Finc 3131- Chapter 2 Hw Study Guide Questions And Correct Answers

Liquidity refers to the {Ans: Speed and ease with which an asset can be converted to cash at or near market value}The Toy Store has beginning retained earnings of $28,975. For the year, the company earned net income of $4,680 and paid dividends of $1,600. The company also issued $3,000 worth of new stock. What is the value of the retained earnings account at the end of the year? $35,255 $32,055 $27,375 $20,445 $22,695 {Ans: }The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the: - net working capital schedule. - GAAP statement. - balance sheet. - income statement. - statement of cash flows. {Ans: income statement}Which one of the following will decrease the liquidity level of a firm? - Cash sale of inventory - Collection of an account receivable - Proceeds from a long-term loan - Credit sale of inventory - Cash purchase of inventory {Ans: cash purchase of inventory}the least liquid current asset is typically considered to be {Ans: inventory; because it may be subject to obsolescence, and will likely incur the greatest loss in value if it must be sold