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1) Current Assets (liquidity): This type of asset includes only assets that can be converted into cash within 13 months or less. T/F
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- What do current liabilities and current assets have in common?a) Current assets are claims against current liabilities.b) If current assets increase, then there will be a corresponding increase in currentliabilities.c) Current liabilities and current assets are converted into cash.d) Current liabilities and current assets are those items that will be satisfied andconverted into cash, respectively, in one year or one operating cycle, whichever islonger.The basis for classifying assets as current or noncurrent is conversion to cash within Select one: a. the operating cycle or one year, whichever is longer. b. the accounting cycle or one year, whichever is shorter. c. the accounting cycle or one year, whichever is longer. d. the operating cycle or one year, whichever is shorter.Question 3.Match the following terms with the appropriate definition.Future ValueTime value of moneyMonetary AssetPresent value of a single amountSimple interestA.Claim to a fixed amount of cash.B.A dollar now is worth more than a dollar later.C.Based on initial investment only.D.Amount today equivalent to a specified future amount.E.Accumulation of an amount with interest.
- The assets that can be converted into cash within a short period are known as?1. In which section of the statement of financial position should cash that is restricted for the settlement of liabilitydue 18 months after the reporting period be presented?a. Current assetsb. Equityc. Noncurrent liabilitiesd. Noncurrent assetsThe characteristics of current assets are (Choose the INCORRECT answer) a) They are converted to cash within a yearb) They consist of short and long term financial assets and intangible fixed assetsc) They are considered liquid assetsd) They are used in the daily operations of the firm
- 11In a cash flow statement, which one of the following would appear as an outflow of cash? Select one: a. An increase in debtors during the year. b. An increase creditor during the year. c. Depreciation charges on fixed assets. d. Loss on sale of a fixed asset. 12A credit balance on accruals account indicates? Select one: a. a liability and an expense owing. b. an asset and a prepayment of income. c. an asset and an accrual of income. d. a liability and an expense prepaid. 6ABC paid XYZ rent in advance for one year. By recording this payment ABC will reflect: Select one: a. An increase in assets and liabilities. b. An increase in assets and stockholder's equity. c. An increase in assets and decrease in liabilities. d. No change in total assets. 8Which of the following expenses will not be analyzed to administrative expenses in a published profit and loss account for a company? Select one: a. Bank charges and interest. b. Office expenses. c. General expenses. d. Managing Director…What is meant by liquidity? Rank the following assets from one to five in order of liquidity. Inventory Account receivable Short term investment Goodwill BuildingWhich of the following is a series of constant cash flows that occur at the end of each period for some fixed number of periods .... A. Annuity B. Mezzanine Debt C. Perpetuity D. Original Investment
- A fixed stream of cash flows occurring at the beginning of each period for a fixed period of time is known as: Select one: a. Ordinary annuity b. Constant annuity c. Annuity due d. Financial annuityA liquid asset can be converted to cash quickly without significantly impacting the asset’s value. Which of the following asset classes is generally considered to be the most liquid? Accounts receivable Cash Inventories The most recent data from the annual balance sheets of Fitcom Corporation and Zebra Paper Corporation are as follows: Balance Sheet December 31st31st (Millions of dollars) Zebra Paper Corporation Fitcom Corporation Zebra Paper Corporation Fitcom Corporation Assets Liabilities Current assets Current liabilities Cash $2,870 $1,845 Accounts payable $0 $0 Accounts receivable 1,050 675 Accruals 633 0 Inventories 3,080 1,980 Notes payable 3,586 3,375 Total current assets $7,000 $4,500 Total current liabilities $4,219 $3,375 Net fixed assets Long-term bonds 5,156 4,125 Net plant and equipment 5,500 5,500 Total debt $9,375 $7,500 Common equity Common stock $2,031 $1,625…b. Determine the free cash flow from the purchase of the XC-750. Calculate the free cash flow from the purchase of the XC-750 below (with vs. without XC ? 750): (Note: the change in net working capital for year 0 is equal to the sum of the change in accounts receivable due to the decrease in sales, the change in inventory due to the increase in inventory starting in year 0, and the change in accounts payable due to the decrease in cost of goods sold.) (Round to the nearest dollar.) PLEASE FILL OUT CHART OF PART B Billingham Packaging is considering expanding its production capacity by purchasing a new machine, the XC-750. The cost of the XC-750 is $2.78 million. Unfortunately, installing this machine will take several months and will partially disrupt production. The firm has just completed a $50,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates: Marketing: Once the XC-750 is operational next year, the extra capacity is expected to…