Multiple choice

1) An item which may be converted to cash within one year or one operating cycle of the firm is classified as a

A)current liability.

B)long-term asset.

C)current asset.

D)long-term liability.

2) Which of the following is not a primary source of capital to the firm? A) assets

B)common stock C)preferred stock D)bonds

3) The residual income of the firm belongs to A)creditors. B)preferred stockholders. C)common stockholders. D)bondholders.

4) A person signs a contract calling for payments of $250,000 per year, to begin 10 years from now. To find the present value of this contract, which table or tables should you use?

A)the future value of $1 B)the future value of an annuity of $1 and the future value of $1 C)the present value of an annuity of $1 and the present value of $1 D)none of the above