Question 1

Last year,The Pizza Joint added $4,100 to retained earnings from sales of $93,600.The company had costs of $74,400,dividends of $2,500,and interest paid of $1,400.The tax rate was 34 percent.What was the amount of the depreciation expense?

Accepted Answer

A)  $7,300
B)  $7,500
C)  $7,800
D)  $8,100
E)  $8,400F) A) and D)
G) B) and E)

Question 2

Daniel's Market has sales of $36,600,costs of $28,400,depreciation expense of $3,100,and interest expense of $1,500.If the tax rate is 34 percent,what is the operating cash flow,OCF?

Accepted Answer

A)  $4,811
B)  $5,279
C)  $6,466
D)  $6,976
E)  $7,013F) D) and E)
G) C) and E)

Question 3

Which one of the following is included in net working capital?

Accepted Answer

A)  Newly purchased equipment with a useful life of 6 years
B)  Mortgage on a building payable over the next 12 years
C)  Interest on a long-term debt
D)  10-year bonds issued to the general public
E)  Invoice from a supplier for inventory purchasedF) B) and E)
G) B) and D)

Question 4

Andre's Dog House had current assets of $67,200 and current liabilities of $71,100 last year.This year,the current assets are $82,600 and the current liabilities are $85,100.The depreciation expense for the past year is $9,600 and the interest paid is $8,700.What is the amount of the change in net working capital?

Accepted Answer

A)  -$2,800
B)  -$1,400
C)  $1,400
D)  $2,100
E)  $2,800F) B) and C)
G) A) and B)

Question 5

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

Accepted Answer

A)  income statement.
B)  cash flow statement.
C)  liquidity position.
D)  balance sheet.
E)  periodic operating statement.F) A) and C)
G) B) and D)

Question 6

Net working capital is defined as:

Accepted Answer

A)  the depreciated book value of a firm's fixed assets.
B)  the value of a firm's current assets.
C)  available cash minus current liabilities.
D)  total assets minus total liabilities.
E)  current assets minus current liabilities.F) A) and E)
G) C) and E)

Question 7

Use the following tax table to answer this question:  The Holiday Inn earned $177,284 in taxable income for the year.How much tax does the company owe on this income?

Accepted Answer

A)  $46,311.02
B)  $48,490.76
C)  $52,390.76
D)  $59,998.81
E)  $65,240.76F) C) and E)
G) A) and C)

Question 8

The financial statements of Jame's Auto Repair reflect cash of $14,600,accounts receivable of $11,500,accounts payable of $22,900,inventory of $17,800,long-term debt of $42,000,and net fixed assets of $63,800.The firm estimates that if it wanted to cease operations today it could sell the inventory for $35,000 and the fixed assets for $49,000.The firm could also collect 100 percent of its receivables.What is the market value of the assets?

Accepted Answer

A)  $32,800
B)  $39,900
C)  $74,000
D)  $95,500
E)  $110,100F) B) and C)
G) A) and B)

Question 9

Gino's Winery has net working capital of $29,800,net fixed assets of $64,800,current liabilities of $34,700,and long-term debt of $23,000.What is the value of the owners' equity?

Accepted Answer

A)  $36,900
B)  $66,700
C)  $71,600
D)  $89,400
E)  $106,300F) D) and E)
G) A) and B)

Question 10

Bridgewater Furniture has sales of $811,000,costs of $658,000,and interest paid of $21,800.The depreciation expense is $56,100 and the tax rate is 34 percent.At the beginning of the year,the firm had retained earnings of $318,300 and common stock of $250,000.At the end of the year,the firm has retained earnings of $322,500 and common stock of $280,000.What is the amount of the dividends paid for the year?

Accepted Answer

A)  $15,266
B)  $19,466
C)  $31,566
D)  $41,066
E)  $45,366F) B) and E)
G) None of the above

Question 11

The Braxton Co.has beginning long-term debt of $64,500,which is the principal balance of a loan payable to Centre Bank.During the year,the company paid a total of $16,300 to the bank,including $4,100 of interest.The company also borrowed $11,000.What is the value of the ending long-term debt?

