Question 1

Caldweiler & Co.owes a total of $21 684 in taxes for this year.The taxable income is $71 509.If the firm earns $100 more in income,it will owe an additional $36 in taxes.What is the average tax rate on income of $71 609?

Accepted Answer

A)  28.00 per cent
B)  30.33 per cent
C)  33.33 per cent
D)  34.00 per cent
E)  36.00 per centF) A) and D)
G) A) and E) B

Question 2

Westerman Inc.started the financial year 2009 with $1968 in current assets and $1348 in current liabilities.The corresponding ending figures were $1992 and $1350.What was the addition to net working capital during the year 2009?

Accepted Answer

A)  $22
B)  $24
C)  $2
D)  $28
E)  $620F) A) and D)
G) None of the above

Question 3

Delivery trucks are classified as:

Accepted Answer

A)  noncash expenses
B)  current liabilities
C)  current assets
D)  tangible fixed assets
E)  intangible fixed assetsF) A) and D)
G) D) and E) D

Question 4

A fixed asset by definition:

Accepted Answer

A)  has a relatively long life
B)  has a life of one year or more and is a tangible asset
C)  includes both highly liquid assets and intangible assets
D)  is equal to total assets minus net working capital
E)  converts to cash within one yearF) B) and C)
G) A) and B)

Question 5

Paddle Fans & More has a marginal tax rate of 34 per cent and an average tax rate of 23.7 per cent.If the firm earns $138 500 in taxable income,how much will it owe in taxes?

Accepted Answer

A)  $31 366.67
B)  $31 500.00
C)  $32 824.50
D)  $39 957.25
E)  $47 090.00F) B) and E)
G) A) and B)

Question 6

The book value of an asset is equal to:

Accepted Answer

A)  the initial cost less depreciation plus interest earned.
B)  the initial cost plus depreciation minus the interest charges
C)  the initial cost minus the depreciation to date
D)  the higher of the original cost or the current market value
E)  the lower of the original cost or the current market valueF) All of the above
G) A) and B)

Question 7

The Plaza Cafe has an operating cash flow of $78 460,a depreciation expense of $8960,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 128F) A) and D)
G) B) and C)

Question 8

Depreciation does which one of the following for a profitable firm?

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

Question 9

An intangible asset is:

Accepted Answer

A)  a valuable fixed asset that has no physical existence
B)  a physical fixed asset that loses value over time,such as equipment
C)  a fully-depreciated fixed asset which has no remaining market value
D)  a current asset with a negligible book value but considerable market value
E)  a current asset with minimal market value and no physical existenceF) All of the above
G) A) and C)

Question 10

The Good Life Store has sales of $79 600.The cost of goods sold is $48 200 and the other costs are $18 700.Depreciation is $8300 and the tax rate is 34 per cent.What is the net income?

Accepted Answer

A)  $2904
B)  $8382
C)  $11 204
D)  $14 660
E)  $16 682F) B) and E)
G) A) and B)

Question 11

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

Accepted Answer

A)  fixed costs
B)  depreciation
C)  marginal tax rate
D)  revenue
E)  dividendsF) C) and D)
G) C) and E)

Question 12

An increase in which one of the following will increase operating cash flow for a profitable,tax-paying firm?

Accepted Answer

A)  fixed expenses
B)  interest paid
C)  net capital spending
D)  inventory
E)  depreciationF) A) and B)
G) D) and E)

Question 13

Which of the following is an intangible fixed asset?

Accepted Answer

A)  inventory
B)  delivery truck
C)  patents
D)  accounts receivable
E)  buildingsF) A) and B)
G) D) and E)

Question 14

William Blue Pty Ltd has sales of $1600 for the financial year ended 30 June 2010.The associated cost of goods sold is $800.The depreciation charge for the year is $50 and interest paid was $80.If the average tax rate is 30% what is EBIT for the year?

