Question 1

The Plaza Cafe has an operating cash flow of $83,770,depreciation expense of $43,514,and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows:   Beginning  Balance  Ending  Balance  Current assets $138,590$129,204 Net fixed assets 599,608597,913 Current liabilities 143,215139,827 Long-tem debt 408,660402,120\begin{array} { | l | r | r | } \hline & \begin{array} { l } 	ext { Beginning } \	ext { Balance }\end{array} & \begin{array} { l } 	ext { Ending } \	ext { Balance }\end{array} \\hline 	ext { Current assets } & \$ 138,590 & \$ 129,204 \\hline 	ext { Net fixed assets } & 599,608 & 597,913 \\hline 	ext { Current liabilities } & 143,215 & 139,827 \\hline 	ext { Long-tem debt } & 408,660 & 402,120 \\hline\end{array} Current assets  Net fixed assets  Current liabilities  Long-tem debt ​ Beginning  Balance ​$138,590599,608143,215408,660​ Ending  Balance ​$129,204597,913139,827402,120​​  What is the amount of the cash flow from assets?

Accepted Answer

A)  $26,359
B)  $47,949
C)  $61,487
D)  $43,909
E)  $35,953 F) A) and E)
G) A) and D)

Question 2

What is the maximum average tax rate for corporations?

Accepted Answer

A)  38 percent
B)  25 percent
C)  33 percent
D)  39 percent
E)  35 percentF) A) and B)
G) A) and E)

Question 3

The Green Carpet has current liabilities of $72,100 and accounts receivable of $107,800.The firm has total assets of $443,500 and net fixed assets of $323,700.The owners' equity has a book value of $191,400.What is the amount of the net working capital?

Accepted Answer

A)  $50,100
B)  $47,700
C)  $6,500
D)  -$18,800
E)  -$29,700F) B) and C)
G) A) and E)

Question 4

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

Question 5

Dockside Warehouse has net working capital of $42,400,total assets of $519,300,and net fixed assets of $380,200.What is the value of the current liabilities?

Accepted Answer

A)  $61,700
B)  $88,40000
C)  $102,900
D)  $96,700
E)  $111,500F) A) and E)
G) B) and D)

Question 6

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 E)
G) A) and D)

Question 7

Net capital spending is equal to:

Accepted Answer

A)  ending net fixed assets minus beginning net fixed assets plus depreciation.
B)  beginning net fixed assets minus ending net fixed assets plus depreciation.
C)  ending net fixed assets minus beginning net fixed assets minus depreciation.
D)  ending total assets minus beginning total assets plus depreciation.
E)  ending total assets minus beginning total assets minus depreciation.F) C) and E)
G) C) and D)

Question 8

The accounting statement that measures the revenues,expenses,and net income of a firm over a period of time is called the:

Accepted Answer

A)  statement of cash flows.
B)  income statement.
C)  GAAP statement.
D)  balance sheet.
E)  net working capital schedule.F) A) and B)
G) A) and D)

Question 9

An income statement prepared according to GAAP:

Accepted Answer

A)  reflects the net cash flows of a firm over a stated period of time.
B)  reflects the financial position of a firm as of a particular date.
C)  distinguishes variable costs from fixed costs.
D)  records revenue when payment for a sale is received.
E)  records expenses based on the matching principle.F) A) and E)
G) A) and B)

