Question 1

The Widget Co.purchased new machinery three years ago for $4 million.The machinery can be sold to the Roman Co.today for $2 million.The Widget Co.'s current balance sheet shows net fixed assets of $2,500,000, current liabilities of $1,375,000, and net working capital of $725,000.If all the current assets were liquidated today, the company would receive $1.9 million in cash.The book value of the Widget Co.'s assets today is _____ and the market value of those assets is _____.

Accepted Answer

A)  $4,600,000; $3,900,000
B)  $4,600,000; $3,125,000
C)  $5,000,000; $3,125,000
D)  $5,000,000; $3,900,000
E)  $6,500,000; $3,900,000F) A) and E)
G) C) and D)

Question 2

A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200.What is the amount of the shareholders' equity?

Accepted Answer

A)  $6,900
B)  $15,300
C)  $18,700
D)  $23,700
E)  $35,500F) A) and B)
G) C) and E)

Question 3

Which one of the following statements concerning net working capital is correct?

Accepted Answer

A)  Net working capital increases when inventory is purchased with cash.
B)  Net working capital must be a positive value.
C)  Total assets must increase if net working capital increases.
D)  A decrease in the cash balance may or may not decrease net working capital.
E)  Net working capital is the amount of cash a firm currently has available for spending.F) B) and C)
G) A) and B)

Question 4

Winston Industries had sales of $843,800 and costs of $609,900.The firm paid $38,200 in interest and $18,000 in dividends.It also increased retained earnings by $62,138 for the year.The depreciation was $76,400.What is the average tax rate?

Accepted Answer

A)  32.83 percent
B)  33.33 percent
C)  38.17 percent
D)  43.39 percent
E)  48.87 percentF) C) and E)
G) D) and E)

Question 5

The common set of standards and procedures by which audited financial statements are prepared is known as the:

Accepted Answer

A)  matching principle.
B)  cash flow identity.
C)  Generally Accepted Accounting Principles.
D)  Financial Accounting Reporting Principles.
E)  Standard Accounting Value Guidelines.F) A) and D)
G) A) and B)

Question 6

Which of the following are included in current liabilities?
I.note payable to a supplier in eight months
II.amount due from a customer next month
III.account payable to a supplier that is due next week
IV.loan payable to the bank in fourteen months

Accepted Answer

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

Question 7

What is the amount of the net capital spending for 2011?

Accepted Answer

A)  -$382
B)  $1,229
C)  $1,804
D)  $2,375
E)  $2,516F) C) and E)
G) B) and C)

Question 8

What is the cash flow to creditors for 2011?

Accepted Answer

A)  -$1,020
B)  -$1,100
C)  $280
D)  $1,580
E)  $1,760F) All of the above
G) A) and E)

Question 9

What is the change in net working capital from 2010 to 2011?

Accepted Answer

A)  -$175
B)  -$70
C)  $125
D)  $240
E)  $315F) A) and D)
G) D) and E)

Question 10

The higher the degree of financial leverage employed by a firm, the:

Accepted Answer

A)  higher the probability that the firm will encounter financial distress.
B)  lower the amount of debt incurred.
C)  less debt a firm has per dollar of total assets.
D)  higher the number of outstanding shares of stock.
E)  lower the balance in accounts payable.F) A) and B)
G) C) and E)

Question 11

Which one of the following statements related to an income statement is correct?

Accepted Answer

A)  Interest expense increases the amount of tax due.
B)  Depreciation does not affect taxes since it is a non-cash expense.
C)  Net income is distributed to dividends and paid-in surplus.
D)  Taxes reduce both net income and operating cash flow.
E)  Interest expense is included in operating cash flow.F) C) and D)
G) D) and E)

Question 12

Which one of the following statements concerning net working capital is correct?

Accepted Answer

A)  The lower the value of net working capital the greater the ability of a firm to meet its current obligations.
B)  An increase in net working capital must also increase current assets.
C)  Net working capital increases when inventory is sold for cash at a profit.
D)  Firms with equal amounts of net working capital are also equally liquid.
E)  Net working capital is a part of the operating cash flow.F) None of the above
G) A) and B)

Question 13

The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million, and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Accepted Answer

A)  -$500,000
B)  $400,000
C)  $1,300,000
D)  $1,700,000
E)  $1,800,000F) None of the above
G) All of the above

Question 14

Net capital spending:

Accepted Answer

A)  is equal to ending net fixed assets minus beginning net fixed assets.
B)  is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense.
C)  reflects the net changes in total assets over a stated period of time.
D)  is equivalent to the cash flow from assets minus the operating cash flow minus the change in net working capital.
E)  is equal to the net change in the current accounts.F) A) and C)
G) B) and D)

Question 15

What is the cash flow from assets for 2011?

