Chapter 02 - Reviewing Financial Statements
15. If a company reports a large amount of net income on its income statement during a year, the firm will have A. positive cash flow. B. negative cash flow. C. zero cash flow. D. Any of these scenarios are possible.
16. Free cash flow is defined as A. Cash flows available for payments to stockholders of a firm after the firm has made payments to all others will claims against it. B. Cash flows available for payments to stockholders and debt holders of a firm after the firm has made payments necessary to vendors. C. Cash flows available for payments to stockholders and debt holders of a firm after the firm has made investments in assets necessary to sustain the ongoing operations of the firm. D. Cash flows available for payments to stockholders and debt holders of a firm that would be tax-free to the recipients.
17. The Sarbanes-Oxley Act requires public companies to ensure that these individuals have considerable experience applying generally accepted accounting principles (GAAP) for financial statements. A. External auditors B. Internal auditors C. Chief Financial Officers D. Corporate boards' audit committees
18. Balance Sheet You are evaluating the balance sheet for Campus Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $400,000, Accounts receivable = $200,000, Inventory = $100,000, Accrued wages and taxes = $10,000, Accounts payable = $300,000, and Notes payable = $600,000. What is Campus's net working capital? A. -$210,000 B. $700,000 C. $910,000 D. $1,610,000