Question 1

For the year, B&K United increased current liabilities by $1,400, decreased cash by $1,200, increased net fixed assets by $340, increased accounts receivable by $200, and decreased inventory by $150. What is the annual change in net working capital?

Accepted Answer

A)   −$2,550
B)   −$70
C)   $590
D)   $550
E)   −$2,210F) A) and E)
G) B) and C)

Question 2

Carlisle Express paid $1,282 in interest and $975 in dividends last year. Current assets increased by $2,700, current liabilities decreased by $420, and long-term debt increased by $2,200. What was the cash flow to creditors?

Accepted Answer

A)   −$530
B)   −$918
C)   $1,839
D)   2,132
E)   $3,094F) A) and B)
G) None of the above

Question 3

Shareholders' equity:

Accepted Answer

A)   is referred to as a firm's financial leverage.
B)   is equal to total assets plus total liabilities.
C)   decreases whenever new shares of stock are issued.
D)   includes patents, preferred stock, and common stock.
E)   represents the residual value of a firm.F) B) and E)
G) A) and E)

Question 4

Which one of the following accounts is the most liquid?

Accepted Answer

A)   Inventory
B)   Building
C)   Accounts Receivable
D)   Equipment
E)   LandF) B) and E)
G) B) and C)

Question 5

Jensen Enterprises paid $700 in dividends and $320 in interest this past year. Common stock remained constant at $6,800 and retained earnings decreased by $180. What is the net income for the year?

Accepted Answer

A)   $180
B)   $520
C)   $1,020
D)   $880
E)   $1,200F) D) and E)
G) A) and E)

Question 6

An increase in the interest expense for a firm with a taxable income of $123,000 will:

Accepted Answer

A)   increase net income.
B)   increase gross income.
C)   increase the cash flow from assets.
D)   decrease the cash flow from equity.
E)   decrease the operating cash flow.F) B) and E)
G) A) and C)

Question 7

At the beginning of the year, a firm had current assets of $121,306 and current liabilities of $124,509. At the end of the year, the current assets were $122,418 and the current liabilities were $103,718. What is the change in net working capital?

Accepted Answer

A)   −$19,679
B)   −$11,503
C)   $19,387
D)   $15,497
E)   $21,903F) A) and D)
G) None of the above

Question 8

HiWay Furniture has sales of $316,000, depreciation of $47,200, interest expense of $41,400, costs of $148,200, and taxes of $16,632. The firm has net capital spending of $36,400 and a decrease in net working capital of $14,300. What is the cash flow from assets for the year?

Accepted Answer

A)   $145,985
B)   $129,068
C)   $119,655
D)   $120,810
E)   $134,585F) A) and B)
G) A) and C)

Question 9

Which one of the following statements concerning corporate income taxes is correct for 2018?

Accepted Answer

A)   All corporations are exempt from federal taxation.
B)   Corporations pay no tax on their first $50,000 of income.
C)   The federal income tax on corporations is a flat-rate tax with the same rate applying to all levels of taxable income.
D)   The marginal tax rate will always be lower than the average tax rate.
E)   The first 25 percent of corporate income is exempt from taxation.F) B) and E)
G) A) and B)

Question 10

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 21 percent. The firm paid $59,000 in cash dividends. What is the addition to retained earnings?

Accepted Answer

A)   $98,210
B)   $81,700
C)   $95,200
D)   $103,460
E)   $121,680F) C) and D)
G) B) and C)

Question 11

Which one of the following will increase the cash flow from assets, all else equal?

Accepted Answer

A)   Decrease in cash flow to stockholders
B)   Decrease in operating cash flow
C)   Decrease in the change in net working capital
D)   Decrease in cash flow to creditors
E)   Increase in net capital spendingF) A) and E)
G) B) and C)

Question 12

Which one of the following is classified as a tangible fixed asset?

Accepted Answer

A)   Accounts receivable
B)   Production equipment
C)   Cash
D)   Patent
E)   InventoryF) A) and B)
G) A) and C)

Question 13

Last year, Kaylor Equipment had $15,900 of sales, $500 of net new equity, dividend payments of $75, an addition to retained earnings of $418, depreciation of $680, and $511 of interest expense. What are the earnings before interest and taxes at a tax rate of 21 percent?

Accepted Answer

A)   $589.46
B)   $1,135.05
C)   $1,331.54
D)   $1,560.85
E)   $949.46F) A) and B)
G) None of the above

Question 14

Williamsburg Markets has an operating cash flow of $4,267 and depreciation of $1,611. Current assets decreased by $1,356 while current liabilities decreased by $2,662, and net fixed assets decreased by $382 during the year. What is free cash flow for the year?

Accepted Answer

A)   $1,732
B)   $2,247
C)   $2,961
D)   $3,915
E)   $4,267F) B) and C)
G) C) and D)

Question 15

Net working capital is defined as:

Accepted Answer

A)   total liabilities minus shareholders' equity.
B)   current liabilities minus shareholders' equity.
C)   fixed assets minus long-term liabilities.
D)   total assets minus total liabilities.
E)   current assets minus current liabilities.F) A) and E)
G) A) and B)

Question 16

Keisler's has cost of goods sold of $11,518, interest expense of $315, dividends of $420, depreciation of $811, and a change in retained earnings of $296. What is the taxable income given a tax rate of 21 percent?

Accepted Answer

A)   $955.38
B)   $967.78
C)   $906.33
D)   $776.41
E)   $646.15F) A) and D)
G) A) and C)

Question 17

You recently purchased a grocery store. At the time of the purchase, the store's market value and its book value were equal. The purchase included the building, fixtures, and inventory. Which one of the following is most apt to cause the market value of this store to be less than its book value?

Accepted Answer

A)   A sudden and unexpected increase in inflation
B)   The replacement of old inventory items with more desirable products
C)   Improvements to the surrounding area by other store owners
D)   Construction of a new restricted access highway located between the store and the surrounding residential areas
E)   Addition of a stop light at the main entrance to the store's parking lotF) A) and E)
G) B) and D)

Question 18

In 2017, Boyer Enterprises had $76,700 in taxable income. What was the firm's average tax rate for the year?   Taxable Income $0 - 50,00050,001 - 75,00075,001 - 100,000100,001 - 335,000 Tax Rate15%253439\begin{array}{c}\begin{array}{c}	ext { Taxable Income }\\begin{array}{lll}\$0&	ext { - } &50,000 \50,001 &	ext { - } &75,000 \75,001&	ext { - } &100,000 \100,001&	ext { - } &335,000 \\end{array}\end{array}\begin{array}{c}	ext { Tax Rate}\15 \% \25 \34 \39\end{array}\end{array} Taxable Income $050,00175,001100,001​ -  -  -  - ​50,00075,000100,000335,000​​ Tax Rate15%253439​​

Accepted Answer

A)   28.25 percent
B)   18.68 percent
C)   26.48 percent
D)   20.14 percent
E)   29.03 percent F) C) and D)
G) A) and B)

Question 19

Depreciation for a tax-paying firm:

Accepted Answer

A)   increases expenses and lowers taxes.
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 that increases the net income.
E)   decreases net fixed assets, net income, and operating cash flows.F) None of the above
G) B) and D)

Question 20

For the past year, Galaxy Interiors had depreciation of $2,419, beginning total assets of $23,616, and ending total assets of $21,878. Current assets decreased by $1,356. What was the amount of net capital spending for the year?

Accepted Answer

A)   −$382
B)   $2,037
C)   $2,801
D)   $1,993
E)   $1,172F) B) and E)
G) B) and D)

Exam 2: Financial Statements, Taxes, and Cash Flow

For the past year, Galaxy Interiors had depreciation of $2,419, beginning total assets of $23,616, and ending total assets of $21,878. Current assets decreased by $1,356. What was the amount of net capital spending for the year?

Correct Answer
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Which one of the following accounts is the most liquid?

Correct Answer
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An increase in the interest expense for a firm with a taxable income of $123,000 will:

Correct Answer
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Williamsburg Markets has an operating cash flow of $4,267 and depreciation of $1,611. Current assets decreased by $1,356 while current liabilities decreased by $2,662, and net fixed assets decreased by $382 during the year. What is free cash flow for the year?

Correct Answer
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Net working capital is defined as:

Correct Answer
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Which one of the following is classified as a tangible fixed asset?

Correct Answer
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Which one of the following statements concerning corporate income taxes is correct for 2018?

Correct Answer
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Depreciation for a tax-paying firm:

Correct Answer
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You recently purchased a grocery store. At the time of the purchase, the store's market value and its book value were equal. The purchase included the building, fixtures, and inventory. Which one of the following is most apt to cause the market value of this store to be less than its book value?

Correct Answer
verified

At the beginning of the year, a firm had current assets of $121,306 and current liabilities of $124,509. At the end of the year, the current assets were $122,418 and the current liabilities were $103,718. What is the change in net working capital?

Correct Answer
verified

Jensen Enterprises paid $700 in dividends and $320 in interest this past year. Common stock remained constant at $6,800 and retained earnings decreased by $180. What is the net income for the year?

Correct Answer
verified

Which one of the following will increase the cash flow from assets, all else equal?

Correct Answer
verified

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 21 percent. The firm paid $59,000 in cash dividends. What is the addition to retained earnings?

Correct Answer
verified

For the year, B&K United increased current liabilities by $1,400, decreased cash by $1,200, increased net fixed assets by $340, increased accounts receivable by $200, and decreased inventory by $150. What is the annual change in net working capital?

Correct Answer
verified

Correct Answer
verified

Last year, Kaylor Equipment had $15,900 of sales, $500 of net new equity, dividend payments of $75, an addition to retained earnings of $418, depreciation of $680, and $511 of interest expense. What are the earnings before interest and taxes at a tax rate of 21 percent?

Correct Answer
verified

Shareholders' equity:

Correct Answer
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Carlisle Express paid $1,282 in interest and $975 in dividends last year. Current assets increased by $2,700, current liabilities decreased by $420, and long-term debt increased by $2,200. What was the cash flow to creditors?

Correct Answer
verified

HiWay Furniture has sales of $316,000, depreciation of $47,200, interest expense of $41,400, costs of $148,200, and taxes of $16,632. The firm has net capital spending of $36,400 and a decrease in net working capital of $14,300. What is the cash flow from assets for the year?

Correct Answer
verified

Keisler's has cost of goods sold of $11,518, interest expense of $315, dividends of $420, depreciation of $811, and a change in retained earnings of $296. What is the taxable income given a tax rate of 21 percent?

Correct Answer
verified

Exam 2: Financial Statements, Taxes, and Cash Flow

For the past year, Galaxy Interiors had depreciation of $2,419, beginning total assets of $23,616, and ending total assets of $21,878. Current assets decreased by $1,356. What was the amount of net capital spending for the year?

Correct AnswerverifiedShow Answer

Which one of the following accounts is the most liquid?

Correct AnswerverifiedShow Answer

An increase in the interest expense for a firm with a taxable income of $123,000 will:

Correct AnswerverifiedShow Answer

Williamsburg Markets has an operating cash flow of $4,267 and depreciation of $1,611. Current assets decreased by $1,356 while current liabilities decreased by $2,662, and net fixed assets decreased by $382 during the year. What is free cash flow for the year?

Correct AnswerverifiedShow Answer

Net working capital is defined as:

Correct AnswerverifiedShow Answer

Which one of the following is classified as a tangible fixed asset?

Correct AnswerverifiedShow Answer

Which one of the following statements concerning corporate income taxes is correct for 2018?

Correct AnswerverifiedShow Answer

Depreciation for a tax-paying firm:

Correct AnswerverifiedShow Answer

You recently purchased a grocery store. At the time of the purchase, the store's market value and its book value were equal. The purchase included the building, fixtures, and inventory. Which one of the following is most apt to cause the market value of this store to be less than its book value?

Correct AnswerverifiedShow Answer

At the beginning of the year, a firm had current assets of $121,306 and current liabilities of $124,509. At the end of the year, the current assets were $122,418 and the current liabilities were $103,718. What is the change in net working capital?

Correct AnswerverifiedShow Answer

Jensen Enterprises paid $700 in dividends and $320 in interest this past year. Common stock remained constant at $6,800 and retained earnings decreased by $180. What is the net income for the year?

Correct AnswerverifiedShow Answer

Which one of the following will increase the cash flow from assets, all else equal?

Correct AnswerverifiedShow Answer

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 21 percent. The firm paid $59,000 in cash dividends. What is the addition to retained earnings?

Correct AnswerverifiedShow Answer

For the year, B&K United increased current liabilities by $1,400, decreased cash by $1,200, increased net fixed assets by $340, increased accounts receivable by $200, and decreased inventory by $150. What is the annual change in net working capital?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Last year, Kaylor Equipment had $15,900 of sales, $500 of net new equity, dividend payments of $75, an addition to retained earnings of $418, depreciation of $680, and $511 of interest expense. What are the earnings before interest and taxes at a tax rate of 21 percent?

Correct AnswerverifiedShow Answer

Shareholders' equity:

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Carlisle Express paid $1,282 in interest and $975 in dividends last year. Current assets increased by $2,700, current liabilities decreased by $420, and long-term debt increased by $2,200. What was the cash flow to creditors?

Correct AnswerverifiedShow Answer

HiWay Furniture has sales of $316,000, depreciation of $47,200, interest expense of $41,400, costs of $148,200, and taxes of $16,632. The firm has net capital spending of $36,400 and a decrease in net working capital of $14,300. What is the cash flow from assets for the year?

Correct AnswerverifiedShow Answer

Keisler's has cost of goods sold of $11,518, interest expense of $315, dividends of $420, depreciation of $811, and a change in retained earnings of $296. What is the taxable income given a tax rate of 21 percent?

Correct AnswerverifiedShow Answer

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