Please use the Ross, et al Fundamentals of Corporate Finance as a resource in solving

the problems.

1.

Select all that are true

.a) Accounting emphasizes the determination of net income while the emphasis in Finance is on net cash flow.

b) Net cash flow generally differs from net income because some of the expenses and revenues listed on the income statement are not paid out or received in cash during the year.

c) Net cash flow does not include after tax interest expense.

d) Free cash flow is the cash flow actually available for distribution to investors after the company has made all the investments in fixed assets, new products, and operating working capital necessary to sustain ongoing operations.

2. The following statements are about the cash flow statements. Select all that are true.

a) The CF statement is an expanded version of the companys cash account.

b) The CF statement allows interested parties to understand where its money is coming from and how it is being utilized.

c) The CF Statement works with a tangible variable called cash.

d) It measures performance using accrual accounting.

e) It includes depreciation and amortization in its transactions.

f) The aim of the CF statement is to measure the change in cash from the beginning of one accounting period to the end of another accounting period.