Question 10

Home Supply,Inc.has compiled the following information:  20152016 Interest paid $10,500$11,400 Long-term debt 287,400293,500 Sales 614,200718,900 Common stock 280,000294,500 Accounts payable 42,60058,700 Depreciation 38,40043,700 Accounts receivable 54,20059,000 Inventory 121,600128,300 Other costs 46,80042,100 Taxes 16,10020,200 Cash 18,2009,500 Retained eamings 65,40089,800 Net fixed assets 481,400539,700 Cost of goods sold 471,100562,300\begin{array} { | l | r | r | } \hline & 2015 & 2016 \\hline 	ext { Interest paid } & \$ 10,500 & \$ 11,400 \\hline 	ext { Long-term debt } & 287,400 & 293,500 \\hline 	ext { Sales } & 614,200 & 718,900 \\hline 	ext { Common stock } & 280,000 & 294,500 \\hline 	ext { Accounts payable } & 42,600 & 58,700 \\hline 	ext { Depreciation } & 38,400 & 43,700 \\hline 	ext { Accounts receivable } & 54,200 & 59,000 \\hline 	ext { Inventory } & 121,600 & 128,300 \\hline 	ext { Other costs } & 46,800 & 42,100 \\hline 	ext { Taxes } & 16,100 & 20,200 \\hline 	ext { Cash } & 18,200 & 9,500 \\hline 	ext { Retained eamings } & 65,400 & 89,800 \\hline 	ext { Net fixed assets } & 481,400 & 539,700 \\hline 	ext { Cost of goods sold } & 471,100 & 562,300 \\hline\end{array} Interest paid  Long-term debt  Sales  Common stock  Accounts payable  Depreciation  Accounts receivable  Inventory  Other costs  Taxes  Cash  Retained eamings  Net fixed assets  Cost of goods sold ​2015$10,500287,400614,200280,00042,60038,40054,200121,60046,80016,10018,20065,400481,400471,100​2016$11,400293,500718,900294,50058,70043,70059,000128,30042,10020,2009,50089,800539,700562,300​​  For 2016,the cash flow from assets is _____ and the cash flow to stockholders is ______.

Accepted Answer

A)  $5,600; $300
B)  $5,600; $15,100
C)  $5,600; $14,500
D)  $6,300; $300
E)  $6,300; $14,500 F) A) and D)
G) A) and C)

Question 11

Able Co.has $267,000 in taxable income and Bravo 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 ____:  \quad \quad  Taxable Income	ext {  Taxable Income} Taxable Income   \quad  Tax Rate	ext {  Tax Rate} Tax Rate 
 $0−50,00015%50,001−75,0002575,001−100,00034100,001−335,00039335,001−10,000,00034\begin{array}{|r|r|c|}\hline \$ 0- & 50,000 & 15 \% \\hline 50,001- & 75,000 & 25 \\hline 75,001- & 100,000 & 34 \\hline 100,001- & 335,000 & 39 \\hline 335,001- & 10,000,000 & 34 \\hline\end{array}$0−50,001−75,001−100,001−335,001−​50,00075,000100,000335,00010,000,000​15%25343934​​

Accepted Answer

A)  $1,500; $1,500
B)  $1,500; $3,400
C)  $3,400; $3,900
D)  $3,900; $3,400
E)  $3,400; $3,400 F) None of the above
G) A) and B)

Question 12

On December 31,2015,The Play House had net fixed assets of $812,650 while the December 31,2016 balance sheet showed net fixed assets of $784,900.Depreciation for 2016 was $84,900.What was the firm's net capital spending for 2016?

Accepted Answer

A)  $51,600
B)  $42,410
C)  $57,150
D)  $54,400
E)  $46,620F) A) and B)
G) A) and C)

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

Question 14

The recognition principle states that:

Accepted Answer

A)  costs should be recorded on the income statement whenever those costs can be reliably determined.
B)  costs should be recorded when paid.
C)  the costs of producing an item should be recorded when the sale of that item is recorded as revenue.
D)  sales should be recorded when the payment for that sale is received.
E)  sales should be recorded when the earnings process is virtually completed and the value of the sale can be determined.F) A) and B)
G) C) and D)

Question 15

National Importers paid $38,600 in dividends and $24,615 in interest over the past year while net working capital increased from $15,506 to $17,411.The company purchased $38,700 in net new fixed assets and had depreciation expenses of $14,784.During the year,the firm issued $20,000 in net new equity and paid off $23,800 in long-term debt.What is the amount of the cash flow from assets?

