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Cartes-fiches 20 Cartes-fiches
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Langue Deutsch
Niveau Collège
Crée / Actualisé 24.12.2018 / 24.12.2018
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  1. When an analyst preparing a free cash flow statement encounters an unusual transaction, the best course of action is to:

a.   determine how the transaction is treated under GAAP

b.   determine how it should be treated in the free cash flow statement

c.   adjust the transaction from GAAP to free cash flow

d.   All of the above answers are correct.

d
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  1. In a free cash flow statement, the amortization of bond discount is:

a.   not adjusted since it is a component of free cash flow

b.   adjusted by moving it from the free cash flow section to the capital cash flow section of the statement; however, the after-tax interest will remain a component of free cash flow

c.   adjusted by moving it from the free cash flow section to the nonoperating cash flow section of the statement

d.   adjusted by moving it from the free cash flow section to the capital cash flow section of the statement along with the after-tax interest

d
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  1. A firm has long-term construction projects. Under GAAP it may:

a.   defer the entire amount of its interest payments until the completion of the construction projects

b.   only expense a portion of its interest payments

c.   choose to expense or capitalize a portion of its interest payments

d.   capitalize a portion of its interest payments and charge the portion to a fixed asset account rather than to interest expense

d
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The amount of interest that a firm with long-term construction projects may capitalize depends on:

a.   if the capitalized interest is considered a free or capital cash flow on the free cash flow statement

b.   the total accumulated cost of the completed long-term construction projects for the accounting period

c.   the average construction in progress balance during the year times the firm’s average borrowing rate, not to exceed the total interest cost incurred during the period

d.   None of the above answers are correct.

c