Exam 3: Accounting and Finance

ABC Corp.'s balance sheet shows its long-term debt to be $20 million.The debt was issued with a 10% interest rate,and the current interest rate is 7%.Based on this information alone,the market value of this debt is most likely:

According to GAAP,assets and liabilities are typically recorded on the balance sheet at:

Which of the following is more likely to be correct if market value of equity is less than book value of equity?

Which of the following statements is true for a corporation with $1 million market value of equity,$2 million market value of assets,and 1,000 shares of outstanding stock?

Which of the following statements is correct for an individual with a net income of $50,000.00,a tax liability of $10,704.50,and a 28% marginal tax rate?

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

Which statement is correct about the tax treatment of dividend income and capital gains for pension funds?

The statement of cash flows shows the firm's cash inflows and outflows from operations as well as from its investments and financing activities.

If a payment of principal is due in 13 months on a long-term liability,that payment will now appear as:

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 increase in inventories uses cash,reducing the firm's net cash balance.

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

Your bookstore is set up as an incorporated business.If you draw $70,000 from your bookstore as your salary,such that your bookstore's taxable income for the year becomes $30,000,how much personal tax and corporate tax must you pay to the federal government? By how much would your taxes change if you reduce your salary to $27,950,such that your bookstore's taxable income becomes $72,050? Assume that you pay personal taxes as an unmarried taxpayer,and that the tax rates are as shown below.

Current period depreciation expense is listed:

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

If the market value of assets is high,then the market value of liabilities must be high also.

The fundamental difference between IFRS and GAAP is:

Professor Diehard found an effective antibiotic for the DEPRESS virus,and patented the drug.He believes that he can sell the patent for $20 million.He then formed a corporation and invested $400,000 in setting up a production plant.If the professor's belief is correct,what are the book and market values of the firm? If there are 2 million shares of stock in the firm,what would be the price per share and the book value per share?

Discuss reasons why a market-value balance sheet may be distinctly different from a book-value balance sheet.

Determine earnings before interest and taxes,net income,and also the cash flow from operations for the following firm: $500,000 sales,$10,000 cash dividends,$300,000 cost of goods sold,$20,000 administrative expense,$20,000 depreciation expense,$40,000 interest expense,$10,000 purchase of productive equipment,no changes in working capital,and a tax rate of 35%.