Question 1

Lester's Fried Chick'n purchased its building 11 years ago at a cost of $189,000.The building is currently valued at $209,000.The firm has other fixed assets that cost $56,000 and are currently valued at $32,000.To date, the firm has recorded a total of $49,000 in depreciation on the various assets it currently owns.Current liabilities are $36,600 and net working capital is $18,400.What is the total book value of the firm's assets?

Accepted Answer

A)  $251,000
B)  $241,000
C)  $232,600
D)  $214,400
E)  $379,000F) C) and D)
G) None of the above

Question 2

Operating cash flow is defined as:

Accepted Answer

A)  a firm's net profit over a specified period of time.
B)  the cash that a firm generates from its normal business activities.
C)  a firm's operating margin.
D)  the change in the net working capital over a stated period of time.
E)  the cash that is generated and added to retained earnings.F) A) and D)
G) B) and E)

Question 3

Net income increases when:

Accepted Answer

A)  fixed costs increase.
B)  depreciation increases.
C)  the average tax rate increases.
D)  revenue increases.
E)  dividends cease.F) All of the above
G) B) and D)

Question 4

Pier Imports has cash of $41,100 and accounts receivable of $54,200, all of which is expected to be collected.The inventory cost $82,300 and can be sold today for $116,500.The fixed assets were purchased at a total cost of $234,500 of which $118,900 has been depreciated.The fixed assets can be sold today for $138,000.What is the total book value of the firm's assets?

Accepted Answer

A)  $327,800
B)  $293,200
C)  $346,800
D)  $412,100
E)  $415,600F) A) and D)
G) A) and E)

Question 5

Blythe Industries reports the following account balances: inventory of $417,600, equipment of $2,028,300, accounts payable of $224,700, cash of $51,900, and accounts receivable of $313,900.What is the amount of the current assets?

Accepted Answer

A)  $46,700
B)  $56,000
C)  $783,400
D)  $975,000
E)  $699,700F) B) and E)
G) C) and E)

Question 6

Plenti-Good Foods has ending net fixed assets of $98,700 and beginning net fixed assets of $84,900.During the year, the firm sold assets with a total book value of $13,200 and also recorded $9,800 in depreciation expense.How much did the company spend to buy new fixed assets?

Accepted Answer

A)  -$23,900
B)  $9,200
C)  $36,800
D)  $40,700
E)  $37,400F) B) and E)
G) A) and B)

Question 7

Given a profitable firm, depreciation:

Accepted Answer

A)  increases net income.
B)  increases net fixed assets.
C)  decreases net working capital.
D)  lowers taxes.
E)  has no effect on net income.F) A) and C)
G) A) and B)

Question 8

Outdoor Sports paid $12,500 in dividends and $9,310 in interest over the past year.Sales totaled $361,820 with costs of $267,940.The depreciation expense was $16,500 and the tax rate was35 percent.What was the amount of the operating cash flow?

Accepted Answer

A)  $64,232
B)  $65,306
C)  $57,556
D)  $70,056
E)  $70,568F) A) and C)
G) C) and E) D

Question 9

Michael's Bakery had $236,400 in net fixed assets at the beginning of the year.During the year, the company purchased $53,200 in new equipment.It also sold, at a price of $22,000, some old equipment that had a book value of $5,900.The depreciation expense for the year was $13,400.What is the net fixed asset balance at the end of the year?

Accepted Answer

A)  $260,000
B)  $283,700
C)  $276,200
D)  $270,300
E)  $289,600F) B) and E)
G) C) and E) D

Question 10

Over the past year, a firm decreased its current assets and increased its current liabilities.As a result, the firm's net working capital:

Accepted Answer

A)  had to increase.
B)  had to decrease.
C)  remained constant.
D)  could have either increased, decreased, or remained constant.
E)  was unaffected as the changes occurred in the firm's current accounts.F) A) and B)
G) A) and C)

Question 11

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100.What is the value of the net working capital?

