4 questions about fin

A. Decrease the firm’s debt

B. Increase the firm’s equi

C. Decrease the firm’s Cash Flow From Investing

D. Decrease the firm’s assets

E. Increase the firm’s assets

F. Increase the firm’s Net Income

G. Decrease the firm’s equity

H. These transactions have no effect on the firm’s capitalization

I. Increase the firm’s debt

Q2:

The CFO of Zero Motorcycles wants to recapitalize the firm. She makes the following transactions (with the approval of the board):

dr Cash $100MM
cr PIC (share issuance) $100MM

dr Loan Payable $100MM
cr Cash $100MM

What is the net financial effect to the firm and why? Choose one financial effect and one reason.

A. Because the firm has increased its cash stockpile.
B. The firm’s financial risk has increased.
C. The firm’s financial risk is unchanged.
D. Because the firm has increased its cash obligations.
E. Because the firm has fewer contractual obligations to pay cash going forward.
F. The firm’s financial risk has decreased.

Q3:

A company tracks its PPE using the shortcut net PPE method. For 20X1 it notes wear of its PPE of 10. Which journal entries should it use to record this? Choose all that apply.

A. dr Depreciation Expense 10
B. cr Accumulated Depreciation 10
C. cr Cash 10
D. dr Accumulated Depreciation 10
E. cr net PPE 10

Q4:

StartupCo’s Balance Sheet for 20X0 is shown below. During 20X1 it notes wear of its PPE of 10. Assuming nothing else happens in 20X1, which Balance Sheet is correct for 20X1?
Balance Sheet as of 12/31/20X0
Current Assets 75
net PPE 100
Total Assets 175

Total Liabilities 110
Equity 65

A.

Balance Sheet as of 12/31/20X1
Current Assets 65
net PPE 90
Total Assets 155
Total Liabilities 100
Equity 55

B.
Balance Sheet as of 12/31/20X1
Current Assets 75
PPE 100
– Accumulated Depreciation -10
net PPE 90
Total Assets 165

Total Liabilities 110
Equity 55

C.
Balance Sheet as of 12/31/20X1
Current Assets 75
net PPE 90
Total Assets 165

Total Liabilities 110
Equity 55