Which one of the following is considered a financing activity?
a. The payment of interest on a note payable to the bank
b. Selling products to customers
c. Paying wages to employees
d. The payment of a cash dividend
d
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Select the correct statement regarding the selling and administrative (S&A) expense budget.
A. The S&A budget is prepared before the cash budget. B. The S&A budget is prepared before the pro forma income statement. C. The S&A budget is prepared after the sales budget. D. All of the answers are correct.
The estimated price of a stock in the future is important because it includes the projected capital gain on the stock
Indicate whether the statement is true or false.
Which of the following is not an element of friction-free commerce?
A) Information is equally distributed. B) Transaction costs are high. C) Prices can be dynamically adjusted to reflect actual demand. D) Unfair competitive advantages are eliminated.
Freiman Corporation's most recent balance sheet and income statement appear below:Balance SheetDecember 31, Year 2 and Year 1(in thousands of dollars) Year 2Year 1Assets Current assets: Cash$160 $120 Accounts receivable, net 220 240 Inventory 120 130 Prepaid expenses 40 40 Total current assets 540 530 Plant and equipment, net 700 700 Total assets$ 1,240 $ 1,230 Liabilities and Stockholders' Equity Current liabilities: Accounts payable$130 $150 Accrued liabilities 90 90 Notes payable, short term 60 70 Total current liabilities 280 310 Bonds payable 280 290 Total liabilities 560 600 Stockholders' equity: Common stock, $2 par value 100 100
Additional paid-in capital 200 200 Retained earnings 380 330 Total stockholders' equity 680 630 Total liabilities & stockholders' equity$ 1,240 $ 1,230 Income StatementFor the Year Ended December 31, Year 2(in thousands of dollars)Sales (all on account)$1,310 Cost of goods sold 780 Gross margin 530 Selling and administrative expenses 359 Net operating income 171 Interest expense 35 Net income before taxes 136 Income taxes (30%) 41 Net income$ 95 The acid-test (quick) ratio at the end of Year 2 is closest to: A. 0.96 B. 1.93 C. 1.36 D. 1.50