Why does capital maintenance require separate measurement approaches? a) Physical and financial capital preservation demand different methods b) Single measurement systems work universally c) Money values never change over time d) Physical assets remain constant forever
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- Working capital is needed for the following purpose: O a. Payment of long term liabilities O b. Payment of wages and salaries O c. None of these O d. Purchase of fixed assetsAn advantage that money has over other assets is that it: Answer a. Provides a higher return to the owner b. Is a safer asset to hold during times of inflation c. Increases in value over time d. Has lower transaction costs to use as a means of payment than other assetsWhich of the following best describes depreciation?A It is a means of spreading the payment for the asset over its total estimated lifeB It represents the decline in the market value of the assetC It is a means of spreading the cost of an asset over its estimated useful lifeD It is a way of estimating the cash needed to replace the asset in the future
- The term 'liquidity' refers to: a) The ability to convert an asset to cash quickly b) The profitability of an asset c) The value of an asset over time d) The interest rate of an assetThe current asset financing policy that calls for matching the maturities of assets with the maturities of liabilities is known as the a. permanent current ratio approach b. temporary net working capital approach C. conservative approach d. self-liquidating approach e. aggressive approachProvide a brief explanation of why depreciation of capital assets is considered in determining potential net income from an investment, but not included in determining the net cash flow of an investment.
- a)What is the basic principle in determining the price of a financial asset? b)Why is it difficult to determine the cash flow of a financial asset? c)Why are the characteristics of an issuer important in determining the price of a financial asset? d)What are the two principal roles of financial assets?What kind of assets are relatively long-lived and depreciate over time? Group of answer choices cash current assets like cash and accounts receivable land fixed assets (property, plant and equipment assets)This is a term to describe non-physical assets like stocks and bonds that get their value from future cash flows. Multiple Choice investment financial asset real asset financial markets
- In current purchasing power technique (a) Why is it necessary to consider monetary assetsseparately from nonmonetary assets? Analyze withexamples. (b) Why does holding monetary assets lead to apurchasing power loss, but holding nonmonetary assetsdoes not lead to a purchasing power loss? Analyze withexamplesWhich of the following is NOT correct regarding the rate of return on assets? a. The rate of return on assets measures management’s ability to productively employ all its resources. b. The rate of return on assets measures the return on all assets used regardless of how the assets are financed. c. The rate of return on assets is a measure of profitability. d. The rate of return on assets measures the return on the investment made by the owners of the entity. is B the correct answer?Explain how sunk costs and cannibalisation affect the determination of aninvestment’s incremental cash flows.