Question 1

Beach Front Industries has sales of $546,000,costs of $295,000,depreciation expense of $37,000,interest expense of $15,000,and a tax rate of 32 percent.The firm paid $59,000 in cash dividends.What is the addition to retained earnings?

Accepted Answer

A)  $76,320
B)  $81,700
C)  $95,200
D)  $103,460
E)  $121,680F) A) and E)
G) B) and D)

Question 2

Depreciation:

Accepted Answer

A)  reduces both taxes and net income.
B)  increases the net fixed assets as shown on the balance sheet.
C)  reduces both the net fixed assets and the costs of a firm.
D)  is a noncash expense which increases the net income.
E)  decreases net fixed assets, net income, and operating cash flows.F) A) and D)
G) A) and B)

Question 3

The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million,and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Accepted Answer

A)  -$500,000
B)  $400,000
C)  $1,300,000
D)  $1,700,000
E)  $1,800,000F) A) and B)
G) A) and C)

Question 4

Andre's Bakery has sales of $687,000 with costs of $492,000.Interest expense is $26,000 and depreciation is $42,000.The tax rate is 35 percent.What is the net income?

Accepted Answer

A)  $42,750
B)  $44,450
C)  $82,550
D)  $86,450
E)  $124,550F) A) and D)
G) C) and E)

Question 5

The tax rates are as shown.Nevada Mining currently has taxable income of $97,800.How much additional tax will the firm owe if taxable income increases by $21,000?   Taxable Income  Tax Rate 50−50,00015%50,001−75,00025%75,001−100,00034%100,001−335,00039%\begin{array} { r c } \frac { 	ext { Taxable Income } } { } & 	ext { Tax Rate } \\hline 50 - 50,000 & 15 \% \50,001 - 75,000 & 25 \% \75,001 - 100,000 & 34 \% \100,001 - 335,000 & 39 \%\end{array} Taxable Income ​50−50,00050,001−75,00075,001−100,000100,001−335,000​ Tax Rate 15%25%34%39%​​

Accepted Answer

A)  $8,080
B)  $8,130
C)  $8,155
D)  $8,170
E)  $8,190 F) None of the above
G) A) and C)

Question 6

The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:

Accepted Answer

A)  operating cash flow.
B)  net capital spending.
C)  net working capital.
D)  cash flow from assets.
E)  cash flow to stockholders.F) D) and E)
G) A) and E)

Question 7

Discuss the difference between book values and market values and explain which one is more important to the financial manager and why.

Accepted Answer

The accounts on the balance sheet are ge...

Question 8

The 2010 balance sheet of The Sports Store showed $800,000 in the common stock account and $6.7 million in the additional paid-in surplus account.The 2011 balance sheet showed $872,000 and $8 million in the same two accounts,respectively.The company paid out $600,000 in cash dividends during 2011.What is the cash flow to stockholders for 2011?

Accepted Answer

A)  -$1,372,000
B)  -$772,000
C)  -$628,000
D)  $372,000
E)  $1,972,000F) A) and E)
G) A) and D)

Question 9

Which one of the following represents the most liquid asset?

Accepted Answer

A)  $100 account receivable that is discounted and collected for $96 today
B)  $100 of inventory which is sold today on credit for $103
C)  $100 of inventory which is discounted and sold for $97 cash today
D)  $100 of inventory that is sold today for $100 cash
E)  $100 accounts receivable that will be collected in full next weekF) A) and E)
G) D) and E)

Question 10

Which one of the following will increase the value of a firm's net working capital?

Accepted Answer

A)  using cash to pay a supplier
B)  depreciating an asset
C)  collecting an accounts receivable
D)  purchasing inventory on credit
E)  selling inventory at a profitF) D) and E)
G) A) and C)

Question 11

Adelson's Electric had beginning long-term debt of $42,511 and ending long-term debt of $48,919.The beginning and ending total debt balances were $84,652 and $78,613,respectively.The interest paid was $4,767.What is the amount of the cash flow to creditors?

Accepted Answer

A)  -$1,641
B)  -$1,272
C)  $1,272
D)  $7,418
E)  $11,175F) A) and E)
G) C) and E)

Question 12

Which one of the following must be true if a firm had a negative cash flow from assets?

Accepted Answer

A)  The firm borrowed money.
B)  The firm acquired new fixed assets.
C)  The firm had a net loss for the period.
D)  The firm utilized outside funding.
E)  Newly issued shares of stock were sold.F) C) and E)
G) None of the above

Question 13

Dee Dee's Marina is obligated to pay its creditors $6,400 today.The firm's assets have a current market value of $5,900.What is the current market value of the shareholders' equity?

Accepted Answer

A)  -$600
B)  -$500
C)  $0
D)  $500
E)  $600F) None of the above
G) A) and B)

Question 14

Which one of the following statements related to taxes is correct?

Accepted Answer

A)  The marginal tax rate must be equal to or lower than the average tax rate for a firm.
B)  The tax for a firm is computed by multiplying the firm's current marginal tax rate times the taxable income.
C)  Additional income is taxed at a firm's average tax rate.
D)  Given the corporate tax structure in 2012, the highest marginal tax rate is equal to the highest average tax rate.
E)  The marginal tax rate for a firm can be either higher than or the same as the average tax rate.F) None of the above
G) A) and D)

Question 15

Jake owns The Corner Market which he is trying to sell so that he can retire and travel.The Corner Market owns the building in which it is located.This building was built at a cost of $647,000 and is currently appraised at $819,000.The counters and fixtures originally cost $148,000 and are currently valued at $65,000.The inventory is valued on the balance sheet at $319,000 and has a retail market value equal to 1.2 times its cost.Jake expects the store to collect 98 percent of the $21,700 in accounts receivable.The firm has $26,800 in cash and has total debt of $414,700.What is the market value of this firm?

Accepted Answer

A)  $857,634
B)  $900,166
C)  $919,000
D)  $1,314,866
E)  $1,333,700F) A) and C)
G) A) and D)

Question 16

Jensen Enterprises paid $1,300 in dividends and $920 in interest this past year.Common stock increased by $1,200 and retained earnings decreased by $310.What is the net income for the year?

Accepted Answer

A)  -$210
B)  $990
C)  $1,610
D)  $1,910
E)  $2,190F) D) and E)
G) B) and D)

Question 17

Your firm has total assets of $4,900,fixed assets of $3,200,long-term debt of $2,900,and short-term debt of $1,400.What is the amount of net working capital?

Accepted Answer

A)  -$100
B)  $300
C)  $600
D)  $1,700
E)  $1,800F) B) and D)
G) A) and D)

Question 18

Which one of the following statements concerning net working capital is correct?

Accepted Answer

A)  Net working capital increases when inventory is purchased with cash.
B)  Net working capital must be a positive value.
C)  Total assets must increase if net working capital increases.
D)  A decrease in the cash balance may or may not decrease net working capital.
E)  Net working capital is the amount of cash a firm currently has available for spending.F) D) and E)
G) B) and C)

Question 19

Which one of these is most apt to be a fixed cost?

Accepted Answer

A)  raw materials
B)  manufacturing wages
C)  management bonuses
D)  office salaries
E)  shipping and freightF) A) and D)
G) None of the above

Question 20

Given the tax rates as shown,what is the average tax rate for a firm with taxable income of $311,360?

Accepted Answer

A)  28.25 percent
B)  31.09 percent
C)  33.62 percent
D)  35.48 percent
E)  39.00 percentF) C) and E)
G) A) and E)

Exam 2: Financial Statements,Taxes,and Cash Flow

Beach Front Industries has sales of $546,000,costs of $295,000,depreciation expense of $37,000,interest expense of $15,000,and a tax rate of 32 percent.The firm paid $59,000 in cash dividends.What is the addition to retained earnings?

Correct Answer
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Dee Dee's Marina is obligated to pay its creditors $6,400 today.The firm's assets have a current market value of $5,900.What is the current market value of the shareholders' equity?

Correct Answer
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The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:

Correct Answer
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Given the tax rates as shown,what is the average tax rate for a firm with taxable income of $311,360?

Correct Answer
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Discuss the difference between book values and market values and explain which one is more important to the financial manager and why.

Correct Answer
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The accounts on the balance sheet are ge...
View Answer

Which one of the following must be true if a firm had a negative cash flow from assets?

Correct Answer
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Jensen Enterprises paid $1,300 in dividends and $920 in interest this past year.Common stock increased by $1,200 and retained earnings decreased by $310.What is the net income for the year?

Correct Answer
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Adelson's Electric had beginning long-term debt of $42,511 and ending long-term debt of $48,919.The beginning and ending total debt balances were $84,652 and $78,613,respectively.The interest paid was $4,767.What is the amount of the cash flow to creditors?

Correct Answer
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Correct Answer
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Which one of the following represents the most liquid asset?

Correct Answer
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Which one of the following statements related to taxes is correct?

Correct Answer
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Correct Answer
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Which one of the following will increase the value of a firm's net working capital?

Correct Answer
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Correct Answer
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Your firm has total assets of $4,900,fixed assets of $3,200,long-term debt of $2,900,and short-term debt of $1,400.What is the amount of net working capital?

Correct Answer
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The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million,and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Correct Answer
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Andre's Bakery has sales of $687,000 with costs of $492,000.Interest expense is $26,000 and depreciation is $42,000.The tax rate is 35 percent.What is the net income?

Correct Answer
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Which one of these is most apt to be a fixed cost?

Correct Answer
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Depreciation:

Correct Answer
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Which one of the following statements concerning net working capital is correct?

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

Beach Front Industries has sales of $546,000,costs of $295,000,depreciation expense of $37,000,interest expense of $15,000,and a tax rate of 32 percent.The firm paid $59,000 in cash dividends.What is the addition to retained earnings?

Correct AnswerverifiedShow Answer

Dee Dee's Marina is obligated to pay its creditors $6,400 today.The firm's assets have a current market value of $5,900.What is the current market value of the shareholders' equity?

Correct AnswerverifiedShow Answer

The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:

Correct AnswerverifiedShow Answer

Given the tax rates as shown,what is the average tax rate for a firm with taxable income of $311,360?

Correct AnswerverifiedShow Answer

Discuss the difference between book values and market values and explain which one is more important to the financial manager and why.

Correct AnswerverifiedThe accounts on the balance sheet are ge...View AnswerShow Answer

Which one of the following must be true if a firm had a negative cash flow from assets?

Correct AnswerverifiedShow Answer

Jensen Enterprises paid $1,300 in dividends and $920 in interest this past year.Common stock increased by $1,200 and retained earnings decreased by $310.What is the net income for the year?

Correct AnswerverifiedShow Answer

Adelson's Electric had beginning long-term debt of $42,511 and ending long-term debt of $48,919.The beginning and ending total debt balances were $84,652 and $78,613,respectively.The interest paid was $4,767.What is the amount of the cash flow to creditors?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following represents the most liquid asset?

Correct AnswerverifiedShow Answer

Which one of the following statements related to taxes is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following will increase the value of a firm's net working capital?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Your firm has total assets of $4,900,fixed assets of $3,200,long-term debt of $2,900,and short-term debt of $1,400.What is the amount of net working capital?

Correct AnswerverifiedShow Answer

The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million,and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Correct AnswerverifiedShow Answer

Andre's Bakery has sales of $687,000 with costs of $492,000.Interest expense is $26,000 and depreciation is $42,000.The tax rate is 35 percent.What is the net income?

Correct AnswerverifiedShow Answer

Which one of these is most apt to be a fixed cost?

Correct AnswerverifiedShow Answer

Depreciation:

Correct AnswerverifiedShow Answer

Which one of the following statements concerning net working capital is correct?

Correct AnswerverifiedShow Answer

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The accounts on the balance sheet are ge...
View Answer

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