chapter 5

Question 1

balance sheet

Answer 1

reports the assets, liabilities and stockholder’s equity of a business enterprise at a specific date

Question 2

solvency

Answer 2

refers to the ability of a company to pay its debts as they mature

Question 3

financial flexibility

Answer 3

which measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities

Question 4

current asset

Answer 4

are cash and other assets a company expects to convert into cash, sell or consume either in one yr or in the operating cycle, whichever is longer.

Question 5

current asset in order

Answer 5

1. cash and cash equivalents
2. short-term investments
3. receivables
4. inventories
5. prepaid expenses

Question 6

cash

Answer 6

is generally considered to consist of currency and demand deposits(monies available on demand at a financial institution)

Question 7

short term investment

Answer 7

all equity securities are recorded at fair value with changes in net come

Question 8

Noncurrent Assets

Answer 8

1. Long-term investments
2. PPE
3. Intangible Asset

Question 9

Current liabilities

Answer 9

are the obligations that a company reasonably expects to liquidate either through the use of current assets or the creation of other current liabilities