(PLEASE SHOW ALL WORK AND FORMULAS) (PLEASE SHOW ALL WORK AND FORMULAS) 20). Whi

Question

(PLEASE SHOW ALL WORK AND FORMULAS)

(PLEASE SHOW ALL WORK AND FORMULAS)

20). Which of the following is/are false regarding the balance sheet and income statement? I. The income statement reflects a summary of activity that occurs over some period of time while the balance sheet is a snapshot taken at a single point in time II. Both represent a summary of activity that occurs over some time period. III. The two statements, taken together, give an accurate estimate of the firm's cash flows and market value a) I only b) II only c) III only d) II and II only 21) A firm with negative net working capital a) has no cash on hand b) MUST sell some of its inventory to correct the problem c) has more current liabilities than current assets d) all of the above

Explanation / Answer

20) The correct option is d) II and III only

since only income statement is the financial statement which covers financial performance for a period of time , while Balance Sheet gives the status of assets and liabilities as of a particular date

21) net working capital = current assets - current liabilities , this means that a firm with negative working capital has more of current liabilities than current assets

hence correct option is d) all of the above

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