Question 1

The _____ tax rate is equal to total taxes divided by total taxable income.

Accepted Answer

A)  deductible
B)  residual
C)  total
D)  average
E)  marginalF) All of the above
G) None of the above

Question 2

Assume you are the financial officer of a major firm. The president of the firm has just stated that she wishes to reduce the firm's investment in current assets since those assets provide little, if any, return to the firm. How would you respond to this statement?

Accepted Answer

While it is true that current assets pro...

Question 3

The 2011 balance sheet of The Beach Shoppe showed long-term debt of $2.1 million, and the 2012 balance sheet showed long-term debt of $2.3 million. The 2012 income statement showed an interest expense of $250,000. What was the cash flow to creditors for 2012?

Accepted Answer

A)  -$200,000
B)  -$150,000
C)  $50,000
D)  $200,000
E)  $450,000F) A) and B)
G) None of the above

Question 4

At the beginning of the year, the long-term debt of a firm was $72,918 and total debt was $138,407. At the end of the year, long-term debt was $68,219 and total debt was $145,838. The interest paid was $6,430. What is the amount of the cash flow to creditors?

Accepted Answer

A)  -$18,348
B)  -$1,001
C)  $11,129
D)  $13,861
E)  $19,172F) B) and D)
G) A) and E)

Question 5

What is the net capital spending for 2012?

Accepted Answer

A)  $117
B)  $239
C)  $257
D)  $338
E)  $421F) D) and E)
G) A) and D)

Question 6

The 2011 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 2012 balance sheet showed $872,000 and $8 million in the same two accounts, respectively. The company paid out $600,000 in cash dividends during 2012. What is the cash flow to stockholders for 2012?

Accepted Answer

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

Question 7

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

Accepted Answer

A)  income statement
B)  balance sheet
C)  statement of cash flows
D)  tax reconciliation statement
E)  market value reportF) C) and D)
G) A) and B)

Question 8

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) C) and D)
G) C) and E)

Question 9

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

Accepted Answer

A)  Liquid assets tend to earn a high rate of return.
B)  Liquid assets are valuable to a firm.
C)  Liquid assets are defined as assets that can be sold quickly regardless of the price obtained.
D)  Inventory is more liquid than accounts receivable because inventory is tangible.
E)  Any asset that can be sold within the next year is considered liquid.F) B) and D)
G) A) and B)

Question 10

The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate.

Accepted Answer

A)  mean
B)  residual
C)  total
D)  average
E)  marginalF) None of the above
G) All of the above

Question 11

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

Question 12

Which one of the following statements related to the cash flow to creditors is correct?

Accepted Answer

A)  If the cash flow to creditors is positive then the firm must have borrowed more money than it repaid.
B)  If the cash flow to creditors is negative then the firm must have a negative cash flow from assets.
C)  A positive cash flow to creditors represents a net cash outflow from the firm.
D)  A positive cash flow to creditors means that a firm has increased its long-term debt.
E)  If the cash flow to creditors is zero, then a firm has no long-term debt.F) B) and E)
G) B) and C)

Question 13

Which one of the following is included in a firm's market value but yet is excluded from the firm's accounting value?

Accepted Answer

A)  real estate investment
B)  good reputation of the company
C)  equipment owned by the firm
D)  money due from a customer
E)  an item held by the firm for future saleF) A) and D)
G) D) and E)

Question 14

Noncash items refer to:

Accepted Answer

A)  accrued expenses.
B)  inventory items purchased using credit.
C)  the ownership of intangible assets such as patents.
D)  expenses which do not directly affect cash flows.
E)  sales which are made using store credit.F) C) and E)
G) C) and D)

Question 15

What is the amount of the noncash expenses for 2012?

Accepted Answer

A)  $740
B)  $1,282
C)  $1,333
D)  $1,611
E)  $2,351F) C) and D)
G) D) and E)

Question 16

Webster World has sales of $12,900, costs of $5,800, depreciation expense of $1,100, and interest expense of $700. What is the operating cash flow if the tax rate is 32 percent?

