BUSN part 2 Flashcards
What is capital?
Money
What is debt financing?
Borrowing money from a creditor (i.e., bank) with the expectation that the company will pay them back.
Which of the following financial statements is shown as of one specific date?
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Change in Equity
Balance Sheet
Which of the following is NOT a way financial accounting information is used?
Credit Analysis
Valuation
Regulatory Uses
Breakeven Analysis
Breakeven Analysis
Select the TWO critical conditions that must exist for financial statements to be useful.
Comparability
Creditability
Acceptability
Dependability
Comparability and Creditability
The balance sheet embodies which of the following basic accounting equations?
Debit = Credit
Net working capital
Shareholder’s Equity
Assets = Liabilities + Owners Equity
Assets = Liabilities + Owners Equity
Owners Equity can be defined as:
Accounts Receivable - Accounts Payable
What is the effect on the financial statements if a cash dividend is paid to owners?
1. Decrease assets and owner’s equity, but no effect on liabilities
2. Decrease assets, and increase liability and owner’s equity
3. Increase assets and liabilities, but decrease owner’s equity
4. Increase assets and owner’s equity, but has no effect on liabilities
- Decrease assets and owner’s equity, but no effect on liabilities
What is reported on the income statement?
Tax Expense and revenue
What is the equation for Net Income?
Net Income = Revenue - Expenses
Which ONE of the following statements is TRUE regarding ACCRUAL accounting?
1.“Revenue” is a measure of cash consumed
2. “Expense” is a measure of economic value consumed
3. “Revenue” is a measure of cash created
4. “Expense” is a measure of economic value created
5. “Expense” is a measure of cash created
6. “Expense” is a measure of cash consumed
- “Expense” is a measure of economic value consumed
Which of the following does NOT appear on an income statement?
Interest Payable
Rent Expense
Sales
Cost of Goods Sold
Interest Payable
Which of the following is NOT presented on the income statement?
Operating Income
Net Income
Retained Earnings
Earnings Per Share
Gross Profit
Retained Earnings
How do you find the Debt Ratio?
Debt Ratio = Total Liabilities / Total Assets
What is the basic CVP equation?
Sales Revenue - Variable Costs - Fixed Costs = Net Income
Select the example of a product costs
Direct Labor
Direct Materials
Manufacturing Overhead
All of the above
All of the above
What is a bond?
A loan from an investor with the promise of repayment
What is a stock?
A share of ownership in a company
What is the formula for NPV?
Sum of all the discounted cash flows - initial investment
Which of the following is a reason that the time value of money is important?
Inflation
All of the listed reasons
Investment opportunities
Consumption opportunity
All of the listed reasons
What is a return?
Money made or lost in an investment over time
What is the fundamental TVM formula?
FV = CF/(2 + r)^2
PV = CF/(1 + r)^t
PV = CF/(r-t)
PV = CF/(1 + r)^t
What is an annuity?
A financial security that pays a fixed stream of cash flows
What is a perpetuity?
A stream of cash flows that continues indefinitely
What is the Internal Rate of Return (IRR)?
Both the other answers
The discount rate that sets the NPV to zero The return that a project will produce
Both the other answers
How do you calculate the NPV in Excel?
- The NPV formula - the initial investment
- The NPV formula + the discounted cash flows
- The NPV formula alone
- The NPV formula - the initial investment
A company should accept a project when the NPV is
Positive or Negative?
Positive
What is the pivotal question of finance?
Is it worth it?
What is Present Value?
What future cash flows are worth today
______ structures are more rigid and group employees by function, products, processes, customers, or regions. _______ and team-based structures are more flexible and assemble employees to respond quickly to dynamic business environments.
Traditional; Contemporary
