Question 1

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 2

The 2010 balance sheet of The Beach Shoppe showed long-term debt of $2.1 million,and the 2011 balance sheet showed long-term debt of $2.3 million.The 2011 income statement showed an interest expense of $250,000.What was the cash flow to creditors for 2011?

Accepted Answer

A)   -$200,000
B)   -$150,000
C)   $50,000
D)   $200,000
E)   $450,000F) A) and E)
G) B) and D) C

Question 3

Which one of the following statements concerning net working capital is correct?

Accepted Answer

A)   Net working capital increases when inventory is purchased with cash.
B)   Net working capital must be a positive value.
C)   Total assets must increase if net working capital increases.
D)   A decrease in the cash balance may or may not decrease net working capital.
E)   Net working capital is the amount of cash a firm currently has available for spending.F) A) and B)
G) B) and D)

Question 4

Which one of the following statements related to an income statement is correct?

Accepted Answer

A)   Interest expense increases the amount of tax due.
B)   Depreciation does not affect taxes since it is a non-cash expense.
C)   Net income is distributed to dividends and paid-in surplus.
D)   Taxes reduce both net income and operating cash flow.
E)   Interest expense is included in operating cash flow.F) A) and C)
G) B) and E)

Question 5

Which one of the following is classified as an intangible fixed asset?

Accepted Answer

A)   accounts receivable
B)   production equipment
C)   building
D)   trademark
E)   inventoryF) A) and E)
G) B) and E)

Question 6

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) A) and B)
G) All of the above

Question 7

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

Question 8

A positive cash flow to stockholders indicates which one of the following with certainty?

Accepted Answer

A)   The dividends paid exceeded the net new equity raised.
B)   The amount of the sale of common stock exceeded the amount of dividends paid.
C)   No dividends were distributed but new shares of stock were sold.
D)   Both the cash flow to assets and the cash flow to creditors must be negative.
E)   Both the cash flow to assets and the cash flow to creditors must be positive.F) A) and C)
G) C) and D)

Question 9

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)   increase in the change in net working capital
D)   decrease in cash flow to creditors
E)   decrease in net capital spendingF) B) and E)
G) A) and B)

Question 10

Depreciation:

Accepted Answer

A)   reduces both taxes and net income.
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 which increases the net income.
E)   decreases net fixed assets,net income,and operating cash flows.F) A) and B)
G) B) and C)

Question 11

Which one of the following statements is correct concerning a corporation with taxable income of $125,000?

Accepted Answer

A)   Net income minus dividends paid will equal the ending retained earnings for the year.
B)   An increase in depreciation will increase the operating cash flow.
C)   Net income divided by the number of shares outstanding will equal the dividends per share.
D)   Interest paid will be included in both net income and operating cash flow.
E)   An increase in the tax rate will increase both net income and operating cash flow.F) B) and E)
G) A) and B)

Question 12

Cash flow from assets is also known as the firm's:

Accepted Answer

A)   capital structure.
B)   equity structure.
C)   hidden cash flow.
D)   free cash flow.
E)   historical cash flow.F) None of the above
G) C) and D)

Question 13

During 2011,RIT Corp.had sales of $565,600.Costs of goods sold,administrative and selling expenses,and depreciation expenses were $476,000,$58,800,and $58,800,respectively.In addition,the company had an interest expense of $112,000 and a tax rate of 32 percent.What is the operating cash flow for 2009? Ignore any tax loss carry-back or carry-forward provisions.

Accepted Answer

A)   $17,920
B)   $21,840
C)   $30,800
D)   $52,600
E)   $77,840F) B) and E)
G) A) and E)

Question 14

The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million,and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Accepted Answer

A)   -$500,000
B)   $400,000
C)   $1,300,000
D)   $1,700,000
E)   $1,800,000F) A) and C)
G) A) and E)

Question 15

The 2010 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 2011 balance sheet showed $872,000 and $8 million in the same two accounts,respectively.The company paid out $600,000 in cash dividends during 2011.What is the cash flow to stockholders for 2011?

Accepted Answer

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

Question 16

Boyer Enterprises had $200,000 in 2011 taxable income.What is the firm's average tax rate based on the rates shown in the following table?

Accepted Answer

A)   28.25 percent
B)   30.63 percent
C)   32.48 percent
D)   36.50 percent
E)   39.00 percentF) C) and D)
G) D) and E)

Question 17

The 2010 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940.The 2011 balance sheet showed current assets of $1,640 and current liabilities of $1,140.What was the change in net working capital for 2011?

