Question 1

Universal Financial,Inc.has total current assets of $1,200,000; long-term debt of $600,000; total current liabilities of $500,000; and long-term assets of $800,000.How much is the firm's net working capital?

Accepted Answer

A)  $1,000,000 
B)  $900,000 
C)  $600,000 
D)  $700,000

Question 2

What are the differences between GAAP and IFRS?

Accepted Answer

The answer of What are the differences between GAAP and...

Question 3

Which of the following statements concerning net income is MOST correct?

Accepted Answer

A)  Net income represents cash available to pay dividends. 
B)  Net income represents sales minus operating expenses at a specific point in time. 
C)  Negative net income reduces a company's cash balance. 
D)  Net income represents income that may be reinvested in the firm or distributed to its owners.

Question 4

Profits-to-Sales relationships are defined as profit margins.

Accepted Answer

A) True 
 B)False

Question 5

Common-sized balance sheets show each account as a percentage of total sales to help analysts in comparing companies of difference sizes.

Accepted Answer

A) True 
 B)False

Question 6

Net working capital is equal to gross working capital minus depreciation.

Accepted Answer

A) True 
 B)False

Question 7

Earnings available to common shareholders is equal to a corporation's positive net cash flow over a given period,typically one year.

Accepted Answer

A) True 
 B)False

Question 8

When a company sells a piece of equipment or land,any gain (sales price less the book value of the asset or residual value)is thought to be a capital gain.

Accepted Answer

A) True 
 B)False

Question 9

The statement of cash flow explains the changes that took place in the firm's cash balance over the period of interest.

Accepted Answer

A) True 
 B)False

Question 10

Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000.Rogue's operating income is equal to

Accepted Answer

A)  $770,000. 
B)  $1,070,000. 
C)  $1,100,000. 
D)  $1,500,000.

Question 11

Which of the following accounts does NOT belong on the asset side of a balance sheet?

Accepted Answer

A)  accounts receivable 
B)  marketable securities 
C)  cash 
D)  common stock

Question 12

Common stockholders' equity equals common stock issued minus treasury stock.

Accepted Answer

A) True 
 B)False

Question 13

A balance sheet reflects the current market value of a firm's assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Rogue Corp.has sales of $4,250,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000.The firm's interest expense is $250,000,and the corporate tax rate is 40%.What is Rogue's tax liability?

Accepted Answer

A)  $258,000 
B)  $260,000 
C)  $360,000 
D)  $600,000

Question 15

A company with negative net income will also have negative operating cash flow.

Accepted Answer

A) True 
 B)False

Question 16

If two companies have the same revenues and operating expenses,their net incomes will still be different if one company finances its assets with more debt and the other company with more equity.

Accepted Answer

A) True 
 B)False

Question 17

The income statement for Simpson,Inc.indicates that tax expense was $30,000.The balance sheet indicates that taxes payable for the same year increased by $5,000.What amount did Simpson,Inc.actually pay in taxes during this year?

Accepted Answer

A)  $15,000 
B)  $20,000 
C)  $25,000 
D)  Cannot be determined without the cash balance

Question 18

A firm's financing costs include

Accepted Answer

A)  depreciation expense. 
B)  interest expense 
C)  costs of goods sold. 
D)  both A and B.

Question 19

Prepare a balance sheet using the information given below.Make sure to identify current assets,net fixed assets,total assets,current liabilities,long-term debt,total equity,and total liabilities and equity.

Accepted Answer

The answer of Prepare a balance sheet using the information...

Question 20

Siskiyou Corp.has cash of $75,000; short-term notes payable of $100,000; accounts receivables of $275,000; accounts payable of $135,000: inventories of $350,000; and accrued expenses of $75,000.What is the firm's net working capital?

Accepted Answer

A)  $390,000 
B)  $175,000 
C)  $700,000 
D)  $210,000

Exam 3: Understanding Financial Statements and Cash Flows

Universal Financial,Inc.has total current assets of $1,200,000; long-term debt of $600,000; total current liabilities of $500,000; and long-term assets of $800,000.How much is the firm's net working capital?

What are the differences between GAAP and IFRS?

Which of the following statements concerning net income is MOST correct?

Profits-to-Sales relationships are defined as profit margins.

Common-sized balance sheets show each account as a percentage of total sales to help analysts in comparing companies of difference sizes.

Net working capital is equal to gross working capital minus depreciation.

Earnings available to common shareholders is equal to a corporation's positive net cash flow over a given period,typically one year.

When a company sells a piece of equipment or land,any gain (sales price less the book value of the asset or residual value)is thought to be a capital gain.

The statement of cash flow explains the changes that took place in the firm's cash balance over the period of interest.

Which of the following accounts does NOT belong on the asset side of a balance sheet?

Common stockholders' equity equals common stock issued minus treasury stock.

A balance sheet reflects the current market value of a firm's assets and liabilities.

Rogue Corp.has sales of $4,250,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000.The firm's interest expense is $250,000,and the corporate tax rate is 40%.What is Rogue's tax liability?

A company with negative net income will also have negative operating cash flow.

If two companies have the same revenues and operating expenses,their net incomes will still be different if one company finances its assets with more debt and the other company with more equity.

The income statement for Simpson,Inc.indicates that tax expense was $30,000.The balance sheet indicates that taxes payable for the same year increased by $5,000.What amount did Simpson,Inc.actually pay in taxes during this year?

A firm's financing costs include

Prepare a balance sheet using the information given below.Make sure to identify current assets,net fixed assets,total assets,current liabilities,long-term debt,total equity,and total liabilities and equity.

Siskiyou Corp.has cash of $75,000; short-term notes payable of $100,000; accounts receivables of $275,000; accounts payable of $135,000: inventories of $350,000; and accrued expenses of $75,000.What is the firm's net working capital?