Which of the following will give rise to a deferred tax liability?

• A.An expense is recognized for financial purposes before it is recognized for tax purposes
• B.Taxes payable (owed) are more than income tax expense reported on the income statement
• C.Revenue is recognized earlier for financial purposes than for tax return purposes

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The ________ ratio is the most conservative liquidity ratio.

• A.quick
• B.current
• C.cash

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A company with outstanding bonds of $100,000 retires the debt early by buying back the bonds at
$ 83,000. The impact on the cash flow statement, assuming the indirect method is used, would be:

• A.a cash outflow of $83,000 under investing cash flows and a deduction of $17,000 under cash flows from investing.
• B.a cash outflow of $83,000 under cash flows from financing and a deduction of $17,000 under cash flows from operations.
• C.a cash inflow of $83,000 under cash flows from financing and a cash inflow of $17,000 under cash flows from operations.

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There are 1,000 identical firms in a purely competitive industry. In the short run, the total revenues of each firm are less than total costs. What will happen in the long run?

• A.Additional firms will enter the market, but the price will remain the same because the existing firms will not allow it to decrease.
• B.Firms will exit the market and the product price will rise.
• C.Additional firms will enter the market and price will be driven down to where each firm will be making just enough to stay in business (cover its variable costs).

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An analyst has put together the following information from an annual report:

What is the cash flow from financing?

• A.165
• B.-1,743
• C.1,221

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