________ is the process of “expiring” the cost of a long-term tangible asset over its useful life. A) Expiration B) Depreciation C) Economic recovery D) Salvaging ANSWER Answer: B
Date: September 19th, 2020
When considering fixed operating cost increases, a financial manager must weigh the increased financial risk associated with greater operating leverage against the expected increase in returns. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A terminal warehouse is ________. A) a warehouse located beyond city limits for storing the merchandise B) a warehouse on the borrower’s premises to store the merchandise C) a central warehouse storing the merchandise of various customers D) a warehouse located near the lender’s home for storing the merchandise ANSWER C
Date: September 19th, 2020
Which of the methods below is a way to allocate depreciation? A) The allocation each year is the amount of cost as determined by the actual estimated usage for that year. B) Use the government-mandated accelerated depreciation system, which depreciates the capital asset at the minimum accelerated amount allowed each year. C) The allocation each […]
Date: September 19th, 2020
As Akerlof argues, sellers who have a lemon, of course, know they have lemon but are not willing to tell the truth about the condition of their auto and, for the short selling period involved, can put their auto in a satisfactory condition that approximates the normal condition of the auto that are not lemons. […]
Date: September 19th, 2020
A firm is considering purchasing two assets. Asset L will have a useful life of 20 years and cost $5 million; it will have installation costs of $1 million but no salvage or residual value. Asset S will have a useful life of 8 years and cost $2 million; it will have installation costs of […]
Date: September 19th, 2020
On a corporate income statement, interest is paid after taxes are paid. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: On a corporate income statement, interest is paid BEFORE taxes are paid.
Date: September 19th, 2020
Under the floating inventory lien, the borrower is free to sell the merchandise and is expected to remit the amount lent against each item, along with accrued interest, to the lender immediately after the sale. The lender then releases the lien on the appropriate item. Indicate whether the statement is true or false […]
Date: September 19th, 2020
Explain how to compute an operating cash flow (OCF) from a modified income statement. What will be an ideal response? ANSWER Answer: We first compute EBIT, which is Revenues – Costs of Goods Sold – General Selling and Administrative Expenses – Depreciation. We then subtract Taxes to get Modified Net Income. Next, add […]
Date: September 19th, 2020
Explain the distinction between profits and cash flow. What will be an ideal response? ANSWER Answer: Profits are an accounting measure of performance during a specific period of time. Cash flow is the actual inflow or outflow of money. Although you cannot spend “profit,” you can spend cash. This is because profit given […]
Date: September 19th, 2020
