1. Which statement about the balance sheet is true?

	a.	The balance sheet for a given year tells us how much money the company earned during that year.
	b.	The balance sheet for a given year is designed to give us an idea of what happened to the firm during that year.
	c.	For most companies, the market value of the stock equals the book value of the stock as reported on the balance sheet.
	d.	A balance sheet lists the assets that will be converted to cash first and the longest-lived ones last.

2. Which factors are used to determine the level of sales that a firm can generate without having to raise any external funds (self-supporting growth rate)?

	a.	total sales, and total assets and liabilities
	b.	profits retained from sales, and total assets and liabilities
	c.	total profit from sales, and assets and liabilities tied to sales
	d.	profits retained from sales, and assets and liabilities tied to sales

Which of the following statements best describes cash flows that would be shown on a cash budget?

	a.	Depreciation is included in the estimate of cash flows (Cash flow = Net income + Depreciation); hence, depreciation is set forth on a separate line in the cash budget.
	b.	Sound working capital policy is designed to maximize the time between cash expenditures on materials and the collection of cash on sales.
	c.	If cash inflows from collections occur in equal daily amounts but most payments are made regularly on the 10th of each month, then it is not necessary to use a daily cash budget. A cash budget focused on the end of the month will suffice.
	d.	The cash flows shown on the cash budget are the actual cash inflows and outflows and thus different from the firms free cash flows, because FCF reflects after-tax operating income and the investments required to maintain future operations.