Solutions for M: Finance, 6th Edition by Marcia Cornett
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Course
FINC - Finance
Institution
FINC - Finance
Complete Solutions Manual for M: Finance, 6th Edition 6e by Marcia Cornett, Troy Adair and John Nofsinger.Full Chapters Solutions are included - Chapter 1 to 14
PART ONE:INTRODUCTION
Chapter 1:Introduction to Financial Management
PART TWO:FINANCIAL STATEMENTS
Chapter 2:Reviewing Financial S...
LG2-1 1. List and describe the four major financial statements.
The four basic financial statements are:
1. The balance sheet reports a firm’s assets, liabilities, and equity at a particular point in time.
2. The income statement shows the total revenues that a firm earns and the total expenses the
firm incurs to generate those revenues over a specific period of time—generally one year.
3. The statement of cash flows shows the firm’s cash flows over a given period of time. This
statement reports the amounts of cash the firm generated and distributed during a particular
time period. The bottom line on the statement of cash flows―the difference between cash
sources and uses―equals the change in cash and marketable securities on the firm’s balance
sheet from the previous year’s balance.
4. The statement of retained earnings provides additional details about changes in retained
earnings during a reporting period. This financial statement reconciles net income earned
during a given period minus any cash dividends paid within that period to the change in
retained earnings between the beginning and ending of the period.
LG2-1 2. On which of the four major financial statements (balance sheet, income statement, statement of
cash flows, or statement of retained earnings) would you find the following items?
a. earnings before taxes - income statement
b. net plant and equipment - balance sheet
c. increase in fixed assets - statement of cash flows
d. gross profits - income statement
e. balance of retained earnings, December 31, 20xx - statement of retained earnings and balance
sheet
f. common stock and paid-in surplus - balance sheet
g. net cash flow from investing activities - statement of cash flows
h. accrued wages and taxes – balance sheet
i. increase in inventory - statement of cash flows
LG2-1 3. What is the difference between current liabilities and long-term debt?
Current liabilities constitute the firm’s obligations due within one year, including accrued wages and
taxes, accounts payable, and notes payable. Long-term debt includes long-term loans and bonds with
maturities of more than one year.
LG2-1 4. How does the choice of accounting method used to record fixed asset depreciation affect
management of the balance sheet?
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