Accepted Answer

A)  $9,800
B)  $10,400
C)  $18,900
D)  $21,300
E)  $23,200F) A) and D)
G) C) and D)

Question 12

Which one of these is correct?

Accepted Answer

A)  Depreciation has no effect on taxes.
B)  Interest paid is a noncash item.
C)  Taxable income must be a positive value.
D)  Net income is distributed either to dividends or retained earnings.
E)  Taxable income equals net income &times; (1 + Average tax rate) .F) A) and B)
G) A) and C)

Question 13

Daniel's Market has sales of $43,800, costs of $40,400, depreciation expense of $2,500, and interest expense of $1,100.If the tax rate is 34 percent, what is the operating cash flow, OCF? Assume tax losses can be carried forward and utilized.

Accepted Answer

A)  $3,332
B)  $3,279
C)  $3,511
D)  $3,468
E)  $3,013F) All of the above
G) B) and C)

Question 14

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 determined.F) A) and D)
G) C) and E)

Question 15

A balance sheet shows beginning values of $56,300 for current liabilities and$289,200 for long-term debt.The ending values are $61,900 and $318,400, respectively.The income statement shows interest paid of $29,700 and dividends of $19,000.What is the amount of the net new borrowing?

Accepted Answer

A)  $29,200
B)  $40,450
C)  $34,800
D)  $70,150
E)  $58,900F) A) and C)
G) A) and B)

Question 16

For Year 2016, Precision Masters had sales of $42,900, cost of goods sold of $26,800, depreciation expense of $1,900, interest expense of $1,300, and dividends paid of $1,000.At the beginning of the year, net fixed assets were $14,300, current assets were $8,700, and current liabilities were $6,600.At the end of the year, net fixed assets were $13,900, current assets were $9,200, and current liabilities were $7,400.The tax rate was 34 percent.What is the cash flow from assets for 2016?

Accepted Answer

A)  $9,914
B)  $11,114
C)  $9,360
D)  $10,514
E)  $11,970F) A) and D)
G) D) and E)

Question 17

The market value:

Accepted Answer

A)  of accounts receivable is generally higher than the book value of those receivables.
B)  of an asset tends to provide a better guide to the actual worth of that asset than does the book value.
C)  of fixed assets will always exceed the book value of those assets.
D)  of an asset is reflected in the balance sheet.
E)  of an asset is lowered each year by the amount of depreciation expensed for that asset.F) B) and E)
G) C) and D) B

Question 18

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 19

Market values:

Accepted Answer

A)  reflect expected selling prices given the current economic situation.
B)  are affected by the accounting methods selected.
C)  are equal to the initial cost minus the depreciation to date.
D)  either remain constant or increase over time.
E)  are equal to the greater of the initial cost or the current expected sales value.F) A) and E)
G) None of the above

Question 20

Six months ago, Benders Gym repurchased $140,000 of its common stock.The company pays regular dividends totaling $18,500 per quarter.What is the amount of the cash flow to stockholders for the past year if 1,200 new shares were issued and sold for $38 a share?

Accepted Answer

A)  -$10,000
B)  -$20,400
C)  $28,500
D)  $74,000
E)  $168,400F) B) and E)
G) A) and D)

Exam 2: Financial Statements, Taxes, and Cash Flow

Correct Answer
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Operating cash flow is defined as:

Correct Answer
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Net income increases when:

Correct Answer
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Correct Answer
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Blythe Industries reports the following account balances: inventory of $417,600, equipment of $2,028,300, accounts payable of $224,700, cash of $51,900, and accounts receivable of $313,900.What is the amount of the current assets?

Correct Answer
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Plenti-Good Foods has ending net fixed assets of $98,700 and beginning net fixed assets of $84,900.During the year, the firm sold assets with a total book value of $13,200 and also recorded $9,800 in depreciation expense.How much did the company spend to buy new fixed assets?

