Essay About Calendar Year And Total Cost

Business Law Case Study
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Johnson, Inc. has just ended the calendar year making a sale in the amount of $10,000 of
merchandise purchased during the year at a total cost of $7,000. Although the firm paid in full
for the merchandise during the year, it has yet to collect at year end from the customer. The net
profit and cash flow from this sale for the year are
A) $3,000 and $10,000, respectively.
B) $3,000 and -$7,000, respectively.
C) $7,000 and -$3,000, respectively.
D) $3,000 and $7,000, respectively.
The wealth of the owners of a corporation is represented by
A) profits.
B) earnings per share.
C) share value.
D) cash flow.
As the risk of a stock investment increases, investors
A) return will increase.
B) return will decrease.
C) required rate of return will decrease.
D) required rate of return will increase
A financial manager must choose between four alternative Assets: 1, 2, 3, and 4. Each asset
costs $35,000 and is expected to provide earnings over a three -year period as described below.
Asset
Year 1
Year 2
Year 3
$21,000
$15,000
$6,000
9,000
15,000
21,000
3
3,000
20,000
19,000
6,000
12,000
12,000
Based on the profit maximization goal, the financial manager would choose
A) Asset 1.
B) Asset 2.
C) Asset 3.
D) Asset 4.
A financial manager must choose between three alternative investments. Each asset is expected
to provide earnings over a three-year period as described below. Based on the wealth
maximization goal, the financial manager would
Year
Asset 1
Asset 2
Asset 3
$21,000
$ 9,000
$15,000