Accounting for Business Stability

What is the study of a business' money-related decisions called?

• Corporate Finance

• Business Management

• Financial Accounting

• Investment Banking

Corporate Finance aims to maximize a business' value by making good business ______ through investments, financing, and dividends.

• decisions

• plans

• strategies

• goals

What is the primary use of Discounted Cash Flow (DCF)?

• To calculate net income

• To determine the profitability of an investment opportunity

• To measure cash flow in period three

• To adjust for depreciation

Fill in the blank: The formula for Operating Cash Flow (OCF) is OCF = Net Income + Non-Cash Expense (______) + Changes in Working Capital.

• Depreciation

• Discount Rate

• Cash Flow in Period Two

• Profitability

What is the formula for Operating Cash Flow in the given example?

• Net Income + Non-Cash Expense + Changes in Working Capital

• Net Income - Depreciation + Changes in Working Capital

• Net Income + Depreciation - Changes in Working Capital

• Net Income + Non-Cash Expense - Changes in Working Capital

Fill in the blank: Terminal Cash Flow is calculated using the formula: _______ + Working Capital = Terminal Cash Flow.

• Salvage Value

• Depreciation

• Net Income

• Investment

Which of the following is NOT an item that typically depreciates?

• A) Buildings

• B) Equipment

• C) Furniture

• D) Land

Straight-line depreciation is best used when no reliable estimate can be made regarding the _______ over the useful life of an asset.

• cost

• benefit

• salvage value

• purchase price

• $3,750

• $5,000

• $4,000

• $3,000

In the Unit-of-Production Depreciation method, depreciation is calculated based on the amount of _______ of an asset.

• time

• usage

• cost

• value