Question 1

The owners' equity for The Deer Store was $58,900 at the beginning of the year.During the year,the company had aftertax income of $4,200,of which $3,200 was paid in dividends.Also during the year,the company repurchased $6,500 of stock from one of the shareholders.What is the value of the owners' equity at year end?

Accepted Answer

A)  $53,400
B)  $45,000
C)  $59,900
D)  $84,400
E)  $90,900

Question 2

Identify the cash flows that occur between a firm and its shareholders and explain how each of these cash flows affects the cash flow to stockholders.

Accepted Answer

The three cash flows that occur between ...

Question 3

Cash flow to creditors is equal to:

Accepted Answer

A)  cash flow from assets plus cash flow to stockholders.
B)  beginning total liabilities minus ending total liabilities plus interest paid.
C)  beginning long-term debt minus ending long-term debt plus interest paid.
D)  ending total debt minus beginning total debt plus interest paid.
E)  ending long-term debt minus beginning long-term debt plus interest paid.

Question 4

If a firm has a negative cash flow from assets every year for several years,the firm:

Accepted Answer

A)  may be continually increasing in size.
B)  must also have a negative cash flow from operations each year.
C)  is operating at a high level of efficiency.
D)  is repaying debt every year.
E)  has annual net losses.

Question 5

Which one of the following statements is correct concerning a firm's fixed assets?

Accepted Answer

A)  The market value is the expected selling price in today's economy.
B)  The market value is affected by the accounting method selected.
C)  The market value is equal to the initial cost minus the depreciation to date.
D)  The book value is equal to the market value minus the accumulated depreciation.
E)  The book value is the greater of the initial cost or the current market value.

Question 6

The market value of a firm's fixed assets:

Accepted Answer

A)  must exceed the book value of those assets.
B)  is more predictable than the book value of those assets.
C)  in addition to the firm's net working capital reflects the true value of a firm.
D)  is decreased annually by the depreciation expense.
E)  is equal to the estimated current cash value of those assets.

Question 7

An increase in which one of the following will increase net income?

Accepted Answer

A)  Fixed costs
B)  Depreciation
C)  Marginal tax rate
D)  Revenue
E)  Dividends

Question 8

The balance sheet of Binger,Inc.has the following balances:  What is the amount of the change in net working capital?

Accepted Answer

A)  -$8,100
B)  -$7,400
C)  $7,700
D)  $8,000
E)  $8,100

Question 9

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.

Question 10

Pete's Warehouse has net working capital of $2,400,total assets of $19,300,and net fixed assets of $10,200.What is the value of the current liabilities?

Accepted Answer

A)  -$6,700
B)  -$2,900
C)  $2,900
D)  $6,700
E)  $11,500

Question 11

Which one of the following will decrease the net working capital of a firm?

Accepted Answer

A)  Obtaining a three-year loan and using the proceeds to buy inventory
B)  Collecting a payment from a credit customer
C)  Obtaining a five-year loan to buy equipment
D)  Selling inventory at a profit
E)  Making a payment on a long-term debt

Question 12

Cash flow to stockholders is defined as:

Accepted Answer

A)  cash flow from assets plus cash flow to creditors.
B)  operating cash flow minus cash flow to creditors.
C)  dividends paid plus the change in retained earnings.
D)  dividends paid minus net new equity raised.
E)  net income minus the addition to retained earnings.

Question 13

Which one of the following has nearly the same meaning as free cash flow?

Accepted Answer

A)  Net income
B)  Cash flow from assets
C)  Operating cash flow
D)  Cash flow to shareholders
E)  Addition to retained earnings

Question 14

Which one of the following is included in the market value of a firm but not in the book value?

Accepted Answer

A)  Raw materials
B)  Partially built inventory
C)  Tax liability
D)  Reputation of the firm
E)  Value of a partially depreciated machine

Question 15

The Paint Ball Range,Inc.paid $30,500 in dividends and $7,600 in interest over the past year.Sales totaled $211,800 with costs of $167,900.The depreciation expense was $16,500.The applicable tax rate is 34 percent.What is the amount of the operating cash flow?

Accepted Answer

A)  $14,232
B)  $15,306
C)  $28,222
D)  $37,168
E)  $40,568

Question 16

The Plaza Cafe has an operating cash flow of $78,460,depreciation expense of $8,960,and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows:  What is the amount of the cash flow from assets?

Accepted Answer

A)  $58,913
B)  $61,246
C)  $61,487
D)  $63,909
E)  $64,128

Question 17

Red Roofs,Inc.has current liabilities of $24,300 and accounts receivable of $7,800.The firm has total assets of $43,100 and net fixed assets of $23,700.The owners' equity has a book value of $21,400.What is the amount of the net working capital?

Accepted Answer

A)  $5,100
B)  -$4,900
C)  $6,500
D)  $18,800
E)  -$2,600

Question 18

Which is more important from a finance perspective-net income or operating cash flow?
 What is the difference between these two values?

Accepted Answer

From a finance perspective,operating cas...

Question 19

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.

