Financial Accounting

Financial leverage is also known as trading on the equity

Bonholders share voting rights with stockholders

If the net present value of long-term asset under consideration for purchase is negative, then the asset should not be purchased

A natural resource is subject to a process called depletion

The interest coverage ration is expressed as a percentage

A building not currently used because economic conditions have limited a company's expansio is classified properly as property, plant, and equipment

In the calculation of free cash flow, dividends and sale of plant assets are both deducted

The higher the debt to equity ratio, the greater the financial risk the company is taking

Entering into a lease is an example of off-balance-sheet financing

Freen cash flow isw a good measure of a company's ability to finance long-term assets

The debt to equity ratio is a measured of financial leverage

A positive net present value of a long-term asset under consideration for purchase indicates that the asset should probably be purchased

A corporation's stockholders are the primary recipients of financial leverage

Dividends on stock are tax-deductible to the issuing corporation whereas interest on debt is not

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset

The debt to equity ratio is expressed in terms of dollars

Asset impairment occurs when the fair value of a long-term asset exceeds its carrying value

The practice of off-balance-sheet financing is illegal

Book value refers to the market value of a long-term asset

Fair value is the amount for which an asset could be bought or sold in a current transaction