1. Which of the following statements is correct?

a. On the liability side of the balance sheet, the current liabilities section describes the value of the firms short-term assets.

b. It is important to realize that the balance sheet does not have to balance, that is, total assets may not equal the sum of total liabilities and total owners equity.

c. All the answers are correct.

d. Cash flows from investing are those cash flows generated from investments or disinvestments in long-term assets.

e. Current assets are a part of the liabilities that are expected to be retired in one year or less.

2. Which of the following statements is correct?

a. Liabilities are the tangible or intangible things that a firm owns.

b. Net income accurately represent the funds that a firm has available to spend.

c. Current Liabilities = Total Liabilities + Long Term Liabilities.

d. Common-size financial statements, which display the data not as dollar amounts, but as percentages.

e. All the answers are correct.

3. Which of the following statements is incorrect?

a. Net profit is the amount left over after paying for the goods that were sold before paying taxes and interest.

b. The statement of cash flows outlines the sources of the firms cash inflows and shows where the cash outflows went.

c. Because the balance sheet is specific to a point in time, it is much like a photograph.

d. Earnings Before Taxes (EBT) = EBIT - Interest Expense.

e. All the answers are correct except one.