Question 1

What happens when moving from net income to cash flows as the result of an increase in inventory balances?

Accepted Answer

A)  Cash flows increase. 
B)  Cash flows decrease. 
C)  Cash flows are unchanged. 
D) The change in cash flows cannot be determined.

Question 2

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

Accepted Answer

A)  Operations. 
B)  Investments. 
C)  Financing. 
D) None of these; depreciation is a noncash expense.

Question 3

What is the tax liability for an individual with $52,000 of income,which includes $2,000 of dividends,if the tax rate is 15% on income up to $25,350 and 28% on income over $25,350?

Accepted Answer

A)  $11,704.50 
B)  $11,264.50 
C)  $14,000.00 
D) $14,560.00

Question 4

The income statement resembles a snapshot of the firm at a specific time.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is correct for a fully depreciated asset?

Accepted Answer

A)  Market value is zero. 
B)  Market value is greater than book value. 
C)  Book value is greater than market value. 
D) The relationship between market and book values is indeterminable

Question 6

What is the marginal impact on taxes for a profitable corporation in the 35% marginal tax bracket that incurs an additional dollar of depreciation expense?

Accepted Answer

A)  A decrease of 65 cents 
B)  A decrease of 35 cents 
C)  An increase of 65 cents 
D) Zero impact

Question 7

Assuming at the $50,000 income level that the corporate tax rate increases from 15 to 25%,which of the following statements is correct for a firm with $75,000 income?

Accepted Answer

A)  Its marginal tax rate is 15%. 
B)  Its average tax rate is 25%. 
C)  Its marginal tax rate is 18.33%. 
D) Its average tax rate is 18.33%.

Question 8

What are the essential features of the taxation of corporate and personal income?

Accepted Answer

The answer of What are the essential features of the...

Question 9

Market-value balance sheets differ from book-value balance sheets in that market values:

Accepted Answer

A)  are higher than book values. 
B)  are lower than book values. 
C)  conform more to GAAP accounting. 
D) conform to investors' expectations

Question 10

For all U.S.corporations except those in the lowest and highest tax brackets,their:

Accepted Answer

A)  marginal tax rate exceeds their average tax rate. 
B)  average tax rate exceeds their marginal tax rate. 
C)  marginal tax rate equals their average tax rate. 
D) marginal tax rate equals 15%.

Question 11

Accounting practices are not standardized across countries.

Accepted Answer

A) True 
 B)False

Question 12

What is the change in cash balance 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?

Accepted Answer

The answer of What is the change in cash balance...

Question 13

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

Accepted Answer

A)  Dividends 
B)  Interest 
C)  Realized capital gains 
D) Unrealized capital gains

Question 14

Describe the practice of double taxation of corporate earnings in the United States.

Accepted Answer

The answer of Describe the practice of double taxation of...

Question 15

If depreciation is a method of allocating cost rather than an actual cash flow,discuss how depreciation impacts the income statement and overall cash flows.

Accepted Answer

The answer of If depreciation is a method of allocating...

Question 16

An increase in accounts receivable balance provides an increase in cash flow.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements correctly compares international accounting standards?

Accepted Answer

A)  The standards are becoming less similar over time. 
B)  The standards are typically more lenient in the United States. 
C)  The standards are stricter in the United States in some regards. 
D) Balance sheets differ, but income statements are similar in all countries

Question 18

Fixed assets can be either tangible or intangible.

Accepted Answer

A) True 
 B)False

Question 19

Why may it be difficult to rely on profits to get an overall impression of the firm's cash flows?

Accepted Answer

The answer of Why may it be difficult to rely...

Question 20

What is the most likely conclusion for a firm whose statement of cash flows shows an increase in cash balances and has negative cash flows from both operations and financing?

Accepted Answer

A)  The firm has low depreciation expense. 
B)  The firm did not pay any dividends. 
C)  The firm sold more equipment than it purchased. 
D) The firm has a low interest rate on its debt.

Exam 3: Accounting and Finance

What happens when moving from net income to cash flows as the result of an increase in inventory balances?

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

What is the tax liability for an individual with $52,000 of income,which includes $2,000 of dividends,if the tax rate is 15% on income up to $25,350 and 28% on income over $25,350?

The income statement resembles a snapshot of the firm at a specific time.

Which of the following is correct for a fully depreciated asset?

What is the marginal impact on taxes for a profitable corporation in the 35% marginal tax bracket that incurs an additional dollar of depreciation expense?

Assuming at the $50,000 income level that the corporate tax rate increases from 15 to 25%,which of the following statements is correct for a firm with $75,000 income?

What are the essential features of the taxation of corporate and personal income?

Market-value balance sheets differ from book-value balance sheets in that market values:

For all U.S.corporations except those in the lowest and highest tax brackets,their:

Accounting practices are not standardized across countries.

What is the change in cash balance 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?

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

Describe the practice of double taxation of corporate earnings in the United States.

If depreciation is a method of allocating cost rather than an actual cash flow,discuss how depreciation impacts the income statement and overall cash flows.

An increase in accounts receivable balance provides an increase in cash flow.

Which of the following statements correctly compares international accounting standards?

Fixed assets can be either tangible or intangible.

Why may it be difficult to rely on profits to get an overall impression of the firm's cash flows?

What is the most likely conclusion for a firm whose statement of cash flows shows an increase in cash balances and has negative cash flows from both operations and financing?