Chapter 2: In-Class Quiz

Question 1

Which of the following is not a true statement of market value?
A) Market value and book value are often confused
B) Considered the balance sheet value
C) Considered the company’s true value
D) The price at which the assets, liabilities, or equity can actually be bought or sold

Answer 1

B) Considered the balance sheet value

Question 2

Net Working Capital is Current Assets - Current Liabilities. T/F

Answer 2

True

Question 3

The Average tax rate is % paid on the last dollar earned. T/F

Answer 3

False

Question 4

Cash flow is one of the most important pieces of information that can be derived from the financial statements. T/F

Answer 4

True

Question 5

Accounting income is more important than cash flow for making decisions. T/F

Answer 5

False

Question 6

Operating cash flow is the same as operating profit. T/F

Answer 6

False

Question 7

Depreciation is a non-cash expense item. T/F

Answer 7

True

Question 8

The Cash Flow from Assets includes all of the following components EXCEPT:
A) Changes in NWC
B) Changes in working capital
C) Debt to Equity ratio
D) Operating cash flow

Answer 8

C) Debt to Equity raito

Question 9

What is a true statement regarding noncash expense items?
A) Salaries are an example
B) They are expenses charged against revenue that do not affect cash flow
C) Product costs are an example
D) Depreciation is not an example

Answer 9

B) They are expenses charged against revenue that do not affect cash flow

Question 10

Book value is the same as market value. T/F

Answer 10

False