Question 1

The tax rates are as shown.Nevada Mining currently has taxable income of $97,800.How much additional tax will the firm owe if taxable income increases by $21,000?

Accepted Answer

A)  $8,080
B)  $8,130
C)  $8,155
D)  $8,170
E)  $8,190F) B) and C)
G) A) and B)

Question 2

Which one of the following accounts is the most liquid?

Accepted Answer

A)  inventory
B)  building
C)  accounts receivable
D)  equipment
E)  landF) B) and C)
G) All of the above

Question 3

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 D)
G) A) and B)

Question 4

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) A) and B)

Question 5

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 C)
G) None of the above

Question 6

Which one of the following costs is most apt to be a fixed cost?

Accepted Answer

A)  production labor cost
B)  depreciation
C)  raw materials
D)  utilities
E)  sales commissionsF) C) and D)
G) A) and E)

Question 7

The cash flow related to interest payments less any net new borrowing is called the:

Accepted Answer

A)  operating cash flow.
B)  capital spending cash flow.
C)  net working capital.
D)  cash flow from assets.
E)  cash flow to creditors.F) A) and E)
G) B) and E)

Question 8

You recently purchased a grocery store.At the time of the purchase,the store's market value equaled its book value.The purchase included the building,the fixtures,and the inventory.Which one of the following is most apt to cause the market value of this store to be lower than the book value?

Accepted Answer

A)  a sudden and unexpected increase in inflation
B)  the replacement of old inventory items with more desirable products
C)  improvements to the surrounding area by other store owners
D)  construction of a new restricted access highway located between the store and the surrounding residential areas
E)  addition of a stop light at the main entrance to the store's parking lotF) B) and D)
G) A) and D) D

Question 9

Which one of these is most apt to be a fixed cost?

Accepted Answer

A)  raw materials
B)  manufacturing wages
C)  management bonuses
D)  office salaries
E)  shipping and freightF) B) and C)
G) A) and E)

Question 10

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) All of the above

Question 11

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

Question 12

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 C)
G) A) and E)

Question 13

Which of the following are current assets?
I.patent
II.inventory
III.accounts payable
IV.cash

Accepted Answer

A)  I and III only
B)  II and IV only
C)  I, II, and IV only
D)  I, II and IV only
E)  II, III, and IV onlyF) B) and E)
G) A) and E)

Question 14

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

Question 15

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

Question 16

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

Question 17

The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:

Accepted Answer

A)  operating cash flow.
B)  net capital spending.
C)  net working capital.
D)  cash flow from assets.
E)  cash flow to stockholders.F) None of the above
G) D) and E)

Question 18

The Daily News had net income of $121,600 of which 40 percent was distributed to the shareholders as dividends.During the year,the company sold $75,000 worth of common stock.What is the cash flow to stockholders?

Accepted Answer

A)  -$75,000
B)  -$26,360
C)  -$2,040
D)  $123,640
E)  $147,960F) B) and E)
G) A) and B)

Question 19

A firm has net working capital of $640.Long-term debt is $4,180,total assets are $6,230,and fixed assets are $3,910.What is the amount of the total liabilities?

Accepted Answer

A)  $2,050
B)  $2,690
C)  $4,130
D)  $5,590
E)  $5,860F) A) and B)
G) C) and D)

Question 20

Beach Front Industries has sales of $546,000,costs of $295,000,depreciation expense of $37,000,interest expense of $15,000,and a tax rate of 32 percent.The firm paid $59,000 in cash dividends.What is the addition to retained earnings?

Accepted Answer

A)  $76,320
B)  $81,700
C)  $95,200
D)  $103,460
E)  $121,680F) A) and E)
G) C) and E) A

Exam 2: Financial Statements, Taxes, and Cash Flow

The tax rates are as shown.Nevada Mining currently has taxable income of $97,800.How much additional tax will the firm owe if taxable income increases by $21,000?

Correct Answer
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Which one of the following accounts is the most liquid?

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

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

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 costs is most apt to be a fixed cost?

Correct Answer
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The cash flow related to interest payments less any net new borrowing is called the:

Correct Answer
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You recently purchased a grocery store.At the time of the purchase,the store's market value equaled its book value.The purchase included the building,the fixtures,and the inventory.Which one of the following is most apt to cause the market value of this store to be lower than the book value?

Correct Answer
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D

Which one of these is most apt to be a fixed cost?

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

Correct Answer
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E

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

Correct Answer
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Which of the following are current assets? I.patent II.inventory III.accounts payable IV.cash

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

Correct Answer
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Depreciation:

Correct Answer
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Correct Answer
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The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:

Correct Answer
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The Daily News had net income of $121,600 of which 40 percent was distributed to the shareholders as dividends.During the year,the company sold $75,000 worth of common stock.What is the cash flow to stockholders?

Correct Answer
verified

A firm has net working capital of $640.Long-term debt is $4,180,total assets are $6,230,and fixed assets are $3,910.What is the amount of the total liabilities?

Correct Answer
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Beach Front Industries has sales of $546,000,costs of $295,000,depreciation expense of $37,000,interest expense of $15,000,and a tax rate of 32 percent.The firm paid $59,000 in cash dividends.What is the addition to retained earnings?

Correct Answer
verified
A

Exam 2: Financial Statements, Taxes, and Cash Flow

The tax rates are as shown.Nevada Mining currently has taxable income of $97,800.How much additional tax will the firm owe if taxable income increases by $21,000?

Correct AnswerverifiedShow Answer

Which one of the following accounts is the most liquid?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following costs is most apt to be a fixed cost?

Correct AnswerverifiedShow Answer

The cash flow related to interest payments less any net new borrowing is called the:

Correct AnswerverifiedShow Answer

You recently purchased a grocery store.At the time of the purchase,the store's market value equaled its book value.The purchase included the building,the fixtures,and the inventory.Which one of the following is most apt to cause the market value of this store to be lower than the book value?

Correct AnswerverifiedD

Which one of these is most apt to be a fixed cost?

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

Correct AnswerverifiedE

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

Correct AnswerverifiedShow Answer

Which of the following are current assets? I.patent II.inventory III.accounts payable IV.cash

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Depreciation:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:

Correct AnswerverifiedShow Answer

The Daily News had net income of $121,600 of which 40 percent was distributed to the shareholders as dividends.During the year,the company sold $75,000 worth of common stock.What is the cash flow to stockholders?

Correct AnswerverifiedShow Answer

A firm has net working capital of $640.Long-term debt is $4,180,total assets are $6,230,and fixed assets are $3,910.What is the amount of the total liabilities?

Correct AnswerverifiedShow Answer

Beach Front Industries has sales of $546,000,costs of $295,000,depreciation expense of $37,000,interest expense of $15,000,and a tax rate of 32 percent.The firm paid $59,000 in cash dividends.What is the addition to retained earnings?

Correct AnswerverifiedA

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D

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E

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A