Question 1

Which one of the following statements is correct concerning a firm's fixed assets?

Accepted Answer

A)   The market value is the expected selling price in today's economy.
B)   The market value is affected by the accounting method selected.
C)   The market value is equal to the initial cost minus the depreciation to date.
D)   The book value is equal to the market value minus the accumulated depreciation.
E)   The book value is the greater of the initial cost or the current market value.F) B) and E)
G) B) and D)

Question 2

Caldweiler & Co. owes a total of $21,684 in taxes for this year. The taxable income is $71,509. If the firm earns $100 more in income, it will owe an additional $36 in taxes. What is the average tax rate on income of $71,609?

Accepted Answer

A)   28.00 percent
B)   30.33 percent
C)   33.33 percent
D)   34.00 percent
E)   36.00 percentF) All of the above
G) C) and D)

Question 3

Donner United has total owner's 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 C)
G) A) and D)

Question 4

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) B) and D)
G) D) and E)

Question 5

Global Exporters has total assets of $84,300, net working capital of $22,900, owner's equity of $38,600, and long-term debt of $23,900. What is the value of the current assets?

Accepted Answer

A)   $21,600
B)   $24,300
C)   $38,900
D)   $44,700
E)   $46,100F) B) and D)
G) A) and E)

Question 6

An increase in which one of the following will increase net income?

Accepted Answer

A)   Fixed costs
B)   Depreciation
C)   Marginal tax rate
D)   Revenue
E)   DividendsF) C) and D)
G) A) and E)

Question 7

Use the following tax table to answer this question:  The Stone Inn earned $167,284 in taxable income for the year. How much tax does the company owe on this income?

Accepted Answer

A)   $46,311.02
B)   $48,490.76
C)   $54,519.27
D)   $59,998.81
E)   $65,240.76F) A) and D)
G) A) and C)

Question 8

The concept of marginal taxation is best exemplified by which one of the following?

Accepted Answer

A)   Kirby's paid $120,000 in taxes while its primary competitor only paid $80,000 in taxes.
B)   Johnson's Retreat only paid $45,000 on total revenue of $570,000 last year.
C)   Mitchell's Grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes.
D)   Burlington Centre paid no taxes last year due to carryforward losses.
E)   The Blue Moon paid $2.20 in taxes for every $10 of revenue last year.F) D) and E)
G) None of the above

Question 9

For the past year, LP Gas, Inc. had cash flow from assets of $38,100 of which $21,500 flowed to the firm's stockholders. The interest paid was $2,300. What is the amount of the net new borrowing?

Accepted Answer

A)   -$14,300
B)   -$9,700
C)   $12,300
D)   $14,300
E)   $18,900F) A) and B)
G) B) and C)

Question 10

The Toy Store has beginning retained earnings of $28,975. For the year, the company earned net income of $4,680 and paid dividends of $1,600. The company also issued $3,000 worth of new stock. What is the value of the retained earnings account at the end of the year?

Accepted Answer

A)   $20,445
B)   $22,695
C)   $27,375
D)   $32,055
E)   $35,255F) All of the above
G) B) and E)

Question 11

How can a firm determine if its level of liquidity is appropriate?

Accepted Answer

If a firm has too little liquidity, it w...

Question 12

Pete's Warehouse has net working capital of $2,400, total assets of $19,300, and net fixed assets of $10,200. What is the value of the current liabilities?

Accepted Answer

A)   -$6,700
B)   -$2,900
C)   $2,900
D)   $6,700
E)   $11,500F) A) and C)
G) C) and E)

Question 13

Which one of the following decreases net income but does not affect the operating cash flow of a firm which owes no taxes for the current year?

Accepted Answer

A)   Indirect cost
B)   Direct cost
C)   Noncash item
D)   Period cost
E)   Variable costF) All of the above
G) A) and B)

Question 14

If a firm has a negative cash flow from assets every year for several years, the firm:

Accepted Answer

A)   may be continually increasing in size.
B)   must also have a negative cash flow from operations each year.
C)   is operating at a high level of efficiency.
D)   is repaying debt every year.
E)   has annual net losses.F) C) and D)
G) C) and E)

Question 15

Home Supply, Inc. has compiled the following information:  For 2010, the cash flow from assets is _____ and the cash flow to shareholders is _______.