Accepted Answer

A)  $45,100
B)  $53,300
C)  $58,200
D)  $63,300
E)  $85,900F) B) and D)
G) A) and B)

Question 12

Highly liquid assets:

Accepted Answer

A)  increase the probability a firm will face financial distress.
B)  appear on the right side of a balance sheet.
C)  generally produce a high rate of return.
D)  can be sold quickly at close to full value.
E)  include all intangible assets.F) All of the above
G) A) and B)

Question 13

Over the past year,a firm decreased its current assets and increased its current liabilities.As a result,the firm's net working capital:

Accepted Answer

A)  had to increase.
B)  had to decrease.
C)  could have remained constant if the amount of the decrease in current assets equaled the amount of the increase in current liabilities.
D)  could have either increased, decreased, or remained constant.
E)  was unaffected as the changes occurred in the firm's current accounts.F) None of the above
G) A) and E)

Question 14

Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend.The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Accepted Answer

A)  Positive operating cash flow
B)  Negative cash flow from assets
C)  Negative cash flow to stockholders
D)  Negative operating cash flow
E)  Positive cash flow to stockholdersF) C) and E)
G) B) and C)

Question 15

The matching principle states that:

Accepted Answer

A)  costs should be recorded on the income statement whenever those costs can be reliably determined.
B)  costs should be recorded when paid.
C)  the costs of producing an item should be recorded when the sale of that item is recorded as revenue.
D)  sales should be recorded when the payment for that sale is received.
E)  sales should be recorded when the earnings process is virtually completed and the value of the sale can be determined.F) B) and D)
G) All of the above

Question 16

The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920.The depreciation expense for the year is $46,080 and the interest expense is $11,460.What is the amount of the net capital spending?

Accepted Answer

A)  -$22,360
B)  -$4,780
C)  $23,720
D)  $58,340
E)  $69,800F) All of the above
G) B) and C)

Question 17

Andersen's Nursery has sales of $318,400,costs of $199,400,depreciation expense of $28,600,interest expense of $1,100,and a tax rate of 34 percent.The firm paid out $16,500 in dividends.What is the addition to retained earnings?

Accepted Answer

A)  $36,909
B)  $42,438
C)  $44,141
D)  $47,208
E)  $47,615F) A) and D)
G) A) and E)

Question 18

Which one of the following is an intangible fixed asset?

Accepted Answer

A)  Inventory
B)  Machinery
C)  Copyright
D)  Account receivable
E)  BuildingF) A) and B)
G) A) and D)

Question 19

Donner United has total owners' equity of $18,800.The firm has current assets of $23,100,current liabilities of $12,200,and total assets of $36,400.What is the value of the long-term debt?

Accepted Answer

A)  $5,400
B)  $12,500
C)  $13,700
D)  $29,800
E)  $43,000F) C) and D)
G) A) and D)

Question 20

Explain why the marginal tax rate,rather than the average tax rate,is used when computing the cash flows from a proposed new project.

Accepted Answer

The marginal tax rate is used ...

Exam 2: Financial Statements, Taxes, and Cash Flow

Net working capital is defined as:

Correct Answer
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Correct Answer
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Use the following tax table to answer this question: The Holiday Inn earned $177,284 in taxable income for the year.How much tax does the company owe on this income?

Correct Answer
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The Braxton Co.has beginning long-term debt of $64,500,which is the principal balance of a loan payable to Centre Bank.During the year,the company paid a total of $16,300 to the bank,including $4,100 of interest.The company also borrowed $11,000.What is the value of the ending long-term debt?

Correct Answer
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Which one of the following is included in net working capital?

Correct Answer
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Gino's Winery has net working capital of $29,800,net fixed assets of $64,800,current liabilities of $34,700,and long-term debt of $23,000.What is the value of the owners' equity?

Correct Answer
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Highly liquid assets:

Correct Answer
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Over the past year,a firm decreased its current assets and increased its current liabilities.As a result,the firm's net working capital:

Correct Answer
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Correct Answer
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The matching principle states that:

Correct Answer
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Which one of the following is an intangible fixed asset?

