Question 1

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year.The firm reduced its net working capital by $28,000 and incurred net capital spending of $47,900.What is the amount of the cash flow to stockholders for the last year?

Accepted Answer

A)  -$171,500
B)  -$86,700
C)  $21,200
D)  $95,700
E)  $39,700F) A) and E)
G) C) and D)

Question 2

Net working capital includes:

Accepted Answer

A)  a land purchase.
B)  an invoice from a supplier.
C)  non-cash expenses.
D)  fixed asset depreciation.
E)  the balance due on a 15-year mortgage.F) C) and D)
G) None of the above

Question 3

Zoey Pet Supply had $314,000 in net fixed assets at the beginning of the year.During the year, the company purchased $98,200 in new equipment.It also sold, at a price of $10,000, some old equipment that had a book value of $12,500.The depreciation expense for the year was $24,500.What is the net fixed asset balance at the end of the year?

Accepted Answer

A)  $260,000
B)  $283,700
C)  $424,200
D)  $375,200
E)  $277,000F) D) and E)
G) A) and C)

Question 4

Shareholders' equity is equal to:

Accepted Answer

A)  total assets plus total liabilities.
B)  net fixed assets minus total liabilities.
C)  net fixed assets minus long-term debt plus net working capital.
D)  net working capital plus total assets.
E)  total assets minus net working capital.F) A) and B)
G) C) and D)

Question 5

Net capital spending is equal to:

Accepted Answer

A)  ending net fixed assets minus beginning net fixed assets plus depreciation.
B)  beginning net fixed assets minus ending net fixed assets plus depreciation.
C)  ending net fixed assets minus beginning net fixed assets minus depreciation.
D)  ending total assets minus beginning total assets plus depreciation.
E)  ending total assets minus beginning total assets minus depreciation.F) B) and C)
G) None of the above

Question 6

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 E)
G) A) and D)

Question 7

Thorkfeld Company incurred depreciation expenses of $28,900 last year.The sales were $755,000 and the addition to retained earnings was $10,200.The firm paid interest of $6,200 and dividends of $5,000.The tax rate was 33 percent.What was the amount of the costs incurred by the company?

Accepted Answer

A)  $691.013
B)  $707,413
C)  $704,700
D)  $697,213
E)  $719,900F) B) and E)
G) None of the above

Question 8

Holly Farms has sales of $509,600, costs of $448,150, depreciation expense of $36,100, and interest paid of $12,400.The tax rate is 28 percent.How much net income did the firm earn for the period?

Accepted Answer

A)  $7,778
B)  $9,324
C)  $10,380
D)  $8,671
E)  $5,886F) None of the above
G) B) and E)

Question 9

Cash flow from assets is defined as:

Accepted Answer

A)  the cash flow to shareholders minus the cash flow to creditors.
B)  operating cash flow plus the cash flow to creditors plus the cash flow to shareholders.
C)  operating cash flow minus the change in net working capital minus net capital spending.
D)  operating cash flow plus net capital spending plus the change in net working capital.
E)  cash flow to shareholders minus net capital spending plus the change in net working capital.F) All of the above
G) B) and E)

Question 10

Victoria Photography, a sole proprietorship owes $190,874in taxes on a taxable income of $608,606.The company has determined that it will owe   $$195,246 in tax if its taxable income rises to $620,424.What is the marginal tax rate at this level of income?

Accepted Answer

A)  39 percent
B)  38 percent
C)  37 percent
D)  35 percent
E)  32 percent F) A) and D)
G) None of the above

Question 11

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) A) and D)
G) C) and D)

Question 12

The balance sheet of Binger, Inc.has the following balances:  What is the amount of the change in net working capital?

Accepted Answer

A)  -$1,800
B)  -$7,400
C)  $1,800
D)  -$8,100
E)  $8,100F) B) and E)
G) A) and E)

Question 13

Which one of the following will increase the cash flow from assets for a tax-paying firm, all else constant?

Accepted Answer

A)  An increase in net capital spending
B)  A decrease in the cash flow to creditors
C)  An increase in depreciation
D)  An increase in the change in net working capital
E)  A decrease in dividends paidF) A) and B)
G) A) and C)

Question 14

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) A) and B)
G) A) and C)

Question 15

Shareholders' equity is best defined as:

Accepted Answer

A)  the residual value of a firm.
B)  positive net working capital.
C)  the net liquidity of a firm.
D)  cash inflows minus cash outflows.
E)  the cumulative profits of a firm over time.F) A) and B)
G) B) and C)

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) A) and D)
G) A) and B)

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 35 percent.The firm paid out $23,400 in dividends.What is the addition to retained earnings?

Accepted Answer

A)  $36,909
B)  $34,645
C)  $44,141
D)  $37,208
E)  $40,615F) A) and D)
G) D) and E)

Question 18

Cornerstone Markets 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) C) and E)
G) C) and D)

Question 19

Which one of the following terms is defined as the total tax paid divided by the total taxable income?

Accepted Answer

A)  Average tax rate
B)  Variable tax rate
C)  Marginal tax rate
D)  Absolute tax rate
E)  Contingent tax rateF) None of the above
G) D) and E)

Question 20

Firms that compile financial statements according to GAAP:

Accepted Answer

A)  record income and expenses at the time they affect the firm's cash flows.
B)  have no discretion over the timing of recording either revenue or expense items.
C)  must record all expenses when incurred.
D)  can still manipulate their earnings to some degree.
E)  record both income and expenses as soon as the amount for each can be ascertained.F) A) and D)
G) C) and D)

Exam 2: Financial Statements, Taxes, and Cash Flow

Thorkfeld Company incurred depreciation expenses of $28,900 last year.The sales were $755,000 and the addition to retained earnings was $10,200.The firm paid interest of $6,200 and dividends of $5,000.The tax rate was 33 percent.What was the amount of the costs incurred by the company?

Correct Answer
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Which one of the following terms is defined as the total tax paid divided by the total taxable income?

Correct Answer
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Firms that compile financial statements according to GAAP:

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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Net capital spending is equal to:

Correct Answer
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Shareholders' equity is best defined as:

Correct Answer
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The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year.The firm reduced its net working capital by $28,000 and incurred net capital spending of $47,900.What is the amount of the cash flow to stockholders for the last year?

Correct Answer
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Which one of the following will increase the cash flow from assets for a tax-paying firm, all else constant?

Correct Answer
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Victoria Photography, a sole proprietorship owes $190,874in taxes on a taxable income of $608,606.The company has determined that it will owe $$195,246 in tax if its taxable income rises to $620,424.What is the marginal tax rate at this level of income?

Correct Answer
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Shareholders' equity is equal to:

Correct Answer
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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 35 percent.The firm paid out $23,400 in dividends.What is the addition to retained earnings?

Correct Answer
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Correct Answer
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The balance sheet of Binger, Inc.has the following balances: What is the amount of the change in net working capital?

Correct Answer
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Holly Farms has sales of $509,600, costs of $448,150, depreciation expense of $36,100, and interest paid of $12,400.The tax rate is 28 percent.How much net income did the firm earn for the period?

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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Net working capital includes:

Correct Answer
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Cash flow from assets is defined as:

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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Exam 2: Financial Statements, Taxes, and Cash Flow

Thorkfeld Company incurred depreciation expenses of $28,900 last year.The sales were $755,000 and the addition to retained earnings was $10,200.The firm paid interest of $6,200 and dividends of $5,000.The tax rate was 33 percent.What was the amount of the costs incurred by the company?

Correct AnswerverifiedShow Answer

Which one of the following terms is defined as the total tax paid divided by the total taxable income?

Correct AnswerverifiedShow Answer

Firms that compile financial statements according to GAAP:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is an intangible fixed asset?

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Net capital spending is equal to:

Correct AnswerverifiedShow Answer

Shareholders' equity is best defined as:

Correct AnswerverifiedShow Answer

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year.The firm reduced its net working capital by $28,000 and incurred net capital spending of $47,900.What is the amount of the cash flow to stockholders for the last year?

Correct AnswerverifiedShow Answer

Which one of the following will increase the cash flow from assets for a tax-paying firm, all else constant?

Correct AnswerverifiedShow Answer

Victoria Photography, a sole proprietorship owes $190,874in taxes on a taxable income of $608,606.The company has determined that it will owe $$195,246 in tax if its taxable income rises to $620,424.What is the marginal tax rate at this level of income?

Correct AnswerverifiedShow Answer

Shareholders' equity is equal to:

Correct AnswerverifiedShow 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 35 percent.The firm paid out $23,400 in dividends.What is the addition to retained earnings?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The balance sheet of Binger, Inc.has the following balances: What is the amount of the change in net working capital?

Correct AnswerverifiedShow Answer

Holly Farms has sales of $509,600, costs of $448,150, depreciation expense of $36,100, and interest paid of $12,400.The tax rate is 28 percent.How much net income did the firm earn for the period?

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

Net working capital includes:

Correct AnswerverifiedShow Answer

Cash flow from assets is defined as:

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

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