Question 1

Lester's Fried Chick'n purchased its building 11 years ago at a cost of $139,000. The building is currently valued at $179,000. The firm has other fixed assets that cost $66,000 and are currently valued at $58,000. To date, the firm has recorded a total of $79,000 in depreciation on the various assets. The company has current liabilities of $36,600 and net working capital of $18,400. What is the total book value of the firm's assets?

Accepted Answer

A)   $181,000
B)   $241,000
C)   $331,000
D)   $339,000
E)   $379,000F) A) and D)
G) C) and E)

Question 2

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) A) and D)
G) D) and E)

Question 3

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital:

Accepted Answer

A)   had to increase.
B)   had to decrease.
C)   could have remained constant if the amount of the decrease in current assets equaled the amount of the increase in current liabilities.
D)   could have either increased, decreased, or remained constant.
E)   was unaffected as the changes occurred in the firm's current accounts.F) B) and E)
G) C) and D)

Question 4

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

Accepted Answer

A)   income statement.
B)   cash flow statement.
C)   liquidity position.
D)   balance sheet.
E)   periodic operating statement.F) B) and C)
G) None of the above

Question 5

Keyser Materials paid $7,500 in dividends and $28,311 in interest over the past year while net working capital increased from $13,506 to $18,219. The company purchased $42,000 in net new fixed assets and had depreciation expenses of $16,805. During the year, the firm issued $25,000 in net new equity and paid off $11,000 in long-term debt. What is the amount of the cash flow from assets?

Accepted Answer

A)   $21,811
B)   $30,811
C)   $36,189
D)   $49,811
E)   $71,811F) B) and E)
G) B) and D)

Question 6

The Play House's December 31, 2009 balance sheet showed net fixed assets of $1,238,000 and the December 31, 2010 balance sheet showed net fixed assets of $1,416,000. The company's 2010 income statement showed a depreciation expense of $214,600. What was the firm's net capital spending for 2010?

Accepted Answer

A)   $36,600
B)   $42,400
C)   $392,600
D)   $404,400
E)   $416,600F) B) and E)
G) None of the above

Question 7

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 B)
G) A) and C)

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 shareholders.F) B) and D)
G) A) and E)

Question 9

Daniel's Market has sales of $36,600, costs of $28,400, depreciation expense of $3,100, and interest expense of $1,500. If the tax rate is 34 percent, what is the operating cash flow, OCF?

Accepted Answer

A)   $4,811
B)   $5,279
C)   $6,466
D)   $6,976
E)   $7,013F) All of the above
G) A) and B)

Question 10

The Corner Store currently has $3,600 in cash. The company owes $31,800 to suppliers for merchandise and $21,500 to the bank for a long-term loan. Customers owe The Corner Store $19,000 for their purchases. The inventory has a book value of $53,300 and an estimated market value of $71,200. If the store compiled a balance sheet as of today, what would be the book value of the current assets?

Accepted Answer

A)   $46,800
B)   $55,600
C)   $64,700
D)   $75,900
E)   $96,500F) A) and B)
G) A) and C)

Question 11

Operating cash flow is defined as:

Accepted Answer

A)   a firm's net profit over a specified period of time.
B)   the cash that a firm generates from its normal business activities.
C)   a firm's operating margin.
D)   the change in the net working capital over a stated period of time.
E)   the cash that is generated and added to retained earnings.F) B) and E)
G) A) and E)

Question 12

Identify the cash flows that occur between a firm and its shareholders and explain how each of these cash flows affects the cash flow to stockholders.

Accepted Answer

The three cash flows that occur between ...

Question 13

Plato's Foods has ending net fixed assets of $84,400 and beginning net fixed assets of $79,900. During the year, the firm sold assets with a total book value of $13,600 and also recorded $14,800 in depreciation expense. How much did the company spend to buy new fixed assets?

Accepted Answer

A)   -$23,900
B)   $3,300
C)   $32,900
D)   $36,800
E)   $37,400F) B) and D)
G) All of the above

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

Question 15

Frank Town Farms has sales of $481,600, costs of $379,700, depreciation expense of $32,100, and interest paid of $8,400. The tax rate is 32 percent. How much net income did the firm earn for the period?

Accepted Answer

A)   $41,752
B)   $43,090
C)   $43,380
D)   $45,671
E)   $45,886F) A) and B)
G) B) and E)

Question 16

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?

Accepted Answer

A)   $9,800
B)   $10,400
C)   $18,900
D)   $21,300
E)   $23,200F) A) and B)
G) C) and D)

Question 17

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

Question 18

Albertson and Roberts reports the following account balances: inventory of $27,600, equipment of $128,300, accounts payable of $24,700, cash of $11,900, and accounts receivable of $31,900. What is the amount of the current assets?

Accepted Answer

A)   $46,700
B)   $56,000
C)   $71,400
D)   $175,000
E)   $199,700F) A) and D)
G) C) and D)

Question 19

The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation expense is $28,400 and the interest paid is $8,400. What is the amount of the firm's operating cash flow if the tax rate is 34 percent?

