Question 1

Lew's Auto Repair has cash of $18,600, accounts receivable of $34,500, accounts payable of $28,900, inventory of $97,800, long-term debt of $142,000, and net fixed assets of $363,800.The firm estimates that if it wanted to cease operations today it could sell the inventory for $85,000 and the fixed assets for $349,000.The firm could collect 100 percent of its receivables as they are secured.What is the market value of the firm's assets?

Accepted Answer

A)  $332,800
B)  $458,200
C)  $374,200
D)  $495,500
E)  $487,100F) A) and B)
G) A) and E)

Question 2

Paid-in surplus is classified as:

Accepted Answer

A)  owners' equity.
B)  net working capital.
C)  a current asset.
D)  a cash expense.
E)  long-term debt.F) B) and D)
G) All of the above

Question 3

Wes Motors has total assets of $98,300, net working capital of $11,300, owners' equity of $41,600, and long-term debt of $38,600.What is the value of the current assets?

Accepted Answer

A)  $21,600
B)  $18,100
C)  $28,900
D)  $29,400
E)  $6,800F) All of the above
G) A) and E)

Question 4

Jackson Automotive has net working capital of $22,600, current assets of $56,500, equity of $62,700, and long-term debt of $31,900.What is the amount of the net fixed assets?

Accepted Answer

A)  $9,300
B)  $49,400
C)  $94,600
D)  $103,900
E)  $72,000F) B) and D)
G) B) and E)

Question 5

Suzette's Market had long-term debt of $638,100 at the beginning of the year compared to $574,600 at year-end.If the interest expense was $42,300, what was the firm's cash flow to creditors?

Accepted Answer

A)  $21,200
B)  $26,700
C)  $54,900
D)  $102,400
E)  $105,800F) C) and E)
G) B) and C)

Question 6

Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period?

Accepted Answer

A)  Positive operating cash flow
B)  Negative cash flow to creditors
C)  Positive cash flow to stockholders
D)  Negative net capital spending
E)  Positive cash flow from assetsF) B) and E)
G) B) and C)

Question 7

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

Question 8

Use the following tax table to answer this question:  Andrews Dried Fruit, LLC has taxable income of $630,000.How much does it owe in taxes?

Accepted Answer

A)  $141,750
B)  $154,800 
C)  $198,790
D)  $220,500
E)  $233,100F) B) and D)
G) A) and E)

Question 9

A negative cash flow to stockholders indicates a firm:

Accepted Answer

A)  had a net loss for the year.
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) None of the above
G) A) and D)

Question 10

Marenelle Construction has beginning retained earnings of $284,300.For the year, the company earned net income of $13,700 and paid dividends of $9,000.The company also issued $25,000 worth of new stock.What is the value of the retained earnings account at the end of the year?

Accepted Answer

A)  $287,204
B)  $289.454
C)  $294,134
D)  $289.000
E)  $314,000F) B) and D)
G) A) and C)

Question 11

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 paid only $80,000 in taxes.
B)  Johnson's Retreat paid only $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) A) and E)
G) B) and D)

Question 12

The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the:

Accepted Answer

A)  average tax rate.
B)  variable tax rate.
C)  marginal tax rate.
D)  fixed tax rate.
E)  ordinary tax rate.F) C) and D)
G) B) and E)

Question 13

During the past year, Yard Services paid $36,800 in interest along with $2,000 in dividends.The company issued $3,000 of stock and $16,000 of new debt.The company reduced the balance due on its old debt by $18,400.What is the amount of the cash flow to creditors?

Accepted Answer

A)  $8,200
B)  $55,200
C)  $2,400
D)  $39,200
E)  $15,800F) B) and D)
G) A) and C)

Question 14

Use the following tax table to answer this question:  Stacey's Fabrics, a sole proprietorship earned $260.000 in taxable income for the year.How much tax does the company owe?

Accepted Answer

A)    $$96,220
B)  $91,000
C)  $66.690
D)  $62,400
E)  $57,200 F) B) and D)
G) B) and E)

Question 15

For the year, Uptowne Furniture had sales of $818,790, costs of $748,330, and interest paid of $24,450.The depreciation expense was $56,100 and the tax rate was 34 percent.At the beginning of the year, the firm had retained earnings of $172,270 and common stock of $260,000.At the end of the year, retained earnings was $158,713 and common stock was $280,000.Any tax losses can be used.What is the amount of the dividends paid for the year?

Accepted Answer

A)  $5,266
B)  $6,466
C)  $7,566
D)  $7,066
E)  $6,898F) B) and D)
G) A) and E)

Question 16

Daisy Co.has $267,000 in taxable income and Binget Co.has $1,600,000 in taxable income.Suppose both firms have identified a new project that will increase taxable income by $10,000.The additional project will increase Able Co.'s taxes by _____ and Bravo Co.'s taxes by ____.

Accepted Answer

A)  $1,500; $1,500
B)  $3,400; $3,400
C)  $3,400; $3,700
D)  $3,500; $3,700
E)  $3,700; $3,700F) A) and E)
G) C) and E)

Question 17

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

Question 18

Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend.The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Accepted Answer

A)  Positive operating cash flow
B)  Negative cash flow from assets
C)  Positive net income
D)  Negative operating cash flow
E)  Positive cash flow to stockholdersF) B) and E)
G) A) and E)

Question 19

Leslie Printing has net income of $26,310 for the year.At the beginning of the year, the firm had common stock of $55,000, paid-in surplus of $11,200, and retained earnings of $48,420.At the end of the year, the firm had total equity of $142,430.The firm paid dividends of $32,500.What is the amount of the net new equity raised during the year?

