{"id":321,"date":"2023-03-27T21:38:02","date_gmt":"2023-03-27T21:38:02","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/?post_type=chapter&p=321"},"modified":"2023-04-03T02:45:27","modified_gmt":"2023-04-03T02:45:27","slug":"chapter-2-review-questions","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/chapter\/chapter-2-review-questions\/","title":{"raw":"Review Questions","rendered":"Review Questions"},"content":{"raw":"
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Chapter 2 Review Questions<\/h2>\r\n1<\/span>. <\/span>What is the difference between gross profit and net income?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
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\r\n\r\n \r\n\r\n2<\/span>. <\/span>If a classified balance sheet has total assets of $900,000 and total owner\u2019s equity of $350,000, what must the company\u2019s total liabilities be?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
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\r\n\r\n \r\n\r\n3<\/span>. W<\/span>hat key element of the income statement flows through to the balance sheet?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
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\r\n\r\n \r\n\r\n4<\/span>. <\/span>What key columns are commonly found on the statement of owner\u2019s equity?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
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\r\n\r\n \r\n\r\n5<\/span>. <\/span>Ted\u2019s firm reported net income for the current period of $65,750. Is it safe to assume that because Ted\u2019s firm reported such a large net income, it has plenty of cash to fund its operations? Why or why not?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
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\r\n\r\n \r\n\r\n6<\/span>. <\/span>What useful insights does free cash flow (FCF) provide in financial analysis?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
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\r\n\r\n \r\n\r\n7<\/span>. <\/span>Describe how common-size statements are useful.<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section>
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\r\n\r\n \r\n\r\n8<\/span>. <\/span>What is the difference between a calendar year and a fiscal year?<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n<\/section> \r\n\r\nAttribution:<\/strong>\r\n\r\nThis chapter is from \u201cPrinciples of Finance\u201d \u00a0https:\/\/openstax.org\/books\/principles-finance\/pages\/1-why-it-matters<\/a> by Dahlquist and Knight. This book is licensed under the CC-BY<\/a> 4.0 license. 2022 OpenStax.","rendered":"
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Chapter 2 Review Questions<\/h2>\n

1<\/span>. <\/span>What is the difference between gross profit and net income?<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

2<\/span>. <\/span>If a classified balance sheet has total assets of $900,000 and total owner\u2019s equity of $350,000, what must the company\u2019s total liabilities be?<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

3<\/span>. W<\/span>hat key element of the income statement flows through to the balance sheet?<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

4<\/span>. <\/span>What key columns are commonly found on the statement of owner\u2019s equity?<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

5<\/span>. <\/span>Ted\u2019s firm reported net income for the current period of $65,750. Is it safe to assume that because Ted\u2019s firm reported such a large net income, it has plenty of cash to fund its operations? Why or why not?<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

6<\/span>. <\/span>What useful insights does free cash flow (FCF) provide in financial analysis?<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

7<\/span>. <\/span>Describe how common-size statements are useful.<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

\n
\n
\n

 <\/p>\n

8<\/span>. <\/span>What is the difference between a calendar year and a fiscal year?<\/span><\/p>\n<\/div>\n<\/div>\n<\/section>\n

 <\/p>\n

Attribution:<\/strong><\/p>\n

This chapter is from \u201cPrinciples of Finance\u201d \u00a0https:\/\/openstax.org\/books\/principles-finance\/pages\/1-why-it-matters<\/a> by Dahlquist and Knight. This book is licensed under the CC-BY<\/a> 4.0 license. 2022 OpenStax.<\/p>\n","protected":false},"author":101,"menu_order":7,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-321","chapter","type-chapter","status-publish","hentry"],"part":22,"_links":{"self":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/321","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/users\/101"}],"version-history":[{"count":5,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/321\/revisions"}],"predecessor-version":[{"id":1295,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/321\/revisions\/1295"}],"part":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/parts\/22"}],"metadata":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapters\/321\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/media?parent=321"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/pressbooks\/v2\/chapter-type?post=321"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/contributor?post=321"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/ppscacc2010principlesoffinance\/wp-json\/wp\/v2\/license?post=321"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}