WorksheetsChapter 2 Quiz
Total questions: 18
Worksheet time: 9mins
What is the balance sheet primarily used for?
To calculate tax rates
To report revenues and expenses
To provide a snapshot of assets and liabilities
To show a firm's cash flow
Which of the following is considered a current asset?
Buildings
Land
Inventory
Goodwill
What does the balance sheet identity state?
Liabilities = Assets + Equity
Equity = Assets - Liabilities
Assets = Revenues - Expenses
Assets = Liabilities + Stockholders’ Equity
What is the primary purpose of the income statement?
To measure performance over a specified period
To show the firm's assets and liabilities
To calculate cash flow from assets
To report tax obligations
What is the equation for net income?
Net Income = Assets - Liabilities
Net Income = Cash Flow - Capital Spending
Net Income = Revenue - Expenses
Net Income = Revenue + Expenses
Which principle requires matching expenses to the period of revenue recognition?
Cost Principle
Revenue Recognition Principle
Conservatism Principle
GAAP Matching Principle
What is the federal corporate tax rate in the U.S. after the TCJA of 2017?
15%
35%
21%
30%
What is the average tax rate?
Total income / total expenses
Tax rate on the next dollar earned
Total assets / total liabilities
Total taxes paid / taxable income
If a firm's taxable income increases by $1 million, which tax rate should be used for analysis?
Flat tax rate
Marginal tax rate
Effective tax rate
Average tax rate
What does cash flow from assets (CFFA) consist of?
Cash Flow to Creditors + Cash Flow to Stockholders
Operating Cash Flow - Net Capital Spending - Changes in NWC
Net Income + Depreciation - Taxes
Total Assets - Total Liabilities
What is the formula for calculating net working capital?
Total Equity - Total Assets
Total Assets - Total Liabilities
Current Liabilities - Current Assets
Current Assets - Current Liabilities
Which of the following is a noncash item?
Interest Expense
Net Income
Dividends Paid
Depreciation
What is the primary focus of the Statement of Cash Flows?
To provide a snapshot of financial position
To calculate tax obligations
To report cash generated from assets
To show profitability
What is the difference between book value and market value?
Book value is the price at which assets can be sold; market value is the accounting value
Book value is the accounting value; market value is the price at which assets can be sold
Both values are the same
Book value is always higher than market value
What is the marginal tax rate?
Total taxes paid / taxable income
Tax rate on the next dollar earned
Average tax rate for all income
Tax rate for corporations
What is the purpose of earnings management?
To smooth earnings
To increase cash flow
To enhance market value
To reduce tax liability
What is the equation for cash flow to creditors (CF/CR)?
Total Assets - Total Liabilities
Interest paid - Net new borrowing
Operating Cash Flow - Net Capital Spending
Dividends paid - Net new equity
What is the significance of liquidity in a firm?
It shows the firm's total assets
It reflects the firm's equity position
It measures the speed of asset conversion to cash
It indicates profitability