Accepted Answer

A)  $34,000
B)  $42,500
C)  $25,000
D)  $21,500
E)  $0F) A) and E)
G) All of the above

Question 20

Last year, The Pizza Joint added $6,230 to retained earnings from sales of $104,650.The company had costs of $87,300, dividends of $2,500, and interest paid of $1,620.Given a tax rate of 34 percent, what was the amount of the depreciation expense?

Accepted Answer

A)  $2,407
B)  $1,908
C)  $2,503
D)  $3,102
E)  $3,414F) B) and C)
G) A) and B)

Exam 2: Financial Statements, Taxes, and Cash Flow

Jackson Automotive has net working capital of $22,600, current assets of $56,500, equity of $62,700, and long-term debt of $31,900.What is the amount of the net fixed assets?

Correct Answer
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The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the:

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

Correct Answer
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Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period?

Correct Answer
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Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend.The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Correct Answer
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Correct Answer
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Use the following tax table to answer this question: Andrews Dried Fruit, LLC has taxable income of $630,000.How much does it owe in taxes?

Correct Answer
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Use the following tax table to answer this question: Stacey's Fabrics, a sole proprietorship earned $260.000 in taxable income for the year.How much tax does the company owe?

Correct Answer
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Correct Answer
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Marenelle Construction has beginning retained earnings of $284,300.For the year, the company earned net income of $13,700 and paid dividends of $9,000.The company also issued $25,000 worth of new stock.What is the value of the retained earnings account at the end of the year?

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

Correct Answer
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Paid-in surplus is classified as:

Correct Answer
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Suzette's Market had long-term debt of $638,100 at the beginning of the year compared to $574,600 at year-end.If the interest expense was $42,300, what was the firm's cash flow to creditors?

Correct Answer
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Correct Answer
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During the past year, Yard Services paid $36,800 in interest along with $2,000 in dividends.The company issued $3,000 of stock and $16,000 of new debt.The company reduced the balance due on its old debt by $18,400.What is the amount of the cash flow to creditors?

Correct Answer
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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?

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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Last year, The Pizza Joint added $6,230 to retained earnings from sales of $104,650.The company had costs of $87,300, dividends of $2,500, and interest paid of $1,620.Given a tax rate of 34 percent, what was the amount of the depreciation expense?

Correct Answer
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Daisy Co.has $267,000 in taxable income and Binget Co.has $1,600,000 in taxable income.Suppose both firms have identified a new project that will increase taxable income by $10,000.The additional project will increase Able Co.'s taxes by _ and Bravo Co.'s taxes by .

Correct Answer
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Wes Motors has total assets of $98,300, net working capital of $11,300, owners' equity of $41,600, and long-term debt of $38,600.What is the value of the current assets?

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

Jackson Automotive has net working capital of $22,600, current assets of $56,500, equity of $62,700, and long-term debt of $31,900.What is the amount of the net fixed assets?

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The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the:

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A negative cash flow to stockholders indicates a firm:

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Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period?

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Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend.The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the following tax table to answer this question: Andrews Dried Fruit, LLC has taxable income of $630,000.How much does it owe in taxes?

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Use the following tax table to answer this question: Stacey's Fabrics, a sole proprietorship earned $260.000 in taxable income for the year.How much tax does the company owe?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marenelle Construction has beginning retained earnings of $284,300.For the year, the company earned net income of $13,700 and paid dividends of $9,000.The company also issued $25,000 worth of new stock.What is the value of the retained earnings account at the end of the year?

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

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Paid-in surplus is classified as:

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Suzette's Market had long-term debt of $638,100 at the beginning of the year compared to $574,600 at year-end.If the interest expense was $42,300, what was the firm's cash flow to creditors?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the past year, Yard Services paid $36,800 in interest along with $2,000 in dividends.The company issued $3,000 of stock and $16,000 of new debt.The company reduced the balance due on its old debt by $18,400.What is the amount of the cash flow to creditors?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Last year, The Pizza Joint added $6,230 to retained earnings from sales of $104,650.The company had costs of $87,300, dividends of $2,500, and interest paid of $1,620.Given a tax rate of 34 percent, what was the amount of the depreciation expense?

Correct AnswerverifiedShow Answer

Daisy Co.has $267,000 in taxable income and Binget Co.has $1,600,000 in taxable income.Suppose both firms have identified a new project that will increase taxable income by $10,000.The additional project will increase Able Co.'s taxes by _____ and Bravo Co.'s taxes by ____.

Correct AnswerverifiedShow Answer

Wes Motors has total assets of $98,300, net working capital of $11,300, owners' equity of $41,600, and long-term debt of $38,600.What is the value of the current assets?

Correct AnswerverifiedShow Answer

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Daisy Co.has $267,000 in taxable income and Binget Co.has $1,600,000 in taxable income.Suppose both firms have identified a new project that will increase taxable income by $10,000.The additional project will increase Able Co.'s taxes by _ and Bravo Co.'s taxes by .

Correct Answer
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Correct Answer
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