Accepted Answer

A)   $49,100; $62,500
B)   $49,100; $76,800
C)   $49,100; $81,100
D)   $56,400; $76,800
E)   $56,400; $79,300F) None of the above
G) A) and D)

Question 16

For the year, Movers United has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200. What is the amount of the dividends paid?

Accepted Answer

A)   $100
B)   $7,500
C)   $7,600
D)   $15,100
E)   $16,700F) None of the above
G) C) and D)

Question 17

Net working capital is defined as:

Accepted Answer

A)   the depreciated book value of a firm's fixed assets.
B)   the value of a firm's current assets.
C)   available cash minus current liabilities.
D)   total assets minus total liabilities.
E)   current assets minus current liabilities.F) A) and B)
G) All of the above

Question 18

Morgantown Movers has net working capital of $11,300, current assets of $31,200, equity of $53,400, and long-term debt of $11,600. What is the amount of the net fixed assets?

Accepted Answer

A)   $31,800
B)   $32,900
C)   $45,500
D)   $48,100
E)   $53,700F) B) and D)
G) B) and C)

Question 19

Which one of the following will decrease the net working capital of a firm?

Accepted Answer

A)   Obtaining a 3-year loan and using the proceeds to buy inventory
B)   Collecting a payment from a credit customer
C)   Obtaining a 5-year loan to buy equipment
D)   Selling inventory at a profit
E)   Making a payment on a long-term debtF) A) and E)
G) C) and D)

Question 20

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

Exam 2: Financial Statements, Taxes, and Cash Flow

Morgantown Movers has net working capital of $11,300, current assets of $31,200, equity of $53,400, and long-term debt of $11,600. What is the amount of the net fixed assets?

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Which one of the following will decrease the net working capital of a firm?

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Cash flow from assets is defined as:

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The concept of marginal taxation is best exemplified by which one of the following?

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Pete's Warehouse has net working capital of $2,400, total assets of $19,300, and net fixed assets of $10,200. What is the value of the current liabilities?

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Which one of the following decreases net income but does not affect the operating cash flow of a firm which owes no taxes for the current year?

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Donner United has total owner's 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?

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For the past year, LP Gas, Inc. had cash flow from assets of $38,100 of which $21,500 flowed to the firm's stockholders. The interest paid was $2,300. What is the amount of the net new borrowing?

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Use the following tax table to answer this question: The Stone Inn earned $167,284 in taxable income for the year. How much tax does the company owe on this income?

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Net working capital is defined as:

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Caldweiler & Co. owes a total of $21,684 in taxes for this year. The taxable income is $71,509. If the firm earns $100 more in income, it will owe an additional $36 in taxes. What is the average tax rate on income of $71,609?

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For the year, Movers United has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200. What is the amount of the dividends paid?

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How can a firm determine if its level of liquidity is appropriate?

Correct AnswerverifiedIf a firm has too little liquidity, it w...View AnswerShow Answer

Home Supply, Inc. has compiled the following information: For 2010, the cash flow from assets is _____ and the cash flow to shareholders is _______.

Correct AnswerverifiedShow Answer

Which one of the following statements is correct concerning a firm's fixed assets?

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If a firm has a negative cash flow from assets every year for several years, the firm:

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An increase in which one of the following will increase net income?

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The Toy Store has beginning retained earnings of $28,975. For the year, the company earned net income of $4,680 and paid dividends of $1,600. The company also issued $3,000 worth of new stock. What is the value of the retained earnings account at the end of the year?

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Global Exporters has total assets of $84,300, net working capital of $22,900, owner's equity of $38,600, and long-term debt of $23,900. What is the value of the current assets?

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

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If a firm has too little liquidity, it w...
View Answer

Home Supply, Inc. has compiled the following information: For 2010, the cash flow from assets is _ and the cash flow to shareholders is ___.

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