Accepted Answer

A)  $201
B)  $670
C)  $469
D)  $750
E)  $504F) All of the above
G) A) and C)

Question 15

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 day-to-day activities
C)  a firm's operating margin
D)  the change in net working capital over a stated period of time
E)  the cash that is generated and added to retained earningsF) C) and D)
G) A) and B)

Question 16

Earnings per share represent:

Accepted Answer

A)  the gross revenues of a firm divided by the number of outstanding shares
B)  the net cash flow available per share
C)  the amount of net income attributable to each share
D)  the current book value of a firm on a per share basis
E)  the daily increase in the value of one share in the firmF) B) and E)
G) A) and E) C

Question 17

The market value of land is equal to:

Accepted Answer

A)  the anticipated selling price if the land were sold today
B)  the cost of the land at the time the current owner acquired it
C)  the initial cost plus the value of all improvements added
D)  the book value as recorded on the latest financial statement
E)  the historical cost adjusted for annual depreciationF) A) and E)
G) B) and E)

Question 18

Which one of the following is the tax rate that applies to the next dollar of taxable income that a firm earns?

Accepted Answer

A)  average tax rate
B)  variable tax rate
C)  marginal tax rate
D)  absolute tax rate
E)  contingent tax rateF) B) and C)
G) A) and B)

Question 19

Jones Brothers Farm Equipment owes $48 329 in tax on a taxable income of
$549 600.The company has determined that it will owe $56 211 in tax if its taxable income rises to $575 000.What is the marginal tax rate at this level of income?

Accepted Answer

A)  29.08 per cent
B)  30.00 per cent
C)  30.67 per cent
D)  31.03 per cent
E)  32.00 per centF) All of the above
G) A) and D)

Question 20

William Blue Pty Ltd has sales of $1600 for the financial year ended 30 June 2010.The associated cost of goods sold is $800.The depreciation charge for the year is $50 and interest paid was $80.If the average tax rate is 30% what is the net income for the year?

Accepted Answer

A)  $201
B)  $670
C)  $469
D)  $750
E)  $504F) A) and B)
G) C) and D)

Exam 2: Financial Statements, Taxes, and Cash Flow

Caldweiler & Co.owes a total of $21 684 in taxes for this year.The taxable income is $71 509.If the firm earns $100 more in income,it will owe an additional $36 in taxes.What is the average tax rate on income of $71 609?

Correct AnswerverifiedB

Westerman Inc.started the financial year 2009 with $1968 in current assets and $1348 in current liabilities.The corresponding ending figures were $1992 and $1350.What was the addition to net working capital during the year 2009?

Correct AnswerverifiedShow Answer

Delivery trucks are classified as:

Correct AnswerverifiedD

A fixed asset by definition:

Correct AnswerverifiedShow Answer

Paddle Fans & More has a marginal tax rate of 34 per cent and an average tax rate of 23.7 per cent.If the firm earns $138 500 in taxable income,how much will it owe in taxes?

Correct AnswerverifiedShow Answer

The book value of an asset is equal to:

Correct AnswerverifiedShow Answer

The Plaza Cafe has an operating cash flow of $78 460,a depreciation expense of $8960,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

Depreciation does which one of the following for a profitable firm?

Correct AnswerverifiedShow Answer

An intangible asset is:

Correct AnswerverifiedShow Answer

The Good Life Store has sales of $79 600.The cost of goods sold is $48 200 and the other costs are $18 700.Depreciation is $8300 and the tax rate is 34 per cent.What is the net income?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An increase in which one of the following will increase operating cash flow for a profitable,tax-paying firm?

Correct AnswerverifiedShow Answer

Which of the following is an intangible fixed asset?

Correct AnswerverifiedShow Answer

William Blue Pty Ltd has sales of $1600 for the financial year ended 30 June 2010.The associated cost of goods sold is $800.The depreciation charge for the year is $50 and interest paid was $80.If the average tax rate is 30% what is EBIT for the year?

Correct AnswerverifiedShow Answer

Operating cash flow is defined as:

Correct AnswerverifiedShow Answer

Earnings per share represent:

Correct AnswerverifiedC

The market value of land is equal to:

Correct AnswerverifiedShow Answer

Which one of the following is the tax rate that applies to the next dollar of taxable income that a firm earns?

Correct AnswerverifiedShow Answer

Jones Brothers Farm Equipment owes $48 329 in tax on a taxable income of $549 600.The company has determined that it will owe $56 211 in tax if its taxable income rises to $575 000.What is the marginal tax rate at this level of income?

Correct AnswerverifiedShow Answer

William Blue Pty Ltd has sales of $1600 for the financial year ended 30 June 2010.The associated cost of goods sold is $800.The depreciation charge for the year is $50 and interest paid was $80.If the average tax rate is 30% what is the net income for the year?

Correct AnswerverifiedShow Answer

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C

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