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Test Bank for Fundamentals of Corporate Finance Ch. 2 (6th edition by Jonathan Berk)
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Test Bank for Fundamentals of Corporate Finance Ch. 2 (6th edition by Jonathan Berk)
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Test Bank for Fundamentals ofCorporate Finance Ch. 2 (6th edition by
Jonathan Berk)
balance sheet - ANSsnapshot of the firm. a convenient way of organizing and summarizing what
a firm owns (assets), what a firm owes (liabilities), and the difference between the two (the firm's
equity) at a given point in time.
the assets of the firm - ANSon a balance sheet, what is listed on the left hand side?
liabilities and equity - ANSwhat is listed on the right hand side of the balance sheet?
current or fixed - ANSassets are classified as either ______ or ________.
tangible or intangible - ANSfixed assets can either be tangible or intangible
less than a year - ANShow long is the life of a current asset?
accounts receivable - ANSmoney owed to the firm by its customers
current or long-term - ANSliabilities are listed as either ______ or _________.
less than one year (meaning they must be paid within one year) - ANShow long is the life of
current liabilities?
accounts payable - ANSmoney the firm owes to its suppliers
long term liability - ANSa debt that is not due in the coming year is classified as a ______
________ ________.
bonds - ANSlong-term debt
bondholders - ANSlong-term creditors
shareholder's equity aka common equity - ANSthe difference between the total value of the
assets (current and fixed) and the total value of liabilities (current and long-term)
assets - ANSliabilities + shareholder's equity =
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