceptedgaccountinggprinciplesg(GAAP),gassetsgareggenerallygshowngo
ngfinancialgstatementsgatgtheghighergofgcurrentgmarketgvaluegorghistoricalgcost.
Answer: True g False
6) AgfundamentalgdifferencegbetweengCanadiangGAAPgandgIFRSgisgthatgfairgvaluegaccountinggplaysg
agmoregimportantgrolegundergIFRS.
Answer:g g True False
7) Thegfinancialgstatementgsummarizinggthegvaluegofgagfirm'sgequitygongagparticulargdategisgthegstateme
ntgofgcomprehensivegincome.
Answer: True g False
8) Patentsgongnewganti-cholesterolgdruggaregconsideredgintangiblegfixedgassets.
Answer:g g True False
9) Thegdifferencegbetweengagfirm'sgcurrentgassetsgandgitsgcurrentgliabilitiesgisgcalledgnetgworkinggcapital.
Answer:g g True False
10) Statementgofgcomprehensivegincomegisgalsogreferredgtogasgthegbalancegsheet,gisgagsnapshotgofgtheg
firm.gItgisgagconvenientgmeansgofgorganizinggandgsummarizinggwhatgagfirmgownsg(itsgassets),gwhat
gagfirmgowesg(itsgliabilities),gandgthegdifferencegbetweengthegtwog(thegfirm'sgequity)gatgaggivengtim
e.gAnswer: True g False
11) Netgincomegdividedgbygthegtotalgnumbergofgoutstandinggsharesgisgreferredgtogasgthegprofitgmargin.
Answer: True g False
12) Non-cashgitemsgrefergtogexpensesgchargedgagainstgrevenuesgthatgdognotgdirectlygaffectgcashgflow.
Answer:g g True False
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13) Ifgagfirm'sgcashgflowgtogstockholdersgisgnegative,gthengtotalgdividendsgmustghavegexceededgthegval
uegofgnetgnewgequitygsoldgbygthegfirmgduringgthegyear.
Answer: True g False
14) Agfirm'sgmarginalgtaxgrategmaygdiffergfromgitsgaveragegtaxgrate.gHowever,gitgisgthegaveragegtaxgra
tegthatgisgrelevantgforgfinancialgdecision-makinggpurposes.
Answer: True g False
15) Thegfinancialgstatementgsummarizinggagfirm'sgperformancegovergagperiodgofgtimegisgthegstatementg
ofgcashgflows
Answer: True g False
16) Conceptually,gcapitalgcostgallowanceg(CCA)gisgequivalentgtogdepreciation.
Answer:g g True False
MULTIPLEgCHOICE.g Chooseg theg oneg alternativeg thatg bestg completesg theg statementg org answersg theg question.
17) JanexCorporationghadgOCFgofg$250,gnetgcapitalgspendinggofg$500gandgchangegingnetgworkinggcapit
algofg$150.gGivengthisginformation,gdeterminegitsgcashgflowgfromgassets.
A) $(400) B)g $(800) C)g $150 D)g $800 E)g $400
Answer:g A
18) Shareholders'gequitygingagfirmgisg$500.gThegfirmgowesgagtotalgofg$400gofgwhichg75gpercentgisgpayab
legthisgyear.gThegfirmghasgnetgfixedgassetsgofg$600.gWhatgisgthegamountgofgthegnetgworkinggcapital?
A) -$100 B)g $0 C)g -$200 D)g $200 E)g $100
Answer:g B
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iongRoss
19)
Whatgisgthegamountgofgnetgnewgborrowinggforg2015g($gingmillions)?
A) $0 B)g -$225 C)g $25 D)g $225 E)g -$25
Answer:g D
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, DOWNLOADgTHEgTestgBankgforgFundamentalsgofgCorporategFinanceg9thgEdit
iongRoss
20)
Whatgisgnetgcapitalgspendinggforg2015?
A) $477 B)g -$250 C)g $0 D)g $57 E)g -$57
Answer:g E
21)gRDJgManufacturingghadg300gmilliongsharesgofgstockgoutstandinggatgthegendgofg2015.gDuringg2015,g
thegcompanygreportedgnetgincomegofg$600gmillion,gretainedgearningsgofg$900gmillion,gandg$240gmi
lliongingdividendsgpaid.gWhatgisgRDJ'sgearningsgpergshare?
A)g $0.80 B)g $0.50 C)g $2.00 D)g $0.67 E)g $1.25
Answer:g C
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