Question 20

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year.During that time,the firm invested $28,000 in net working capital and incurred net capital spending of $47,900.What is the amount of the cash flow to stockholders for the last year?

Accepted Answer

A)  -$171,500
B)  -$86,700
C)  $21,200
D)  $39,700
E)  $111,100

Exam 2: Financial Statements, Taxes, and Cash Flow

The balance sheet of Binger,Inc.has the following balances: What is the amount of the change in net working capital?

Correct Answer
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Identify the cash flows that occur between a firm and its shareholders and explain how each of these cash flows affects the cash flow to stockholders.

Correct Answer
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The three cash flows that occur between ...
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An increase in which one of the following will increase net income?

Correct Answer
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Cash flow from assets is defined as:

Correct Answer
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If a firm has a negative cash flow from assets every year for several years,the firm:

Correct Answer
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Red Roofs,Inc.has current liabilities of $24,300 and accounts receivable of $7,800.The firm has total assets of $43,100 and net fixed assets of $23,700.The owners' equity has a book value of $21,400.What is the amount of the net working capital?

Correct Answer
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The market value of a firm's fixed assets:

Correct Answer
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Which one of the following has nearly the same meaning as free cash flow?

Correct Answer
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Which one of the following will decrease the net working capital of a firm?

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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Which one of the following is included in the market value of a firm but not in the book value?

Correct Answer
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Which is more important from a finance perspective-net income or operating cash flow? What is the difference between these two values?

Correct Answer
verified
From a finance perspective,operating cas...
View Answer

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year.During that time,the firm invested $28,000 in net working capital and incurred net capital spending of $47,900.What is the amount of the cash flow to stockholders for the last year?

Correct Answer
verified

The Plaza Cafe has an operating cash flow of $78,460,depreciation expense of $8,960,and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows: What is the amount of the cash flow from assets?

Correct Answer
verified

Cash flow to stockholders is defined as:

Correct Answer
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Correct Answer
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Pete's Warehouse has net working capital of $2,400,total assets of $19,300,and net fixed assets of $10,200.What is the value of the current liabilities?

Correct Answer
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Which one of the following statements is correct concerning a firm's fixed assets?

Correct Answer
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The Paint Ball Range,Inc.paid $30,500 in dividends and $7,600 in interest over the past year.Sales totaled $211,800 with costs of $167,900.The depreciation expense was $16,500.The applicable tax rate is 34 percent.What is the amount of the operating cash flow?

Correct Answer
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Cash flow to creditors is equal to:

Correct Answer
verified

Exam 2: Financial Statements, Taxes, and Cash Flow

The balance sheet of Binger,Inc.has the following balances: What is the amount of the change in net working capital?

Correct AnswerverifiedShow Answer

Identify the cash flows that occur between a firm and its shareholders and explain how each of these cash flows affects the cash flow to stockholders.

Correct AnswerverifiedThe three cash flows that occur between ...View AnswerShow Answer

An increase in which one of the following will increase net income?

Correct AnswerverifiedShow Answer

Cash flow from assets is defined as:

Correct AnswerverifiedShow Answer

If a firm has a negative cash flow from assets every year for several years,the firm:

Correct AnswerverifiedShow Answer

Red Roofs,Inc.has current liabilities of $24,300 and accounts receivable of $7,800.The firm has total assets of $43,100 and net fixed assets of $23,700.The owners' equity has a book value of $21,400.What is the amount of the net working capital?

Correct AnswerverifiedShow Answer

The market value of a firm's fixed assets:

Correct AnswerverifiedShow Answer

Which one of the following has nearly the same meaning as free cash flow?

Correct AnswerverifiedShow Answer

Which one of the following will decrease the net working capital of a firm?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following is included in the market value of a firm but not in the book value?

Correct AnswerverifiedShow Answer

Which is more important from a finance perspective-net income or operating cash flow? What is the difference between these two values?

Correct AnswerverifiedFrom a finance perspective,operating cas...View AnswerShow Answer

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year.During that time,the firm invested $28,000 in net working capital and incurred net capital spending of $47,900.What is the amount of the cash flow to stockholders for the last year?

Correct AnswerverifiedShow Answer

The Plaza Cafe has an operating cash flow of $78,460,depreciation expense of $8,960,and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows: What is the amount of the cash flow from assets?

Correct AnswerverifiedShow Answer

Cash flow to stockholders is defined as:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Pete's Warehouse has net working capital of $2,400,total assets of $19,300,and net fixed assets of $10,200.What is the value of the current liabilities?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct concerning a firm's fixed assets?

Correct AnswerverifiedShow Answer

The Paint Ball Range,Inc.paid $30,500 in dividends and $7,600 in interest over the past year.Sales totaled $211,800 with costs of $167,900.The depreciation expense was $16,500.The applicable tax rate is 34 percent.What is the amount of the operating cash flow?

Correct AnswerverifiedShow Answer

Cash flow to creditors is equal to:

Correct AnswerverifiedShow Answer

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The three cash flows that occur between ...
View Answer

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From a finance perspective,operating cas...
View Answer

Correct Answer
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