Question 1

Ezmerelda Jewelers has a marginal tax rate of 32 percent and an average tax rate of 20.9percent.If the firm owes   $$34,330 in taxes, how much taxable income did it earn?

Accepted Answer

A)  $127,584
B)  $116,649
C)  $164,500
D)  $157,500
E)  $168,500 F) None of the above
G) A) and E)

Question 2

What is the maximum average tax rate for corporations?

Accepted Answer

A)  38 percent
B)  25 percent
C)  33 percent
D)  39 percent
E)  35 percentF) None of the above
G) A) and B)

Question 3

Which one of the following is included in the market value of a firm but not in the book value?

Accepted Answer

A)  Raw materials
B)  Partially built inventory
C)  Long-term debt
D)  Reputation of the firm
E)  Value of a partially depreciated machineF) All of the above
G) A) and D)

Question 4

National Importers paid $38,600 in dividends and $24,615 in interest over the past year while net working capital increased from $15,506 to $17,411.The company purchased $38,700 in net new fixed assets and had depreciation expenses of $14,784.During the year, the firm issued $20,000 in net new equity and paid off $23,800 in long-term debt.What is the amount of the cash flow from assets?

Accepted Answer

A)  $21,811
B)  $41,194
C)  $36,189
D)  $26,410
E)  $67,015F) C) and E)
G) B) and D)

Question 5

Based on the recognition principle, revenue is recorded on the financial statements when the:
I.payment is collected for the sale of a good or service.
II.earnings process is virtually complete.
III.value of a sale can be reliably determined.
IV.product is physically delivered to the buyer.

Accepted Answer

A)  I and II only
B)  I and IV only
C)  II and III only
D)  II and IV only
E)  I and III onlyF) C) and D)
G) A) and E)

Question 6

The Carpentry Shop has sales of $398,600, costs of $254,800, depreciation expense of $26,400, interest expense of $1,600, and a tax rate of 34 percent.What is the net income for this firm?

Accepted Answer

A)  $61,930
B)  $66,211
C)  $67,516
D)  $76,428
E)  $83,219F) C) and D)
G) A) and B)

Question 7

Sunny Disposition, Inc.has net working capital of $32,500, current assets of $59,000, equity of $74,500, and long-term debt of $42,500.What is the amount of the net fixed assets?

Accepted Answer

A)  $58,000
B)  $111,000
C)  $94,600
D)  $63,900
E)  $84,500F) A) and C)
G) C) and D)

Question 8

Financial leverage:

Accepted Answer

A)  increases as the net working capital increases.
B)  is equal to the market value of a firm divided by the firm's book value.
C)  is inversely related to the level of debt.
D)  is the ratio of a firm's revenues to its fixed expenses.
E)  increases the potential return to the stockholders.F) None of the above
G) A) and B)

Question 9

A firm's liquidity level decreases when:

Accepted Answer

A)  inventory is purchased with cash.
B)  inventory is sold on credit.
C)  inventory is sold for cash.
D)  an account receivable is collected.
E)  proceeds from a long-term loan are received.F) C) and D)
G) A) and D)

Question 10

An increase in which one of the following will increase operating cash flow for a profitable, tax-paying firm?

Accepted Answer

A)  Fixed expenses
B)  Marginal tax rate
C)  Net capital spending
D)  Inventory
E)  DepreciationF) C) and D)
G) A) and D)

Question 11

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) B) and E)
G) A) and E)

Question 12

The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the:

Accepted Answer

A)  statement of cash flows.
B)  income statement.
C)  GAAP statement.
D)  balance sheet.
E)  net working capital schedule.F) A) and C)
G) A) and B)

Question 13

Taylor Industries has current liabilities of $54,900 and accounts receivable of $88,700.The firm has total assets of $395,000 and net fixed assets of $265,100.The owners' equity has a book value of $147,500
) What is the amount of the net working capital?

Accepted Answer

A)  $77,400
B)  $75,000
C)  $33,800
D)  $8,500
E)  -$2,400F) A) and C)
G) A) and D)

Question 14

The Plaza Cafe has an operating cash flow of $83,770, depreciation expense of $43,514, and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows:  What is the amount of the cash flow from assets?

Accepted Answer

A)  $26,359
B)  $47,949
C)  $61,487
D)  $43,909
E)  $35,953F) All of the above
G) A) and B)

Question 15

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 C)
G) C) and D)

Question 16

Net working capital increases when:

Accepted Answer

A)  fixed assets are purchased for cash.
B)  inventory is purchased on credit.
C)  inventory is sold at cost.
D)  a credit customer pays for his or her purchase.
E)  inventory is sold at a profit.F) B) and C)
G) B) and D)

Question 17

For the year, Movers United has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200.What is the amount of the dividends paid?

Accepted Answer

A)  $100
B)  $7,500
C)  $7,600
D)  $15,100
E)  $16,700F) A) and C)
G) B) and C)

Question 18

Roscoe's fixed assets were purchased three years ago for $1.8 million.These assets 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) None of the above
G) A) and D)

Question 19

Kahlan Opinion Surveys had beginning retained earnings of $24.600.During the year, the company reported sales of $105,700, costs of $78,300, depreciation of $9.000, dividends of $1,200, and interest paid of   $$635.The tax rate is 30 percent.What is the retained earnings balance at the end of the year?

Accepted Answer

A)  $38,835.50
B)  $36,082.15
C)  $36,121.44
D)  $37,671.44
E)  $35,721.45 F) A) and C)
G) A) and E)

Question 20

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) None of the above
G) A) and C)

Exam 2: Financial Statements, Taxes, and Cash Flow

Correct Answer
verified

Ezmerelda Jewelers has a marginal tax rate of 32 percent and an average tax rate of 20.9percent.If the firm owes $$34,330 in taxes, how much taxable income did it earn?

Correct Answer
verified

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
verified

The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the:

Correct Answer
verified

Net working capital increases when:

Correct Answer
verified

Cash flow to stockholders is defined as:

Correct Answer
verified

Sunny Disposition, Inc.has net working capital of $32,500, current assets of $59,000, equity of $74,500, and long-term debt of $42,500.What is the amount of the net fixed assets?

Correct Answer
verified

Which one of the following is included in the market value of a firm but not in the book value?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A firm's liquidity level decreases when:

Correct Answer
verified

Highly liquid assets:

Correct Answer
verified

Taylor Industries has current liabilities of $54,900 and accounts receivable of $88,700.The firm has total assets of $395,000 and net fixed assets of $265,100.The owners' equity has a book value of $147,500 ) What is the amount of the net working capital?

Correct Answer
verified

An increase in which one of the following will increase operating cash flow for a profitable, tax-paying firm?

Correct Answer
verified

The Carpentry Shop has sales of $398,600, costs of $254,800, depreciation expense of $26,400, interest expense of $1,600, and a tax rate of 34 percent.What is the net income for this firm?

Correct Answer
verified

Financial leverage:

Correct Answer
verified

The Plaza Cafe has an operating cash flow of $83,770, depreciation expense of $43,514, and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows: What is the amount of the cash flow from assets?

Correct Answer
verified

For the year, Movers United has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200.What is the amount of the dividends paid?

Correct Answer
verified

Based on the recognition principle, revenue is recorded on the financial statements when the: I.payment is collected for the sale of a good or service. II.earnings process is virtually complete. III.value of a sale can be reliably determined. IV.product is physically delivered to the buyer.

Correct Answer
verified

What is the maximum average tax rate for corporations?

Correct Answer
verified

Exam 2: Financial Statements, Taxes, and Cash Flow

Correct AnswerverifiedShow Answer

Ezmerelda Jewelers has a marginal tax rate of 32 percent and an average tax rate of 20.9percent.If the firm owes $$34,330 in taxes, how much taxable income did it earn?

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

The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the:

Correct AnswerverifiedShow Answer

Net working capital increases when:

Correct AnswerverifiedShow Answer

Cash flow to stockholders is defined as:

Correct AnswerverifiedShow Answer

Sunny Disposition, Inc.has net working capital of $32,500, current assets of $59,000, equity of $74,500, and long-term debt of $42,500.What is the amount of the net fixed assets?

Correct AnswerverifiedShow Answer

Which one of the following is included in the market value of a firm but not in the book value?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm's liquidity level decreases when:

Correct AnswerverifiedShow Answer

Highly liquid assets:

Correct AnswerverifiedShow Answer

Taylor Industries has current liabilities of $54,900 and accounts receivable of $88,700.The firm has total assets of $395,000 and net fixed assets of $265,100.The owners' equity has a book value of $147,500 ) What is the amount of the net working capital?

Correct AnswerverifiedShow Answer

An increase in which one of the following will increase operating cash flow for a profitable, tax-paying firm?

Correct AnswerverifiedShow Answer

The Carpentry Shop has sales of $398,600, costs of $254,800, depreciation expense of $26,400, interest expense of $1,600, and a tax rate of 34 percent.What is the net income for this firm?

Correct AnswerverifiedShow Answer

Financial leverage:

Correct AnswerverifiedShow Answer

The Plaza Cafe has an operating cash flow of $83,770, depreciation expense of $43,514, and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows: What is the amount of the cash flow from assets?

Correct AnswerverifiedShow Answer

For the year, Movers United has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200.What is the amount of the dividends paid?

Correct AnswerverifiedShow Answer

Based on the recognition principle, revenue is recorded on the financial statements when the: I.payment is collected for the sale of a good or service. II.earnings process is virtually complete. III.value of a sale can be reliably determined. IV.product is physically delivered to the buyer.

Correct AnswerverifiedShow Answer

What is the maximum average tax rate for corporations?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified