Question 1

What are the firm's earnings before interest and taxes?

Accepted Answer

The answer of What are the firm's earnings before interest...

Question 2

One of the stronger motivations for a continuing standardization in international accounting standards is to:

Accepted Answer

A) Allow foreign countries to escape the wrath of the U.S.government 
B) Provide additional work for accountants 
C) Force financial statements to be prepared in English 
D) Develop international sources of capital for firms 
A) Allow foreign countries to escape the wrath of the U.S.government 
B) Provide additional work for accountants 
C) Force financial statements to be prepared in English 
D) Develop international sources of capital for firms

Question 3

What is the marginal tax rate for a corporation with $60,000 taxable income and an average tax rate of 16.67 percent if the next-lowest marginal tax rate of 15 percent covers taxable incomes up to $50,000?

Accepted Answer

A) 15.00 percent 
B) 16.67 percent 
C) 18.34 percent 
D) 25.00 percent $60,000 taxable income
X )1667 average tax rate
= $10,000 tax liability 
A) 15.00 percent 
B) 16.67 percent 
C) 18.34 percent 
D) 25.00 percent $60,000 taxable income
X )1667 average tax rate
= $10,000 tax liability

Question 4

If a firm generates $2,000 in sales and has a $500 increase in accounts receivable during an accounting period, then, based on these two categories, cash flow will increase by:

Accepted Answer

A) $2,500 
B) $2,000 
C) $1,500 
D) $500 
A) $2,500 
B) $2,000 
C) $1,500 
D) $500

Question 5

Can cash flow from operations be positive if net income is negative? Can operating cash flow be negative if net income is positive? Give examples.

Accepted Answer

Both statements are True.If net income i

Question 6

Which of the following values would most likely interest a shareholder?

Accepted Answer

A) Book value of equity 
B) Market value of equity 
C) Historical cost of equity 
D) Retained earnings component of equity 
A) Book value of equity 
B) Market value of equity 
C) Historical cost of equity 
D) Retained earnings component of equity

Question 7

Calculate cash inflow or outflow from operating activities given the following information: Net loss -$12,000; depreciation expense $3,000; increase in AR $1,250; decrease in inventory $900; increase in AP $760.

Accepted Answer

A) Cash inflow of $9,675 
B) Cash inflow of $2,650 
C) Cash outflow of $8,590 
D) Cash outflow of $1,690 
A) Cash inflow of $9,675 
B) Cash inflow of $2,650 
C) Cash outflow of $8,590 
D) Cash outflow of $1,690

Question 8

What is the firm's cash flow from operating activities?

Accepted Answer

Cash flow from opera

Question 9

The existence of "goodwill" on a corporate balance sheet indicates that the corporation has:

Accepted Answer

A) Been profitable in the past 
B) depreciated its tangible assets 
C) Intangible assets from past acquisitions 
D) Retained earnings resulting from past income 
A) Been profitable in the past 
B) depreciated its tangible assets 
C) Intangible assets from past acquisitions 
D) Retained earnings resulting from past income

Question 10

Which of the following is not a typical reason for differences between profit and cash flow?

Accepted Answer

A) Depreciation expense 
B) Income taxes 
C) Changing levels of accounts receivable 
D) Accrual accounting practices 
A) Depreciation expense 
B) Income taxes 
C) Changing levels of accounts receivable 
D) Accrual accounting practices

Question 11

The income statement resembles a snapshot of the firm at a specific time.

Accepted Answer

A) True 
 B)False

Question 12

When subtracting an asset's accumulated depreciation from its historic cost, the resulting value is termed the:

Accepted Answer

A) Book value of the asset 
B) Market value of the asset 
C) Depreciation expense 
D) Current asset value 
A) Book value of the asset 
B) Market value of the asset 
C) Depreciation expense 
D) Current asset value

Question 13

Balance sheets have traditionally recorded amounts in terms of market values.

Accepted Answer

A) True 
 B)False

Question 14

The payment of interest expense is considered cash flow from financing on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following could account for a firm that has a negative net income, yet has a positive amount of cash provided by operations?

