Question 1

The principal reason for excluding many intangible assets from the balance sheet is that they are difficult to value.

Accepted Answer

A) True 
 B)False

Question 2

An increase in the accounts receivable balance increases the cash flow of a firm.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following assets is likely to be considered the most liquid?

Accepted Answer

A)  marketable securities 
B)  net fixed assets 
C)  accounts payable 
D)  inventories 
A)  marketable securities 
B)  net fixed assets 
C)  accounts payable 
D)  inventories

Question 4

Accrual accounting,which attempts to match sales revenues and the expenses associated with the production of the goods,is conducted in an attempt to:

Accepted Answer

A)  reduce income-tax liability. 
B)  reduce bias in reported profitability measures. 
C)  speed up the receipt of accounts receivable. 
D)  reduce the time necessary to depreciate assets. 
A)  reduce income-tax liability. 
B)  reduce bias in reported profitability measures. 
C)  speed up the receipt of accounts receivable. 
D)  reduce the time necessary to depreciate assets.

Question 5

If the value of a firm's net fixed assets equals the value of the accumulated depreciation,from an accounting context the fixed assets are:

Accepted Answer

A)  new. 
B)  fully depreciated. 
C)  one-half depreciated. 
D)  equal in value to the firm's current assets. 
A)  new. 
B)  fully depreciated. 
C)  one-half depreciated. 
D)  equal in value to the firm's current assets.

Question 6

A balance sheet portrays the value of a firm's assets and liabilities:

Accepted Answer

A)  over an annual period. 
B)  over any stated period of time. 
C)  at any stated point in time. 
D)  only at the end of the calendar year. 
A)  over an annual period. 
B)  over any stated period of time. 
C)  at any stated point in time. 
D)  only at the end of the calendar year.

Question 7

Which of the firm's financial statements most clearly recognizes the payment for new equipment?

Accepted Answer

A)  balance sheet 
B)  income statement 
C)  statement of cash flows 
D)  common-size balance sheet 
A)  balance sheet 
B)  income statement 
C)  statement of cash flows 
D)  common-size balance sheet

Question 8

Fixed assets can be either tangible or intangible.

Accepted Answer

A) True 
 B)False

Question 9

Which one of these will increase a firm's cash balance?

Accepted Answer

A)  an increase in inventory 
B)  a decrease in accounts payable 
C)  an increase in common stock 
D)  an increase in new equipment 
A)  an increase in inventory 
B)  a decrease in accounts payable 
C)  an increase in common stock 
D)  an increase in new equipment

Question 10

Assume a single taxpayer is taxed at 10% on the first $9,075 of taxable income,15% on the next $27,825 of income,and at 25% for the following $52,450 of income.What is the average tax rate for that individual if her taxable income is $41,350?

Accepted Answer

A)  14.98% 
B)  16.67% 
C)  16.13% 
D)  19.98% 
A)  14.98% 
B)  16.67% 
C)  16.13% 
D)  19.98%

Question 11

Which one of the following does not reduce a firm's net income?

Accepted Answer

A)  income taxes 
B)  interest expense 
C)  dividends Paid 
D)  depreciation expense 
A)  income taxes 
B)  interest expense 
C)  dividends Paid 
D)  depreciation expense

Question 12

The purchase of new equipment is a use of cash,and it reduces the firm's net cash balance.

Accepted Answer

A) True 
 B)False

Question 13

The difference between the market values of assets and liabilities is the market value of the shareholders' equity claim.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following is an intangible asset?

Accepted Answer

A)  goodwill 
B)  retained earnings 
C)  deferred income taxes 
D)  treasury stock 
A)  goodwill 
B)  retained earnings 
C)  deferred income taxes 
D)  treasury stock

Question 15

Assuming at the $50,000 income level that the corporate tax rate increases from 15% to 25%,which of the following statements is correct for a firm with $75,000 of taxable income?

Accepted Answer

A)  its marginal tax rate is 15%. 
B)  its average tax rate is 25%. 
C)  its marginal tax rate is 18.33%. 
D)  its average tax rate is 18.33%. 
A)  its marginal tax rate is 15%. 
B)  its average tax rate is 25%. 
C)  its marginal tax rate is 18.33%. 
D)  its average tax rate is 18.33%.

Question 16

Which of the following categories of a statement of cash flows is affected by the payment of interest expense?

Accepted Answer

A)  cash flows from operations 
B)  cash flows from noncash expenses 
C)  cash flows from investments 
D)  cash flows from financing 
A)  cash flows from operations 
B)  cash flows from noncash expenses 
C)  cash flows from investments 
D)  cash flows from financing

Question 17

Which one of the following expense categories is subtracted from total revenues to help arrive at a firm's EBIT (Operating Income)?

Accepted Answer

A)  cash dividends 
B)  depreciation expense 
C)  interest expense 
D)  tax liability 
A)  cash dividends 
B)  depreciation expense 
C)  interest expense 
D)  tax liability

Question 18

An expenditure on new capital equipment is a cash payment.

Accepted Answer

A) True 
 B)False

Question 19

According to the statement of cash flows,cash flows from financing could be positive if:

Accepted Answer

A)  the firm repaid more debt than it added. 
B)  the firm added more debt than it repaid. 
C)  interest rates were low on outstanding debt. 
D)  the firm sold portions of its plant and equipment. 
A)  the firm repaid more debt than it added. 
B)  the firm added more debt than it repaid. 
C)  interest rates were low on outstanding debt. 
D)  the firm sold portions of its plant and equipment.

Question 20

A balance sheet may be considered backward-looking from the perspective that it:

Accepted Answer

A)  works backward, starting with net income. 
B)  records historic, not current values. 
C)  cannot forecast the future. 
D)  records costs over many previous periods. 
A)  works backward, starting with net income. 
B)  records historic, not current values. 
C)  cannot forecast the future. 
D)  records costs over many previous periods.

Exam 3: Accounting and Finance

The principal reason for excluding many intangible assets from the balance sheet is that they are difficult to value.

An increase in the accounts receivable balance increases the cash flow of a firm.

Which of the following assets is likely to be considered the most liquid?

Accrual accounting,which attempts to match sales revenues and the expenses associated with the production of the goods,is conducted in an attempt to:

If the value of a firm's net fixed assets equals the value of the accumulated depreciation,from an accounting context the fixed assets are:

A balance sheet portrays the value of a firm's assets and liabilities:

Which of the firm's financial statements most clearly recognizes the payment for new equipment?

Fixed assets can be either tangible or intangible.

Which one of these will increase a firm's cash balance?

Assume a single taxpayer is taxed at 10% on the first $9,075 of taxable income,15% on the next $27,825 of income,and at 25% for the following $52,450 of income.What is the average tax rate for that individual if her taxable income is $41,350?

Which one of the following does not reduce a firm's net income?

The purchase of new equipment is a use of cash,and it reduces the firm's net cash balance.

The difference between the market values of assets and liabilities is the market value of the shareholders' equity claim.

Which one of the following is an intangible asset?

Assuming at the $50,000 income level that the corporate tax rate increases from 15% to 25%,which of the following statements is correct for a firm with $75,000 of taxable income?

Which of the following categories of a statement of cash flows is affected by the payment of interest expense?

Which one of the following expense categories is subtracted from total revenues to help arrive at a firm's EBIT (Operating Income)?

An expenditure on new capital equipment is a cash payment.

According to the statement of cash flows,cash flows from financing could be positive if:

A balance sheet may be considered backward-looking from the perspective that it:

Goals and Governance of the Firm

Financial Markets and Institutions

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, IPOs, and Seasoned Offerings

Debt and Payout Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters