Financial Statement and Cash Flow_CH2

Question 1

states what the firm owns and how it is financed.

Answer 1

Balance Sheet

Question 2

what the stockholders would
have remaining after the firm discharged its obligations.

Answer 2

equity

Question 3

listing of assets in BC

Answer 3

The assets in the balance sheet are listed in order by the length of time it normally
would take an ongoing firm to convert them into cash

Question 4

marketable securities

Answer 4

financial asssets that can be easily sold and brought. bons stocks, mutual funds,. they are as short term investment

Question 5

Cash VS

Answer 5

market securities

Question 6

credit sales VS

Answer 6

cash sales

Question 7

make comodity VS

Answer 7

buy commodity

Question 8

lease VS

Answer 8

purchase

Question 9

listing of liabilities and stockholders’ equity

Answer 9

The liabilities and the stockholders’ equity are listed in the order in
which they would typically be paid over time

Question 10

debt VS

Answer 10

equity

Question 11

liquidity

Answer 11

the ease and quickness with which assets can be converted to cash

Question 12

current assets

Answer 12

the most liquid and include cash and assets
that will be turned into cash within a year from the date of the balance sheet

Question 13

Accounts
receivable

Answer 13

amounts not yet collected from customers for goods or services sold to them
(after adjustment for potential bad debts).

Question 14

inventory

Answer 14

raw materials to be
used in production, work in process, and finished goods

Question 15

Fixed assets

Answer 15

the least liquid kind of assets
[Tangible fixed assets include property, plant, and equipment]

Question 16

Intangible assets

Answer 16

no physical existence but can
be very valuable
[trademarks, patents]

Question 17

more liquide better for short-term obligations

Answer 17

current assets like cash, accounts receivables or short-term bonds and stocks

Question 18

GAAP

Answer 18

Gennerally Accapted Accounting Principle

Question 19

Does Cah flow appera on Income Statement

Answer 19

no

Question 20

noncash items

Answer 20

expenses against revenues but do not affect cash flow

Question 21

examples of noncash items

Answer 21

depreciation
deferred tax

Question 22

deferred tax

Answer 22

The current tax portion is actually sent to the
tax authorities (for example, the Internal Revenue Service). The deferred tax portion is not

Question 23

theory is that if taxable income is less than accounting income in the current
year, it will…

Answer 23

it will be more than accounting income later on