Correct Answer
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Given a profitable firm, depreciation:

Correct Answer
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Outdoor Sports paid $12,500 in dividends and $9,310 in interest over the past year.Sales totaled $361,820 with costs of $267,940.The depreciation expense was $16,500 and the tax rate was35 percent.What was the amount of the operating cash flow?

Correct Answer
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D

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D

Over the past year, a firm decreased its current assets and increased its current liabilities.As a result, the firm's net working capital:

Correct Answer
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Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100.What is the value of the net working capital?

Correct Answer
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Which one of these is correct?

Correct Answer
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Daniel's Market has sales of $43,800, costs of $40,400, depreciation expense of $2,500, and interest expense of $1,100.If the tax rate is 34 percent, what is the operating cash flow, OCF? Assume tax losses can be carried forward and utilized.

Correct Answer
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The matching principle states that:

Correct Answer
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A balance sheet shows beginning values of $56,300 for current liabilities and$289,200 for long-term debt.The ending values are $61,900 and $318,400, respectively.The income statement shows interest paid of $29,700 and dividends of $19,000.What is the amount of the net new borrowing?

Correct Answer
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The market value:

Correct Answer
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B

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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Market values:

Correct Answer
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Six months ago, Benders Gym repurchased $140,000 of its common stock.The company pays regular dividends totaling $18,500 per quarter.What is the amount of the cash flow to stockholders for the past year if 1,200 new shares were issued and sold for $38 a share?

Correct Answer
verified

Exam 2: Financial Statements, Taxes, and Cash Flow

Correct AnswerverifiedShow Answer

Operating cash flow is defined as:

Correct AnswerverifiedShow Answer

Net income increases when:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Blythe Industries reports the following account balances: inventory of $417,600, equipment of $2,028,300, accounts payable of $224,700, cash of $51,900, and accounts receivable of $313,900.What is the amount of the current assets?

Correct AnswerverifiedShow Answer

Plenti-Good Foods has ending net fixed assets of $98,700 and beginning net fixed assets of $84,900.During the year, the firm sold assets with a total book value of $13,200 and also recorded $9,800 in depreciation expense.How much did the company spend to buy new fixed assets?

Correct AnswerverifiedShow Answer

Given a profitable firm, depreciation:

Correct AnswerverifiedShow Answer

Outdoor Sports paid $12,500 in dividends and $9,310 in interest over the past year.Sales totaled $361,820 with costs of $267,940.The depreciation expense was $16,500 and the tax rate was35 percent.What was the amount of the operating cash flow?

Correct AnswerverifiedD

Correct AnswerverifiedD

Over the past year, a firm decreased its current assets and increased its current liabilities.As a result, the firm's net working capital:

Correct AnswerverifiedShow Answer

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100.What is the value of the net working capital?

Correct AnswerverifiedShow Answer

Which one of these is correct?

Correct AnswerverifiedShow Answer

Daniel's Market has sales of $43,800, costs of $40,400, depreciation expense of $2,500, and interest expense of $1,100.If the tax rate is 34 percent, what is the operating cash flow, OCF? Assume tax losses can be carried forward and utilized.

Correct AnswerverifiedShow Answer

The matching principle states that:

Correct AnswerverifiedShow Answer

A balance sheet shows beginning values of $56,300 for current liabilities and$289,200 for long-term debt.The ending values are $61,900 and $318,400, respectively.The income statement shows interest paid of $29,700 and dividends of $19,000.What is the amount of the net new borrowing?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The market value:

Correct AnswerverifiedB

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

Market values:

Correct AnswerverifiedShow Answer

Six months ago, Benders Gym repurchased $140,000 of its common stock.The company pays regular dividends totaling $18,500 per quarter.What is the amount of the cash flow to stockholders for the past year if 1,200 new shares were issued and sold for $38 a share?

Correct AnswerverifiedShow Answer

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D

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D

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B

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