Accepted Answer

A)   $80
B)   $170
C)   $190
D)   $880
E)   $920F) B) and E)
G) C) and E) A

Question 18

Suppose you are given the following information for Bayside Bakery: sales = $30,000;costs = $15,000;addition to retained earnings = $4,221;dividends paid = $469;interest expense = $1,300;tax rate = 30 percent.What is the amount of the depreciation expense?

Accepted Answer

A)   $4,820
B)   $5,500
C)   $7,000
D)   $8,180
E)   $9,500F) A) and E)
G) C) and E)

Question 19

The book value of a firm is:

Accepted Answer

A)   equivalent to the firm's market value provided that the firm has some fixed assets.
B)   based on historical cost.
C)   generally greater than the market value when fixed assets are included.
D)   more of a financial than an accounting valuation.
E)   adjusted to the market value whenever the market value exceeds the stated book value.F) C) and E)
G) B) and C) B

Question 20

Which one of the following is NOT included in cash flow from assets?

Accepted Answer

A)   accounts payable
B)   inventory
C)   sales
D)   interest expense
E)   cash accountF) A) and C)
G) A) and E)

Exam 2: Financial Statements, Taxes, and Cash Flowpart Two: Financial Statements and Long-Term Financial Planning

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

The 2010 balance sheet of The Beach Shoppe showed long-term debt of $2.1 million,and the 2011 balance sheet showed long-term debt of $2.3 million.The 2011 income statement showed an interest expense of $250,000.What was the cash flow to creditors for 2011?

Correct Answer
verified
C

Which one of the following statements concerning net working capital is correct?

Correct Answer
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Which one of the following statements related to an income statement is correct?

Correct Answer
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Which one of the following is classified as an intangible fixed asset?

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

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
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A positive cash flow to stockholders indicates which one of the following with certainty?

Correct Answer
verified

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

Correct Answer
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Depreciation:

Correct Answer
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Which one of the following statements is correct concerning a corporation with taxable income of $125,000?

Correct Answer
verified

Cash flow from assets is also known as the firm's:

Correct Answer
verified

Correct Answer
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The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million,and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Correct Answer
verified

Correct Answer
verified

Boyer Enterprises had $200,000 in 2011 taxable income.What is the firm's average tax rate based on the rates shown in the following table?

Correct Answer
verified

The 2010 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940.The 2011 balance sheet showed current assets of $1,640 and current liabilities of $1,140.What was the change in net working capital for 2011?

Correct Answer
verified
A

Suppose you are given the following information for Bayside Bakery: sales = $30,000;costs = $15,000;addition to retained earnings = $4,221;dividends paid = $469;interest expense = $1,300;tax rate = 30 percent.What is the amount of the depreciation expense?

Correct Answer
verified

The book value of a firm is:

Correct Answer
verified
B

Which one of the following is NOT included in cash flow from assets?

Correct Answer
verified

Exam 2: Financial Statements, Taxes, and Cash Flowpart Two: Financial Statements and Long-Term Financial Planning

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

The 2010 balance sheet of The Beach Shoppe showed long-term debt of $2.1 million,and the 2011 balance sheet showed long-term debt of $2.3 million.The 2011 income statement showed an interest expense of $250,000.What was the cash flow to creditors for 2011?

Correct AnswerverifiedC

Which one of the following statements concerning net working capital is correct?

Correct AnswerverifiedShow Answer

Which one of the following statements related to an income statement is correct?

Correct AnswerverifiedShow Answer

Which one of the following is classified as an intangible fixed asset?

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

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

A positive cash flow to stockholders indicates which one of the following with certainty?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Depreciation:

Correct AnswerverifiedShow Answer

Which one of the following statements is correct concerning a corporation with taxable income of $125,000?

Correct AnswerverifiedShow Answer

Cash flow from assets is also known as the firm's:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million,and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Boyer Enterprises had $200,000 in 2011 taxable income.What is the firm's average tax rate based on the rates shown in the following table?

Correct AnswerverifiedShow Answer

The 2010 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940.The 2011 balance sheet showed current assets of $1,640 and current liabilities of $1,140.What was the change in net working capital for 2011?

Correct AnswerverifiedA

Suppose you are given the following information for Bayside Bakery: sales = $30,000;costs = $15,000;addition to retained earnings = $4,221;dividends paid = $469;interest expense = $1,300;tax rate = 30 percent.What is the amount of the depreciation expense?

Correct AnswerverifiedShow Answer

The book value of a firm is:

Correct AnswerverifiedB

Which one of the following is NOT included in cash flow from assets?

Correct AnswerverifiedShow Answer

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

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C

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A

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B

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