Question 1

An advantage of balance sheet numbers is that assets reflect current market values.

Accepted Answer

A) True 
 B)False

Question 2

Which of the basic financial statements is best used to answer the questions "What does the company own and how is it financed?"

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 3

Which of the following best represents the stream of income that is available to stockholders?

Accepted Answer

A) Net profit after tax 
B) Earnings before interest,taxes and dividends 
C) Gross profit 
D) Operating profit 
A) Net profit after tax 
B) Earnings before interest,taxes and dividends 
C) Gross profit 
D) Operating profit

Question 4

Which of the basic financial statements is best used to answer the questions "Where did the company's money come from and how was it spent over the preceding year?"

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 5

Balance sheet and other accounts for GPA are listed below in alphabetical order.Use these accounts to construct GPA's balance sheet for 2013.All balance sheet accounts are shown,but some accounts will not be used.All amounts are in millions of dollars.
Accounts payable $1900
Accounts receivable $661
Cash $1,000
Common stock $2,000
EBIT $1,968
Interest expense $8.00
Inventories $1,620
Long-term debt $890
Net plant & equipment $2,563
Other current assets $645
Other long-term assets $576
Retained earnings $2,080
Short-term debt $195
Taxes $778

Accepted Answer

The answer of Balance sheet and other accounts for GPA...

Question 6

Total equity on the balance sheet increases as dividends paid increases.

Accepted Answer

A) True 
 B)False

Question 7

Patriot Corporation purchased manufacturing equipment with an expected useful life of five years.The purchase of the machinery would be shown as

Accepted Answer

A) an expense on the balance sheet. 
B) an expense on the income statement. 
C) an asset on the balance sheet. 
D) both an expense and an asset. 
A) an expense on the balance sheet. 
B) an expense on the income statement. 
C) an asset on the balance sheet. 
D) both an expense and an asset.

Question 8

The interest payments on corporate bonds are tax-deductible.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would NOT be included as an asset on a corporate balance sheet?

Accepted Answer

A) Accounts receivable 
B) Common stock 
C) Inventory 
D) Buildings 
A) Accounts receivable 
B) Common stock 
C) Inventory 
D) Buildings

Question 10

Which of the following represents an attempt to measure the earnings of the firm's operations over a given time period?

Accepted Answer

A) Balance sheet 
B) Cash flow statement 
C) Income statement 
D) None of the above 
A) Balance sheet 
B) Cash flow statement 
C) Income statement 
D) None of the above

Question 11

Who owns the retained earnings of a public firm?

Accepted Answer

A) The IRS 
B) Common stockholders 
C) Bondholders 
D) Preferred stockholders 
A) The IRS 
B) Common stockholders 
C) Bondholders 
D) Preferred stockholders

Question 12

Firms should compare their gross,operating and net profit margins to past years and other companies in order to

Accepted Answer

A) evaluate the firm's performance. 
B) identify expenses that seem to be out-of-line 
C) better manage the reporting of the firm's earnings. 
D) Both A and B. 
A) evaluate the firm's performance. 
B) identify expenses that seem to be out-of-line 
C) better manage the reporting of the firm's earnings. 
D) Both A and B.

Question 13

A corporation's average tax rate will always be lower than or equal to its marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 14

Your firm has the following income statement items: sales of $50,250,000;income tax of $1,744,000;operating expenses of $10,115,000;cost of goods sold of $35,025,000;and interest expense of $750,000.What is the amount of the firm's income before tax?

Accepted Answer

A) $4,360,000 
B) $750,000 
C) $10,865,000 
D) $25,115,000 
A) $4,360,000 
B) $750,000 
C) $10,865,000 
D) $25,115,000

Question 15

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

Accepted Answer

A) $22,250 
B) $24,670 
C) $25,000 
D) $34,000 
A) $22,250 
B) $24,670 
C) $25,000 
D) $34,000

Question 16

Which of the following best describes a balance sheet?

Accepted Answer

A) Reports cash receipts and cash disbursements for a specific accounting period 
B) Reports investment activities for a specified accounting period 
C) Reports revenues and expenses for a specific accounting period 
D) Reports the amount and composition of assets and liabilities at a specified point in time 
A) Reports cash receipts and cash disbursements for a specific accounting period 
B) Reports investment activities for a specified accounting period 
C) Reports revenues and expenses for a specific accounting period 
D) Reports the amount and composition of assets and liabilities at a specified point in time

Question 17

Which of the following is not included in computing EBT (earnings before taxes)?

Accepted Answer

A) Marketing expenses 
B) Depreciation expense 
C) Cost of goods sold 
D) Dividends 
A) Marketing expenses 
B) Depreciation expense 
C) Cost of goods sold 
D) Dividends

Question 18

Your firm has the following balance sheet statement items: total current liabilities of $805,000;total assets of $2,655,000;fixed and other assets of $1,770,000;and long-term debt of $200,000.What is the amount of the firm's total current assets?

Accepted Answer

A) $885,000 
B) $1,550,000 
C) $600,000 
D) $325,000 
A) $885,000 
B) $1,550,000 
C) $600,000 
D) $325,000

Question 19

Pearls,Inc.had sales in 2013 of $2.1 million.The common stockholders received $600,000 in cash dividends.Interest totaling $150,000 was paid on outstanding debts.Operating expenses totaled $300,000,and cost of goods sold was $500,000.What is the tax liability of Pearls,Inc.? 2013 U.S.Corporate tax rates are shown below:

Accepted Answer

Pearls Taxable Income
Sales $2,100,000
L

Question 20

The practice of shifting income from good years to poor years in order to show a record of steady growth is

Accepted Answer

A) known as earnings management and is considered unethical. 
B) highly recommended but not required by GAAP. 
C) a basic requirement of accrual accounting. 
D) impossible if Generally Accepted Accounting Principles are followed. 
A) known as earnings management and is considered unethical. 
B) highly recommended but not required by GAAP. 
C) a basic requirement of accrual accounting. 
D) impossible if Generally Accepted Accounting Principles are followed.

An advantage of balance sheet numbers is that assets reflect current market values.

Which of the basic financial statements is best used to answer the questions "What does the company own and how is it financed?"

Which of the following best represents the stream of income that is available to stockholders?

Which of the basic financial statements is best used to answer the questions "Where did the company's money come from and how was it spent over the preceding year?"

Total equity on the balance sheet increases as dividends paid increases.

Patriot Corporation purchased manufacturing equipment with an expected useful life of five years.The purchase of the machinery would be shown as

The interest payments on corporate bonds are tax-deductible.

Which of the following would NOT be included as an asset on a corporate balance sheet?

Which of the following represents an attempt to measure the earnings of the firm's operations over a given time period?

Who owns the retained earnings of a public firm?

Firms should compare their gross,operating and net profit margins to past years and other companies in order to

A corporation's average tax rate will always be lower than or equal to its marginal tax rate.

Your firm has the following income statement items: sales of $50,250,000;income tax of $1,744,000;operating expenses of $10,115,000;cost of goods sold of $35,025,000;and interest expense of $750,000.What is the amount of the firm's income before tax?

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

Which of the following best describes a balance sheet?

Which of the following is not included in computing EBT (earnings before taxes)?

Your firm has the following balance sheet statement items: total current liabilities of $805,000;total assets of $2,655,000;fixed and other assets of $1,770,000;and long-term debt of $200,000.What is the amount of the firm's total current assets?

The practice of shifting income from good years to poor years in order to show a record of steady growth is

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

An advantage of balance sheet numbers is that assets reflect current market values.

Which of the basic financial statements is best used to answer the questions "What does the company own and how is it financed?"

Which of the following best represents the stream of income that is available to stockholders?

Which of the basic financial statements is best used to answer the questions "Where did the company's money come from and how was it spent over the preceding year?"

Total equity on the balance sheet increases as dividends paid increases.

Patriot Corporation purchased manufacturing equipment with an expected useful life of five years.The purchase of the machinery would be shown as

The interest payments on corporate bonds are tax-deductible.

Which of the following would NOT be included as an asset on a corporate balance sheet?

Which of the following represents an attempt to measure the earnings of the firm's operations over a given time period?

Who owns the retained earnings of a public firm?

Firms should compare their gross,operating and net profit margins to past years and other companies in order to

A corporation's average tax rate will always be lower than or equal to its marginal tax rate.

Your firm has the following income statement items: sales of $50,250,000;income tax of $1,744,000;operating expenses of $10,115,000;cost of goods sold of $35,025,000;and interest expense of $750,000.What is the amount of the firm's income before tax?

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

Which of the following best describes a balance sheet?

Which of the following is not included in computing EBT (earnings before taxes)?

Your firm has the following balance sheet statement items: total current liabilities of $805,000;total assets of $2,655,000;fixed and other assets of $1,770,000;and long-term debt of $200,000.What is the amount of the firm's total current assets?

The practice of shifting income from good years to poor years in order to show a record of steady growth is

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