Foundations of Business Finance 2025: Study Guide, Practice Questions & Key Concepts

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




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


__________ liabilities are those due within one year. -
.....ANSWER ...✔✔ Current


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


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

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Accounts payable - .....ANSWER ...✔✔ The amounts
owed for credit purchases by a firm


Notes payable - .....ANSWER ...✔✔ Outstanding
short-term loans, typically from commercial banks


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


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


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

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(3) paid-in-capital excess of par
(4) retained earnings


__________ __________ shows the total proceeds from
the sale of preferred stock. - .....ANSWER ...✔✔
Preferred stock


__________-__________-__________ __________
__________ __________ __________ 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


__________ __________ equals the number of
outstanding common shares multiplied by the par value
per share. - .....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. - .....ANSWER ...✔✔
Par value


__________ __________ are the cumulative total of the
earnings that the firm has reinvested in its assets and