Exam 3: Accounting and Finance

Johnson's Nursery has net income of $42,500,depreciation expense of $1,800,interest expense of $900,taxes of $1,600,additions to net working capital of $2,300,and capital expenditures of $11,700.What is the amount of the free cash flow?

Calculate the EBIT for a firm with $4 million total revenues,$3.5 million cost of goods sold,$500,000 depreciation expense,and $120,000 interest expense.

Which of the following forms of income can individuals defer from taxation?

If a firm pays taxes,which one of these will reduce net income but increase cash flow?

Businesses that aggressively exploit any means possible to increase current earnings may cross over into fraudulent account practices.

Book values are "forward-looking" measures of value.

What is the change in cash for a firm with the following: $10,000 cash flow from operations,$1,600 cash used for new investment,a reduction in the level of debt of $2,000,$1,000 in cash dividends,and $200 in depreciation expense?

What is the fundamental difference between IFRS and GAAP?

A major goal of the Sarbanes-Oxley Act is to:

The gathering of related revenues and expenses into the same period,regardless of when they were incurred,is:

An increase in depreciation expense will (other things equal):

A company may deduct the interest paid to debtholders and the dividends paid to shareholders when calculating its taxable income.

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

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

In a statement of cash flows,which category includes depreciation expense as a line item?

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

Interest expense appears in the operations section of the statement of cash flows because:

The payment of interest expense is considered a financing activity in the statement of cash flows.

Assume tax rates on single individuals are 10% on taxable income up to $9,275,15% on income of $9,276 to $37,650 and 25% on income of $37,651 to $91,150.What is the tax liability for a single individual with $52,000 of taxable income,which includes $2,000 of dividends?

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: