Question 1

On the income statement,sales revenue,minus cost of goods sold and operating expenses,equals which of the following?

Accepted Answer

A) Net profit 
B) Retained earnings 
C) Net income available to preferred shareholders 
D) EBIT 
A) Net profit 
B) Retained earnings 
C) Net income available to preferred shareholders 
D) EBIT D

Question 2

A & K Co.expects to have earnings before taxes of $250,000 to $300,000.The company's marginal tax rate is 39% and its average tax rate about 33%.For every additional dollar of interest expense,A & K's taxes will

Accepted Answer

A) increase by 39 cents. 
B) fall by 39 cents. 
C) be unaffected. 
D) fall by about 33 cents. 
A) increase by 39 cents. 
B) fall by 39 cents. 
C) be unaffected. 
D) fall by about 33 cents. B

Question 3

Beginning cash balance + cash flow from operations + cash flow from investing activities + cash flow from financing activities = ending cash balance.

Accepted Answer

A) True 
 B)False  True

Question 4

Corporate income statements are usually compiled on an accrual,rather than cash,basis.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following best represents operating income?

Accepted Answer

A) Income after financing activities 
B) Earnings before interest and taxes 
C) Income from capital gains 
D) Income from discontinued operations 
A) Income after financing activities 
B) Earnings before interest and taxes 
C) Income from capital gains 
D) Income from discontinued operations

Question 6

Generally Accepted Accounting Principles (GAAP)require companies to smooth earnings by shifting some profits from good years to bad years.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following streams of income is not affected by how a firm is financed (whether with debt or equity)?

Accepted Answer

A) Net profit after tax but before dividends 
B) Net working capital 
C) Operating income 
D) Income before tax 
A) Net profit after tax but before dividends 
B) Net working capital 
C) Operating income 
D) Income before tax

Question 8

Goodwin Enterprises had a gross profit of $2,500,000 for the year.Operating expenses and interest expense incurred in that same year were $595,000 and $362,000,respectively.Goodwin had 200,000 shares of common stock and 180,000 shares of preferred stock outstanding.Management declared a $2.50 dividend per share on the common and a $1.50 dividend per share on the preferred.Securities purchased at a cost of $37,500 in a previous year were resold at a price of $50,500.Compute the taxable income and the resulting tax liability for Goodwin Enterprises for the year.
Use the following tax rates:
Income Tax rate
$0-$50,000 15%
$50,001-$75,000 25%
$75,001-$100,000 34%
$100,001-$335,000 39%
over $335,001 34%

Accepted Answer

Gross profit $2,500,000
Operating expens

Question 9

Based on the information contained in Table 2,what was the total amount of Bird Industries' common stock dividend for 2012?

Accepted Answer

A) $800 
B) $2,300 
C) $2,000 
D) Cannot be determined with available information 
A) $800 
B) $2,300 
C) $2,000 
D) Cannot be determined with available information

Question 10

Based on the information contained in Table 2,what was Bird Industries' operating profit margin for 22012?

Accepted Answer

A) 21% 
B) 4.8% 
C) 4.2% 
D) 2.4% 
A) 21% 
B) 4.8% 
C) 4.2% 
D) 2.4%

Question 11

Which of the basic financial statements is best used to answer questions about changes in owner's equity that are not explained by the income statement?

Accepted Answer

A) Balance sheet 
B) Statement of shareholder's equity 
C) Income statement 
D) Cash flow statement 
A) Balance sheet 
B) Statement of shareholder's equity 
C) Income statement 
D) Cash flow statement

Question 12

Net plant and equipment is

Accepted Answer

A) plant and equipment purchases less amount borrowed to finance purchases. 
B) current year plant and equipment purchases less current year's depreciation expense. 
C) gross plant and equipment less accumulated depreciation. 
D) plant and equipment at current market valuations. 
A) plant and equipment purchases less amount borrowed to finance purchases. 
B) current year plant and equipment purchases less current year's depreciation expense. 
C) gross plant and equipment less accumulated depreciation. 
D) plant and equipment at current market valuations.

Question 13

Operating cash flow will increase with a decrease in

Accepted Answer

A) inventories. 
B) current liabilities. 
C) depreciation expense. 
D) capital expenditures. 
A) inventories. 
B) current liabilities. 
C) depreciation expense. 
D) capital expenditures.

Question 14

Which of the following represents a source of cash?

Accepted Answer

A) A decrease in accounts payable 
B) A decrease in accounts receivable 
C) Payment of dividends 
D) An increase in inventories 
A) A decrease in accounts payable 
B) A decrease in accounts receivable 
C) Payment of dividends 
D) An increase in inventories

Question 15

In a growing business,negative cash flow from investing activities is normal.

Accepted Answer

A) True 
 B)False

Question 16

The cash flow statement shows amounts that the company has earned but for which it has not yet received cash.

Accepted Answer

A) True 
 B)False

Question 17

2013 U.S.Corporate tax rates are shown below:
 
Bouffard Co.has earnings before taxes of $100,000,000 in 2013.The company's tax expense will be

Accepted Answer

A) $3,500,000 
B) $36,500,000 
C) $31,875,000 
D) $35,000,000 
A) $3,500,000 
B) $36,500,000 
C) $31,875,000 
D) $35,000,000

Question 18

Based on the information contained in Table 3,what is Snark Enterprise's gross profit margin in 2012.

Accepted Answer

A) 5.6% 
B) 4.5% 
C) 29.7% 
D) 2.2% 
A) 5.6% 
B) 4.5% 
C) 29.7% 
D) 2.2%

Question 19

Which of the following does NOT represent cash outflows to the firm?

Accepted Answer

A) Taxes 
B) Interest payments 
C) Dividends 
D) Depreciation 
A) Taxes 
B) Interest payments 
C) Dividends 
D) Depreciation

Question 20

The balance includes information about the company's assets and liabilities.

Accepted Answer

A) True 
 B)False

On the income statement,sales revenue,minus cost of goods sold and operating expenses,equals which of the following?

A & K Co.expects to have earnings before taxes of $250,000 to $300,000.The company's marginal tax rate is 39% and its average tax rate about 33%.For every additional dollar of interest expense,A & K's taxes will

Beginning cash balance + cash flow from operations + cash flow from investing activities + cash flow from financing activities = ending cash balance.

Corporate income statements are usually compiled on an accrual,rather than cash,basis.

Which of the following best represents operating income?

Generally Accepted Accounting Principles (GAAP)require companies to smooth earnings by shifting some profits from good years to bad years.

Which of the following streams of income is not affected by how a firm is financed (whether with debt or equity)?

Based on the information contained in Table 2,what was the total amount of Bird Industries' common stock dividend for 2012?

Based on the information contained in Table 2,what was Bird Industries' operating profit margin for 22012?

Which of the basic financial statements is best used to answer questions about changes in owner's equity that are not explained by the income statement?

Net plant and equipment is

Operating cash flow will increase with a decrease in

Which of the following represents a source of cash?

In a growing business,negative cash flow from investing activities is normal.

The cash flow statement shows amounts that the company has earned but for which it has not yet received cash.

2013 U.S.Corporate tax rates are shown below: Bouffard Co.has earnings before taxes of $100,000,000 in 2013.The company's tax expense will be

Based on the information contained in Table 3,what is Snark Enterprise's gross profit margin in 2012.

Which of the following does NOT represent cash outflows to the firm?

The balance includes information about the company's assets and liabilities.

Getting Started-Principles of Finance

Firms and the Financial Market

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 3: Understanding Financial Statements,taxes,and Cash Flows

On the income statement,sales revenue,minus cost of goods sold and operating expenses,equals which of the following?

A & K Co.expects to have earnings before taxes of $250,000 to $300,000.The company's marginal tax rate is 39% and its average tax rate about 33%.For every additional dollar of interest expense,A & K's taxes will

Beginning cash balance + cash flow from operations + cash flow from investing activities + cash flow from financing activities = ending cash balance.

Corporate income statements are usually compiled on an accrual,rather than cash,basis.

Which of the following best represents operating income?

Generally Accepted Accounting Principles (GAAP)require companies to smooth earnings by shifting some profits from good years to bad years.

Which of the following streams of income is not affected by how a firm is financed (whether with debt or equity)?

Based on the information contained in Table 2,what was the total amount of Bird Industries' common stock dividend for 2012?

Based on the information contained in Table 2,what was Bird Industries' operating profit margin for 22012?

Which of the basic financial statements is best used to answer questions about changes in owner's equity that are not explained by the income statement?

Net plant and equipment is

Operating cash flow will increase with a decrease in

Which of the following represents a source of cash?

In a growing business,negative cash flow from investing activities is normal.

The cash flow statement shows amounts that the company has earned but for which it has not yet received cash.

2013 U.S.Corporate tax rates are shown below: Bouffard Co.has earnings before taxes of $100,000,000 in 2013.The company's tax expense will be

Based on the information contained in Table 3,what is Snark Enterprise's gross profit margin in 2012.

Which of the following does NOT represent cash outflows to the firm?

The balance includes information about the company's assets and liabilities.

Getting Started-Principles of Finance

Firms and the Financial Market

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters