FOUNDATIONS OF BUSINESS FINANCE (PEREGRINE) EXAM AND PRACTICE QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+

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FOUNDATIONS OF BUSINESS
FINANCE (PEREGRINE) EXAM AND
PRACTICE QUESTIONS AND
CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS) |ALREADY
GRADED A+

Question: True or false: The one fixed asset that is not depreciated is land
because it seldom declines in value.
Answer: True


Question:__________ liabilities are those due within one year.
Answer: Current


Question:__________-__________ __________ liabilities are due after more
than a year, and may include bonds, mortgages, and long-term loans.
Answer: Long-term debt


Question:Name the three types of accounts listed as current liabilities on
balance sheets.
Answer: (1) Accounts Payable
(2) Notes Payable
(3) Accrued Expenses


Question:Accounts payable

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Answer: The amounts owed for credit purchases by a firm


Question:Notes payable
Answer: Outstanding short-term loans, typically from commercial banks


Question:Accrued expenses
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


Question:The __________ __________ section of a balance sheet provides
information about the claims against a firm held by investors who own
preferred and common shares.
Answer: Stockholders' equity


Question:The Stockholders' equity section of the balance sheet is reflected in
four types of accounts. These include __________ __________, __________
__________, __________-__________-__________ __________ ___________
__________ __________, and __________ __________.
Answer: (1) preferred stock
(2) common stock
(3) paid-in-capital excess of par
(4) retained earnings


Question:__________ __________ shows the total proceeds from the sale of
preferred stock.
Answer: Preferred stock

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Question:__________-__________-__________ __________ __________
__________ __________ equals the number of shares outstanding multiplied
by the original selling price of the shares, net of the par value.
Answer: Paid-in-capital in excess of par


Question:__________ __________ equals the number of outstanding common
shares multiplied by the par value per share.
Answer: Common stock


Question:__________ __________ (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.
Answer: Par value


Question:__________ __________ are the cumulative total of the earnings
that the firm has reinvested in its assets and operations since its inception.
Answer: Retained earnings


Question: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).
Answer: common stock, paid-in-capital


Question:The __________ __________ entry on a balance sheet records the
value of common shares that a firm currently holds in reserve.