Accepted Answer

A)  $21,811
B)  $41,194
C)  $36,189
D)  $26,410
E)  $67,015F) B) and E)
G) B) and C)

Question 16

Use the following tax table to answer this question;  \quad \quad  Taxable Income	ext {  Taxable Income} Taxable Income   \quad  Tax Rate	ext {  Tax Rate} Tax Rate 
 $0−50,00015%50,001−75,0002575,001−100,00034100,001−335,00039335,001−10,000,00034\begin{array}{|r|r|c|}\hline \$ 0- & 50,000 & 15 \% \\hline 50,001- & 75,000 & 25 \\hline 75,001- & 100,000 & 34 \\hline 100,001- & 335,000 & 39 \\hline 335,001- & 10,000,000 & 34 \\hline\end{array}$0−50,001−75,001−100,001−335,001−​50,00075,000100,000335,00010,000,000​15%25343934​​   BT Trucking has taxable income of $617,429.How much does it owe in taxes?

Accepted Answer

A)  $96,025.86
B)  $240,797.31
C)  $118,542.79
D)  $209,925.86
E)  $201,354.82 F) All of the above
G) B) 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 D)
G) A) and E)

Question 18

The matching principle states that:

Accepted Answer

A)  costs should be recorded on the income statement whenever those costs can be reliably determined.
B)  costs should be recorded when paid.
C)  the costs of producing an item should be recorded when the sale of that item is recorded as revenue.
D)  sales should be recorded when the payment for that sale is received.
E)  sales should be recorded when the earnings process is virtually completed and the value of the sale can be determinedF) A) and B)
G) C) and E)

Question 19

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&#8217;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 C)

Question 20

Which one of the following changes during a year will increase cash flow from assets but not affect the operating cash flow?

Accepted Answer

A)  Increase in depreciation
B)  Increase in accounts receivable
C)  Increase in accounts payable
D)  Decrease in cost of goods sold
E)  Increase in salesF) A) and C)
G) B) and D)

Exam 2: Financial Statements,Taxes,and Cash Flow

Net capital spending is equal to:

Correct Answer
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The accounting statement that measures the revenues,expenses,and net income of a firm over a period of time is called the:

Correct Answer
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On December 31,2015,The Play House had net fixed assets of $812,650 while the December 31,2016 balance sheet showed net fixed assets of $784,900.Depreciation for 2016 was $84,900.What was the firm's net capital spending for 2016?

Correct Answer
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The Green Carpet has current liabilities of $72,100 and accounts receivable of $107,800.The firm has total assets of $443,500 and net fixed assets of $323,700.The owners' equity has a book value of $191,400.What is the amount of the net working capital?

Correct Answer
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Cash flow from assets is defined as:

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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The recognition principle states that:

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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The matching principle states that:

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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Which one of the following changes during a year will increase cash flow from assets but not affect the operating cash flow?

Correct Answer
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What is the maximum average tax rate for corporations?

Correct Answer
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An income statement prepared according to GAAP:

Correct Answer
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Correct Answer
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Dockside Warehouse has net working capital of $42,400,total assets of $519,300,and net fixed assets of $380,200.What is the value of the current liabilities?

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

Net capital spending is equal to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The accounting statement that measures the revenues,expenses,and net income of a firm over a period of time is called the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

On December 31,2015,The Play House had net fixed assets of $812,650 while the December 31,2016 balance sheet showed net fixed assets of $784,900.Depreciation for 2016 was $84,900.What was the firm's net capital spending for 2016?

Correct AnswerverifiedShow Answer

The Green Carpet has current liabilities of $72,100 and accounts receivable of $107,800.The firm has total assets of $443,500 and net fixed assets of $323,700.The owners' equity has a book value of $191,400.What is the amount of the net working capital?

Correct AnswerverifiedShow Answer

Cash flow from assets is defined as:

Correct AnswerverifiedShow Answer

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

The recognition principle states that:

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

The matching principle states that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following changes during a year will increase cash flow from assets but not affect the operating cash flow?

Correct AnswerverifiedShow Answer

What is the maximum average tax rate for corporations?

Correct AnswerverifiedShow Answer

An income statement prepared according to GAAP:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Dockside Warehouse has net working capital of $42,400,total assets of $519,300,and net fixed assets of $380,200.What is the value of the current liabilities?

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Correct AnswerverifiedShow Answer

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