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50. If market interest rates have increased since a company last borrowed long-term funds,
the market value of these long-term funds will likely be:
51. Which of the following values would most likely interest a shareholder?
52. What happens to the market value of a firm's equity as the book value of the firm's equity
increases?
53. Which of the following statements is true for a corporation with $1 million market value of
equity, $2 million market value of assets, and 1,000 shares of outstanding stock?
54. Which of the following is more likely to be correct if market value of equity is less than
book value of equity?
55. Market-value balance sheets differ from book-value balance sheets in that market
values:
56. If market values of equity exceed book values of equity, then:
57. Perhaps the best method for estimating the market value of shareholders' equity is to:
58. In which of the following asset accounts are you
least
likely to find a difference between
market value and book value?
59. Amy wants to know if inventory is increasing as a percentage of total assets. Which one
of these statements most easily provides the information she is seeking?
60. Which one of the following expense categories is subtracted from total revenues to help
arrive at a firm's EBIT?
61. Which one of the following does
not
reduce a firm's net income?
62. Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods
sold, $500,000 depreciation expense, and $120,000 interest expense.
63. The net income figure on an income statement is calculated before deducting the:
64. An increase in depreciation expense will (other things equal):
65. Current period depreciation expense is listed:
66. Retained earnings result from:
67. The gathering of related revenues and expenses into the same period, regardless of when
they were incurred, is:
68. According to accrual accounting, when goods are not sold until the period after they were
produced, then the cost of goods sold will be:
69. Accrual accounting, which attempts to match sales revenues and the expenses
associated with the production of the goods, is conducted in an attempt to:
70. Which of the firm's financial statements most clearly recognizes the payment for new
equipment?
71. If a firm pays taxes, which one of these will reduce net income but increase cash flow?
72. Which one of the following best explains the combination of a high level of net income
combined with a low level of cash flow during an accounting period?
73. Assume a firm generates $2,000 in sales and has a $500 increase in accounts receivable
during an accounting period. Based solely on this information, cash flow will increase by:
74. In a statement of cash flows, which category includes depreciation expense as a line
item?
75. Which of the following will occur in a statement of cash flows as a result of paying cash
dividends?
76. Which of the following changes in working capital will result in an increase in cash
flows?
77. Which of the following statements is more likely if cash and marketable securities
increase by $5,000 during a period in which cash provided by operations increases by $1,000 and
cash used by investments decreases by $500?
78. If a firm's net income is positive and its noncash expenses are positive, which of the
following could account for a negative amount of cash provided by operations?
79. What is the most likely conclusion for a firm whose statement of cash flows shows an
increase in cash balances and has negative cash flows from both operations and financing?
80. Johnson's Nursery has net income of $42,500, depreciation expense of $1,800, interest
expense of $900, taxes of $1,600, additions to net working capital of $2,300, and capital
expenditures of $11,700. What is the amount of the free cash flow?
81. According to the statement of cash flows, cash flows from financing could be positive if:
82. Which of the following categories of a statement of cash flows is affected by the payment
of interest expense?
83. Which of the following could account for a firm that has a negative net income, yet has a
positive amount of cash provided by operations?
84. If a firm's statement of cash flows shows that cash was used for investments, which of
the following would seem most likely?
85. Interest expense appears in the operations section of the statement of cash flows
because:
86. Which one of these would
not
be paid from free cash flow?
87. Which of the following statements correctly compares international accounting
standards?
