Question 1

Which one of the following is an intangible fixed asset?

Accepted Answer

A)   Inventory
B)   Machinery
C)   Copyright
D)   Account receivable
E)   BuildingF) None of the above
G) B) and E)

Question 2

Which one of the following statements concerning the balance sheet is correct?

Accepted Answer

A)   Total assets equal total liabilities minus total equity.
B)   Net working capital is equal total assets minus total liabilities.
C)   Assets are listed in descending order of liquidity.
D)   Current assets are equal to total assets minus net working capital.
E)   Shareholders' equity is equal to net working capital minus net fixed assets plus long-term debt.F) A) and E)
G) A) and D)

Question 3

Which one of the following is an equity account?

Accepted Answer

A)   Paid in surplus
B)   Bonds payable
C)   Patent
D)   Depreciation
E)   Net fixed assetsF) C) and D)
G) B) and C)

Question 4

Cash flow to stockholders is defined as:

Accepted Answer

A)   cash flow from assets plus cash flow to creditors.
B)   operating cash flow minus cash flow to creditors.
C)   dividends paid plus the change in retained earnings.
D)   dividends paid minus net new equity raised.
E)   net income minus the addition to retained earnings.F) B) and E)
G) C) and E)

Question 5

Use the following tax table to answer this question:  Bait and Tackle has taxable income of $411,562. How much does it owe in taxes?

Accepted Answer

A)   $128,603.33
B)   $134,611.27
C)   $138,542.79
D)   $139,931.08
E)   $141,354.82F) C) and D)
G) B) and E)

Question 6

The balance sheet of a firm shows current liabilities of $46,300 and long-term debt of $189,200 as of last year. Current liabilities are $56,900 and long-term debt is $248,750 as of today, which is the end of the current year. The financial statements for the current year reflect an interest paid amount of $18,700 and dividends of $22,000. What is the amount of the net new borrowing?

Accepted Answer

A)   $51,450
B)   $59,550
C)   $64,750
D)   $70,150
E)   $78,250F) A) and B)
G) A) and C)

Question 7

Roscoe's purchased new machinery three years ago for $1.8 million. The machinery can be sold to Stewart's today for $1.2 million. Roscoe's current balance sheet shows net fixed assets of $960,000, current liabilities of $348,000, and net working capital of $121,000. If all the current assets were liquidated today, the company would receive $518,000 cash. The book value of the firm's assets today is _____ and the market value is _____.

Accepted Answer

A)   $1,081,000; $1,308,000
B)   $1,081,000; $1,718,000
C)   $1,307,000; $1,429,000
D)   $1,429,000; $1,308,000
E)   $1,429,000; $1,718,000F) B) and D)
G) B) and E)

Question 8

Gallagher's Supply has sales of $387,000 and costs of $294,500. The depreciation expense is $43,800. Interest paid equals $18,200 and dividends paid equal $6,500. The tax rate is 35 percent. What is the addition to retained earnings?

Accepted Answer

A)   $10,775
B)   $11,460
C)   $13,120
D)   $13,325
E)   $15,450F) All of the above
G) A) and D)

Question 9

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) C) and D)
G) All of the above

Question 10

Which one of the following statements concerning market and book values is correct?

Accepted Answer

A)   The market value of accounts receivable is generally higher than the book value of those receivables.
B)   The market value tends to provide a better guide to the actual worth of an asset than does the book value.
C)   The market value of fixed assets will always exceed the book value of those assets.
D)   Book values represent the amount of cash that will be received if an asset is sold.
E)   The current book value of equipment purchased last year is equal to the initial cost of the equipment.F) All of the above
G) A) and C)

Exam 2: Financial Statements, Taxes, and Cash Flow

Correct Answer
verified

Use the following tax table to answer this question: Bait and Tackle has taxable income of $411,562. How much does it owe in taxes?

Correct Answer
verified

Gallagher's Supply has sales of $387,000 and costs of $294,500. The depreciation expense is $43,800. Interest paid equals $18,200 and dividends paid equal $6,500. The tax rate is 35 percent. What is the addition to retained earnings?

Correct Answer
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Which one of the following statements concerning market and book values is correct?

Correct Answer
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Cash flow to stockholders is defined as:

Correct Answer
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The matching principle states that:

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

Correct Answer
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Which one of the following is an equity account?

Correct Answer
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Which one of the following statements concerning the balance sheet is correct?

Correct Answer
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Exam 2: Financial Statements, Taxes, and Cash Flow

Correct AnswerverifiedShow Answer

Use the following tax table to answer this question: Bait and Tackle has taxable income of $411,562. How much does it owe in taxes?

Correct AnswerverifiedShow Answer

Gallagher's Supply has sales of $387,000 and costs of $294,500. The depreciation expense is $43,800. Interest paid equals $18,200 and dividends paid equal $6,500. The tax rate is 35 percent. What is the addition to retained earnings?

Correct AnswerverifiedShow Answer

Which one of the following statements concerning market and book values is correct?

Correct AnswerverifiedShow Answer

Cash flow to stockholders is defined as:

Correct AnswerverifiedShow Answer

The matching principle states that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is an intangible fixed asset?

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Which one of the following is an equity account?

Correct AnswerverifiedShow Answer

Which one of the following statements concerning the balance sheet is correct?

Correct AnswerverifiedShow Answer

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