ECON 101-Fundamentals of Corporate Finance Canadian 9th Edition Ross Test Bank

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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 1) Statement of financial position is best described as a financial statement summarizing a firm's performance over... a period of time. Formerly called the income statement. Answer: True False 2) If an asset has a carrying value of $1,000 and its recoverable amount is $750, then a $250 impairment loss has been incurred. Answer: True False 3) If an asset has a carrying value of $2,000 and its recoverable amount is $2,500, then $500 impairment loss has been incurred. Answer: True False 4) Impairment loss is the amount by which the carrying value of an asset or cash-generating unit exceeds its recoverable amount. Answer: True False 5) According to generally accepted accounting principles (GAAP), assets are generally shown on financial statements at the higher of current market value or historical cost. Answer: True False 6) A fundamental difference between Canadian GAAP and IFRS is that fair value accounting plays a more important role under IFRS. Answer: True False 7) The financial statement summarizing the value of a firm's equity on a particular date is the statement of comprehensive income. Answer: True False 8) Patents on new anti-cholesterol drug are considered intangible fixed assets. Answer: True False 9) The difference between a firm's current assets and its current liabilities is called net working capital. Answer: True False 10) Statement of comprehensive income is also referred to as the balance sheet, is a snapshot of the firm. It is a convenient means of organizing and summarizing what a firm owns (its assets), what a firm owes (its liabilities), and the difference between the two (the firm's equity) at a given time. Answer: True False 11) Net income divided by the total number of outstanding shares is referred to as the profit margin. Answer: True False 12) Non-cash items refer to expenses charged against revenues that do not directly affect cash flow. Answer: True False 1 CONTINUED........... [Show More]

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