Correct Answer
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Donner United has total owners' equity of $18,800.The firm has current assets of $23,100,current liabilities of $12,200,and total assets of $36,400.What is the value of the long-term debt?

Correct Answer
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Correct Answer
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The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920.The depreciation expense for the year is $46,080 and the interest expense is $11,460.What is the amount of the net capital spending?

Correct Answer
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Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend.The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Correct Answer
verified

Daniel's Market has sales of $36,600,costs of $28,400,depreciation expense of $3,100,and interest expense of $1,500.If the tax rate is 34 percent,what is the operating cash flow,OCF?

Correct Answer
verified

Explain why the marginal tax rate,rather than the average tax rate,is used when computing the cash flows from a proposed new project.

Correct Answer
verified
The marginal tax rate is used ...
View Answer

Andersen's Nursery has sales of $318,400,costs of $199,400,depreciation expense of $28,600,interest expense of $1,100,and a tax rate of 34 percent.The firm paid out $16,500 in dividends.What is the addition to retained earnings?

Correct Answer
verified

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

Correct Answer
verified

Last year,The Pizza Joint added $4,100 to retained earnings from sales of $93,600.The company had costs of $74,400,dividends of $2,500,and interest paid of $1,400.The tax rate was 34 percent.What was the amount of the depreciation expense?

Correct Answer
verified

Exam 2: Financial Statements, Taxes, and Cash Flow

Net working capital is defined as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the following tax table to answer this question: The Holiday Inn earned $177,284 in taxable income for the year.How much tax does the company owe on this income?

Correct AnswerverifiedShow Answer

The Braxton Co.has beginning long-term debt of $64,500,which is the principal balance of a loan payable to Centre Bank.During the year,the company paid a total of $16,300 to the bank,including $4,100 of interest.The company also borrowed $11,000.What is the value of the ending long-term debt?

Correct AnswerverifiedShow Answer

Which one of the following is included in net working capital?

Correct AnswerverifiedShow Answer

Gino's Winery has net working capital of $29,800,net fixed assets of $64,800,current liabilities of $34,700,and long-term debt of $23,000.What is the value of the owners' equity?

Correct AnswerverifiedShow Answer

Highly liquid assets:

Correct AnswerverifiedShow Answer

Over the past year,a firm decreased its current assets and increased its current liabilities.As a result,the firm's net working capital:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The matching principle states that:

Correct AnswerverifiedShow Answer

Which one of the following is an intangible fixed asset?

Correct AnswerverifiedShow Answer

Donner United has total owners' equity of $18,800.The firm has current assets of $23,100,current liabilities of $12,200,and total assets of $36,400.What is the value of the long-term debt?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920.The depreciation expense for the year is $46,080 and the interest expense is $11,460.What is the amount of the net capital spending?

Correct AnswerverifiedShow Answer

Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend.The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Correct AnswerverifiedShow Answer

Daniel's Market has sales of $36,600,costs of $28,400,depreciation expense of $3,100,and interest expense of $1,500.If the tax rate is 34 percent,what is the operating cash flow,OCF?

Correct AnswerverifiedShow Answer

Explain why the marginal tax rate,rather than the average tax rate,is used when computing the cash flows from a proposed new project.

Correct AnswerverifiedThe marginal tax rate is used ...View AnswerShow Answer

Andersen's Nursery has sales of $318,400,costs of $199,400,depreciation expense of $28,600,interest expense of $1,100,and a tax rate of 34 percent.The firm paid out $16,500 in dividends.What is the addition to retained earnings?

Correct AnswerverifiedShow Answer

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

Correct AnswerverifiedShow Answer

Last year,The Pizza Joint added $4,100 to retained earnings from sales of $93,600.The company had costs of $74,400,dividends of $2,500,and interest paid of $1,400.The tax rate was 34 percent.What was the amount of the depreciation expense?

Correct AnswerverifiedShow Answer

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The marginal tax rate is used ...
View Answer

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Correct Answer
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Correct Answer
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