Question 1

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) A) and C)

Question 2

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

Question 3

Jake owns The Corner Market which he is trying to sell so that he can retire and travel.The Corner Market owns the building in which it is located.This building was built at a cost of $647,000 and is currently appraised at $819,000.The counters and fixtures originally cost $148,000 and are currently valued at $65,000.The inventory is valued on the balance sheet at $319,000 and has a retail market value equal to 1.2 times its cost.Jake expects the store to collect 98 percent of the $21,700 in accounts receivable.The firm has $26,800 in cash and has total debt of $414,700.What is the market value of this firm?

Accepted Answer

A)  $857,634
B)  $900,166
C)  $919,000
D)  $1,314,866
E)  $1,333,700F) B) and E)
G) A) and C)

Question 4

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

Question 5

What is the amount of the noncash expenses for 2011?

Accepted Answer

A)  $740
B)  $1,282
C)  $1,333
D)  $1,611
E)  $2,351F) A) and D)
G) None of the above

Question 6

Crandall Oil has total sales of $1,349,800 and costs of $903,500.Depreciation is $42,700 and the tax rate is 34 percent.The firm does not have any interest expense.What is the operating cash flow?

Accepted Answer

A)  $129,152
B)  $171,852
C)  $179,924
D)  $281,417
E)  $309,076F) C) and D)
G) B) and D)

Question 7

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

Question 8

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 E)
G) B) and D)

Question 9

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

Question 10

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

Question 11

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

Accepted Answer

A)  The marginal tax rate must be equal to or lower than the average tax rate for a firm.
B)  The tax for a firm is computed by multiplying the firm's current marginal tax rate times the taxable income.
C)  Additional income is taxed at a firm's average tax rate.
D)  Given the corporate tax structure in 2012, the highest marginal tax rate is equal to the highest average tax rate.
E)  The marginal tax rate for a firm can be either higher than or the same as the average tax rate.F) A) and E)
G) All of the above

Question 12

Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense.The addition to retained earnings is $418 and net new equity is $500.The tax rate is 35 percent.Sales are $15,900 and depreciation is $680.What are the earnings before interest and taxes?

Accepted Answer

A)  $589.46
B)  $1,269.46
C)  $1,331.54
D)  $1,951.54
E)  $1,949.46F) A) and E)
G) A) and C)

Question 13

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

Question 14

As long as a firm maintains a positive cash balance, why is it essential to review the firm's cash flows?

Accepted Answer

Firms can have positive cash balances be...

Question 15

For a tax-paying firm, an increase in _____ will cause the cash flow from assets to increase.

Accepted Answer

A)  depreciation
B)  net capital spending
C)  change in net working capital
D)  taxes
E)  production costsF) B) and D)
G) C) and D)

Question 16

Which one of the following is true according to Generally Accepted Accounting Principles?

Accepted Answer

A)  Depreciation may or may not be recorded at management's discretion.
B)  Income is recorded based on the matching principle.
C)  Costs are recorded based on the realization principle.
D)  Depreciation is recorded based on the recognition principle.
E)  Costs of goods sold are recorded based on the matching principle.F) A) and C)
G) None of the above

Question 17

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

Question 18

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

Question 19

Cash flow to stockholders is defined as:

Accepted Answer

A)  the total amount of interest and dividends paid during the past year.
B)  the change in total equity over the past year.
C)  cash flow from assets plus the cash flow to creditors.
D)  operating cash flow minus the cash flow to creditors.
E)  dividend payments less net new equity raised.F) None of the above
G) B) and C)

Question 20

Which one of the following will increase the value of a firm's net working capital?

Accepted Answer

A)  using cash to pay a supplier
B)  depreciating an asset
C)  collecting an accounts receivable
D)  purchasing inventory on credit
E)  selling inventory at a profitF) B) and D)
G) B) and C)

Exam 2: Corporate Governance

Which one of the following is true according to Generally Accepted Accounting Principles?

Correct Answer
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What is the amount of the noncash expenses for 2011?

Correct Answer
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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
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Which one of the following will increase the value of a firm's net working capital?

Correct Answer
verified

Cash flow to stockholders is defined as:

Correct Answer
verified

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

Correct Answer
verified

As long as a firm maintains a positive cash balance, why is it essential to review the firm's cash flows?

Correct Answer
verified
Firms can have positive cash balances be...
View Answer

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

Correct Answer
verified

For a tax-paying firm, an increase in _____ will cause the cash flow from assets to increase.

Correct Answer
verified

Correct Answer
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Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense.The addition to retained earnings is $418 and net new equity is $500.The tax rate is 35 percent.Sales are $15,900 and depreciation is $680.What are the earnings before interest and taxes?

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

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

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

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

Correct Answer
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Correct Answer
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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

Crandall Oil has total sales of $1,349,800 and costs of $903,500.Depreciation is $42,700 and the tax rate is 34 percent.The firm does not have any interest expense.What is the operating cash flow?

Correct Answer
verified

Net working capital is defined as:

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

Exam 2: Corporate Governance

Which one of the following is true according to Generally Accepted Accounting Principles?

Correct AnswerverifiedShow Answer

What is the amount of the noncash expenses for 2011?

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

Which one of the following will increase the value of a firm's net working capital?

Correct AnswerverifiedShow Answer

Cash flow to stockholders is defined as:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As long as a firm maintains a positive cash balance, why is it essential to review the firm's cash flows?

Correct AnswerverifiedFirms can have positive cash balances be...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

For a tax-paying firm, an increase in _____ will cause the cash flow from assets to increase.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense.The addition to retained earnings is $418 and net new equity is $500.The tax rate is 35 percent.Sales are $15,900 and depreciation is $680.What are the earnings before interest and taxes?

Correct AnswerverifiedShow Answer

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

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

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Crandall Oil has total sales of $1,349,800 and costs of $903,500.Depreciation is $42,700 and the tax rate is 34 percent.The firm does not have any interest expense.What is the operating cash flow?

Correct AnswerverifiedShow Answer

Net working capital is defined as:

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Firms can have positive cash balances be...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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