Accepted Answer

A)  $1,230
B)  $1,580
C)  $1,770
D)  $1,810
E)  $1,980F) All of the above
G) None of the above

Question 16

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

Question 17

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 C)

Question 18

Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411.During the year, assets with a combined book value of $6,943 were sold.Depreciation for the year was $42,822.What is the amount of net capital spending?

Accepted Answer

A)  $33,763
B)  $40,706
C)  $58,218
D)  $65,161
E)  $67,408F) A) and B)
G) B) and E)

Question 19

Which term relates to the cash flow which results from a firm's ongoing, normal business activities?

Accepted Answer

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

Question 20

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

Exam 2: Corporate Governance

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
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A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200.What is the amount of the shareholders' equity?

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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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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What is the cash flow to creditors for 2011?

Correct Answer
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What is the amount of the net capital spending for 2011?

Correct Answer
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Which one of the following statements related to an income statement is correct?

Correct Answer
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What is the change in net working capital from 2010 to 2011?

Correct Answer
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The higher the degree of financial leverage employed by a firm, the:

Correct Answer
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Correct Answer
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Which term relates to the cash flow which results from a firm's ongoing, normal business activities?

Correct Answer
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Which of the following are included in current liabilities? I.note payable to a supplier in eight months II.amount due from a customer next month III.account payable to a supplier that is due next week IV.loan payable to the bank in fourteen months

Correct Answer
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Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411.During the year, assets with a combined book value of $6,943 were sold.Depreciation for the year was $42,822.What is the amount of net capital spending?

Correct Answer
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What is the cash flow from assets for 2011?

Correct Answer
verified

The common set of standards and procedures by which audited financial statements are prepared is known as the:

Correct Answer
verified

The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million, and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Correct Answer
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Which one of the following statements concerning net working capital is correct?

Correct Answer
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Net capital spending:

Correct Answer
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Which one of the following statements concerning net working capital is correct?

Correct Answer
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Winston Industries had sales of $843,800 and costs of $609,900.The firm paid $38,200 in interest and $18,000 in dividends.It also increased retained earnings by $62,138 for the year.The depreciation was $76,400.What is the average tax rate?

Correct Answer
verified

Exam 2: Corporate Governance

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 common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and fixed assets of $21,200.What is the amount of the shareholders' equity?

Correct AnswerverifiedShow Answer

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

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

What is the cash flow to creditors for 2011?

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What is the amount of the net capital spending for 2011?

Correct AnswerverifiedShow Answer

Which one of the following statements related to an income statement is correct?

Correct AnswerverifiedShow Answer

What is the change in net working capital from 2010 to 2011?

Correct AnswerverifiedShow Answer

The higher the degree of financial leverage employed by a firm, the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which term relates to the cash flow which results from a firm's ongoing, normal business activities?

Correct AnswerverifiedShow Answer

Which of the following are included in current liabilities? I.note payable to a supplier in eight months II.amount due from a customer next month III.account payable to a supplier that is due next week IV.loan payable to the bank in fourteen months

Correct AnswerverifiedShow Answer

Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411.During the year, assets with a combined book value of $6,943 were sold.Depreciation for the year was $42,822.What is the amount of net capital spending?

Correct AnswerverifiedShow Answer

What is the cash flow from assets for 2011?

Correct AnswerverifiedShow Answer

The common set of standards and procedures by which audited financial statements are prepared is known as the:

Correct AnswerverifiedShow Answer

The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million, and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

Correct AnswerverifiedShow Answer

Which one of the following statements concerning net working capital is correct?

Correct AnswerverifiedShow Answer

Net capital spending:

Correct AnswerverifiedShow Answer

Which one of the following statements concerning net working capital is correct?

Correct AnswerverifiedShow Answer

Winston Industries had sales of $843,800 and costs of $609,900.The firm paid $38,200 in interest and $18,000 in dividends.It also increased retained earnings by $62,138 for the year.The depreciation was $76,400.What is the average tax rate?

Correct AnswerverifiedShow Answer

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