Accepted Answer

A)  $4,704
B)  $5,749
C)  $5,404
D)  $7,036
E)  $7,100F) D) and E)
G) A) and B)

Question 17

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

Question 18

What is the amount of the net capital spending for 2012?

Accepted Answer

A)  -$382
B)  $1,229
C)  $1,804
D)  $2,375
E)  $2,516F) B) and C)
G) A) and E)

Question 19

Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?

Accepted Answer

A)  income statement
B)  creditor's statement
C)  balance sheet
D)  statement of cash flows
E)  dividend statementF) B) and D)
G) A) and C)

Exam 2: Financial Statements, Taxes, and Cash Flow

Noncash items refer to:

Correct Answer
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Which one of the following statements related to the cash flow to creditors is correct?

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

Correct Answer
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Which one of the following is included in a firm's market value but yet is excluded from the firm's accounting value?

Correct Answer
verified

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

Correct Answer
verified

Webster World has sales of $12,900, costs of $5,800, depreciation expense of $1,100, and interest expense of $700. What is the operating cash flow if the tax rate is 32 percent?

Correct Answer
verified

At the beginning of the year, the long-term debt of a firm was $72,918 and total debt was $138,407. At the end of the year, long-term debt was $68,219 and total debt was $145,838. The interest paid was $6,430. What is the amount of the cash flow to creditors?

Correct Answer
verified

Assume you are the financial officer of a major firm. The president of the firm has just stated that she wishes to reduce the firm's investment in current assets since those assets provide little, if any, return to the firm. How would you respond to this statement?

Correct Answer
verified
While it is true that current assets pro...
View Answer

What is the amount of the noncash expenses for 2012?

Correct Answer
verified

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

Correct Answer
verified

The _____ tax rate is equal to total taxes divided by total taxable income.

Correct Answer
verified

Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?

Correct Answer
verified

The 2011 balance sheet of The Beach Shoppe showed long-term debt of $2.1 million, and the 2012 balance sheet showed long-term debt of $2.3 million. The 2012 income statement showed an interest expense of $250,000. What was the cash flow to creditors for 2012?

Correct Answer
verified

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
verified

What is the amount of the net capital spending for 2012?

Correct Answer
verified

What is the net capital spending for 2012?

Correct Answer
verified

The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate.

Correct Answer
verified

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

Correct Answer
verified

Exam 2: Financial Statements, Taxes, and Cash Flow

Noncash items refer to:

Correct AnswerverifiedShow Answer

Which one of the following statements related to the cash flow to creditors is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following is included in a firm's market value but yet is excluded from the firm's accounting value?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Webster World has sales of $12,900, costs of $5,800, depreciation expense of $1,100, and interest expense of $700. What is the operating cash flow if the tax rate is 32 percent?

Correct AnswerverifiedShow Answer

At the beginning of the year, the long-term debt of a firm was $72,918 and total debt was $138,407. At the end of the year, long-term debt was $68,219 and total debt was $145,838. The interest paid was $6,430. What is the amount of the cash flow to creditors?

Correct AnswerverifiedShow Answer

Assume you are the financial officer of a major firm. The president of the firm has just stated that she wishes to reduce the firm's investment in current assets since those assets provide little, if any, return to the firm. How would you respond to this statement?

Correct AnswerverifiedWhile it is true that current assets pro...View AnswerShow Answer

What is the amount of the noncash expenses for 2012?

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

The _____ tax rate is equal to total taxes divided by total taxable income.

Correct AnswerverifiedShow Answer

Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?

Correct AnswerverifiedShow Answer

The 2011 balance sheet of The Beach Shoppe showed long-term debt of $2.1 million, and the 2012 balance sheet showed long-term debt of $2.3 million. The 2012 income statement showed an interest expense of $250,000. What was the cash flow to creditors for 2012?

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

What is the amount of the net capital spending for 2012?

Correct AnswerverifiedShow Answer

What is the net capital spending for 2012?

Correct AnswerverifiedShow Answer

The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate.

Correct AnswerverifiedShow Answer

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

Correct AnswerverifiedShow Answer

Correct Answer
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While it is true that current assets pro...
View Answer

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verified

Correct Answer
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Correct Answer
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Correct Answer
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