Accepted Answer

A)   $87,620
B)   $89,540
C)   $91,220
D)   $93,560
E)   $95,240F) B) and D)
G) A) and B)

Question 20

A negative cash flow to stockholders indicates a firm:

Accepted Answer

A)   had a negative cash flow from assets.
B)   had a positive cash flow to creditors.
C)   paid dividends that exceeded the amount of the net new equity.
D)   repurchased more shares than it sold.
E)   received more from selling stock than it paid out to shareholders.F) A) and E)
G) C) and E)

Exam 2: Financial Statements, Taxes, and Cash Flow

Correct Answer
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Albertson and Roberts reports the following account balances: inventory of $27,600, equipment of $128,300, accounts payable of $24,700, cash of $11,900, and accounts receivable of $31,900. What is the amount of the current assets?

Correct Answer
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The financial statement that summarizes a firm's accounting value as of a particular date is called the:

Correct Answer
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Operating cash flow is defined as:

Correct Answer
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Correct Answer
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Identify the cash flows that occur between a firm and its shareholders and explain how each of these cash flows affects the cash flow to stockholders.

Correct Answer
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The three cash flows that occur between ...
View Answer

Plato's Foods has ending net fixed assets of $84,400 and beginning net fixed assets of $79,900. During the year, the firm sold assets with a total book value of $13,600 and also recorded $14,800 in depreciation expense. How much did the company spend to buy new fixed assets?

Correct Answer
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Correct Answer
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Correct Answer
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Daniel's Market has sales of $36,600, costs of $28,400, depreciation expense of $3,100, and interest expense of $1,500. If the tax rate is 34 percent, what is the operating cash flow, OCF?

Correct Answer
verified

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital:

Correct Answer
verified

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?

Correct Answer
verified

Frank Town Farms has sales of $481,600, costs of $379,700, depreciation expense of $32,100, and interest paid of $8,400. The tax rate is 32 percent. How much net income did the firm earn for the period?

Correct Answer
verified

The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation expense is $28,400 and the interest paid is $8,400. What is the amount of the firm's operating cash flow if the tax rate is 34 percent?

Correct Answer
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Highly liquid assets:

Correct Answer
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Financial leverage:

Correct Answer
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Firms that compile financial statements according to GAAP:

Correct Answer
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A negative cash flow to stockholders indicates a firm:

Correct Answer
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The Play House's December 31, 2009 balance sheet showed net fixed assets of $1,238,000 and the December 31, 2010 balance sheet showed net fixed assets of $1,416,000. The company's 2010 income statement showed a depreciation expense of $214,600. What was the firm's net capital spending for 2010?

Correct Answer
verified

Net capital spending is equal to:

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

Correct AnswerverifiedShow Answer

Albertson and Roberts reports the following account balances: inventory of $27,600, equipment of $128,300, accounts payable of $24,700, cash of $11,900, and accounts receivable of $31,900. What is the amount of the current assets?

Correct AnswerverifiedShow Answer

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

Correct AnswerverifiedShow Answer

Operating cash flow is defined as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Identify the cash flows that occur between a firm and its shareholders and explain how each of these cash flows affects the cash flow to stockholders.

Correct AnswerverifiedThe three cash flows that occur between ...View AnswerShow Answer

Plato's Foods has ending net fixed assets of $84,400 and beginning net fixed assets of $79,900. During the year, the firm sold assets with a total book value of $13,600 and also recorded $14,800 in depreciation expense. How much did the company spend to buy new fixed assets?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Daniel's Market has sales of $36,600, costs of $28,400, depreciation expense of $3,100, and interest expense of $1,500. If the tax rate is 34 percent, what is the operating cash flow, OCF?

Correct AnswerverifiedShow Answer

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital:

Correct AnswerverifiedShow Answer

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?

Correct AnswerverifiedShow Answer

Frank Town Farms has sales of $481,600, costs of $379,700, depreciation expense of $32,100, and interest paid of $8,400. The tax rate is 32 percent. How much net income did the firm earn for the period?

Correct AnswerverifiedShow Answer

The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation expense is $28,400 and the interest paid is $8,400. What is the amount of the firm's operating cash flow if the tax rate is 34 percent?

Correct AnswerverifiedShow Answer

Highly liquid assets:

Correct AnswerverifiedShow Answer

Financial leverage:

Correct AnswerverifiedShow Answer

Firms that compile financial statements according to GAAP:

Correct AnswerverifiedShow Answer

A negative cash flow to stockholders indicates a firm:

Correct AnswerverifiedShow Answer

The Play House's December 31, 2009 balance sheet showed net fixed assets of $1,238,000 and the December 31, 2010 balance sheet showed net fixed assets of $1,416,000. The company's 2010 income statement showed a depreciation expense of $214,600. What was the firm's net capital spending for 2010?

Correct AnswerverifiedShow Answer

Net capital spending is equal to:

Correct AnswerverifiedShow Answer

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The three cash flows that occur between ...
View Answer

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