Accepted Answer

A) The net loss was greater than the amount of depreciation expense 
B) Inventory increased significantly more than accounts payable 
C) Accounts receivable decreased by significantly more than accounts payable 
D) Cash balances declined to the desired amount 
A) The net loss was greater than the amount of depreciation expense 
B) Inventory increased significantly more than accounts payable 
C) Accounts receivable decreased by significantly more than accounts payable 
D) Cash balances declined to the desired amount

Question 16

An individual's income for the year includes both dividend and interest payments.Which of the following statements will be correct concerning that individual's tax liability?

Accepted Answer

A) Dividends are taxed; tax on interest payments is paid at the corporate level 
B) Interest is taxed; tax on dividend payments is paid at the corporate level 
C) Both dividend and interest payments are taxed at the personal level 
D) All taxes on dividend and interest payments are paid at the corporate level 
A) Dividends are taxed; tax on interest payments is paid at the corporate level 
B) Interest is taxed; tax on dividend payments is paid at the corporate level 
C) Both dividend and interest payments are taxed at the personal level 
D) All taxes on dividend and interest payments are paid at the corporate level

Question 17

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 18

Calculate financing flow given the following information:

Accepted Answer

A) Inflow of $4,000 
B) Inflow of $2,000 
C) Outflow of $4,000 
D) Outflow of $2,000 
A) Inflow of $4,000 
B) Inflow of $2,000 
C) Outflow of $4,000 
D) Outflow of $2,000

Question 19

What happens to the market value of a firm's equity as the book value of the firm's equity increases?

Accepted Answer

A) It increases by the same amount 
B) It decreases by the same amount 
C) It remains constant 
D) There is no set relationship to determine this outcome 
A) It increases by the same amount 
B) It decreases by the same amount 
C) It remains constant 
D) There is no set relationship to determine this outcome

Question 20

Accumulated Depreciation is used to reduce what type of account on the balance sheet?

Accepted Answer

A) Current Asset 
B) Capital Assets or Fixed Assets 
C) Liability 
D) Owners Equity 
A) Current Asset 
B) Capital Assets or Fixed Assets 
C) Liability 
D) Owners Equity

Exam 3: Accounting and Finance

What are the firm's earnings before interest and taxes?

One of the stronger motivations for a continuing standardization in international accounting standards is to:

What is the marginal tax rate for a corporation with $60,000 taxable income and an average tax rate of 16.67 percent if the next-lowest marginal tax rate of 15 percent covers taxable incomes up to $50,000?

If a firm generates $2,000 in sales and has a $500 increase in accounts receivable during an accounting period, then, based on these two categories, cash flow will increase by:

Can cash flow from operations be positive if net income is negative? Can operating cash flow be negative if net income is positive? Give examples.

Which of the following values would most likely interest a shareholder?

Calculate cash inflow or outflow from operating activities given the following information: Net loss -$12,000; depreciation expense $3,000; increase in AR $1,250; decrease in inventory $900; increase in AP $760.

What is the firm's cash flow from operating activities?

The existence of "goodwill" on a corporate balance sheet indicates that the corporation has:

Which of the following is not a typical reason for differences between profit and cash flow?

The income statement resembles a snapshot of the firm at a specific time.

When subtracting an asset's accumulated depreciation from its historic cost, the resulting value is termed the:

Balance sheets have traditionally recorded amounts in terms of market values.

The payment of interest expense is considered cash flow from financing on the statement of cash flows.

Which of the following could account for a firm that has a negative net income, yet has a positive amount of cash provided by operations?

An individual's income for the year includes both dividend and interest payments.Which of the following statements will be correct concerning that individual's tax liability?

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

Calculate financing flow given the following information:

What happens to the market value of a firm's equity as the book value of the firm's equity increases?

Accumulated Depreciation is used to reduce what type of account on the balance sheet?

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 Policy

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Conclusion

What We Do and Do Not Know About Finance

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