Exam 4: Preparing and Using Financial Statements

During the development stage in a new venture's life cycle, the balance sheet reflects the acquisition of initial assets and the obtaining of seed financing.

"Cost of goods sold" is the cost of materials, labor, and advertising incurred to produce the products that were sold.

GAAP stands for "General American Accounting Principles."

Fixed expenses are costs that are expected to remain constant over a range of revenues for a specific time period.

How quickly an asset can be converted into cash is called liability.

The reduction in value of a fixed asset over its expected life intended to reflect the usage or wearing out of the asset is called accumulated depreciation.

Use the following information to determine the cash fixed costs: Administrative expenses = $200,000; Marketing expenses = $180,000; Depreciation expenses = $100,000; and Interest expenses = $20,000.

Financial statement that reports the revenues generated and expenses incurred over an accounting period is called the

On the balance sheet, Total Liabilities = Total Assets - Owners Equity.

NOPAT equals Net Sales multiplied by on minus the tax rate.T 4. When EBIT is zero, a firm's net operating profit after taxes NOPAT) also is zero because no taxes are payable.

What is the survival revenues breakeven based on the following: Administrative expenses = $200,000; Marketing expenses = $180,000; Depreciation expenses = $100,000; and Interest expenses = $20,000; and a variable cost revenue ratio = .50?

Long-term, non-cancelable leases whereby the owner receives payments that cover the cost of the equipment plus a return on investment in the equipment is known as a capital lease.

According to Appendix A of Chapter 4, NOPAT is defined as:

EBDAT is earnings before interest, taxes, depreciation, and amortization.

During the startup stage in a new venture's life cycle, the income statement typically shows no sales but expenses including the production and market of products or services.

Net income, or profit, is the bottom line measure of what's left from the firm's net sales after operating expenses, financing costs, and taxes have been deducted.

What is Acme's net income?

Expenses or costs that vary directly with revenues are said to be:

Last year a firm had sales of $200,000. Its cost of goods sold was $75,000, and administrative and marketing expenses were $25,000 each. Depreciation expense was $10,000, while interest expense was $15,000. If the tax rate is 30%, what was the firm's NOPAT last year?

Cash includes all of the following except: