1. Cybil Baunt just inherited a 1958 Chevy Impala ...

Cybil Baunt just inherited a 1958 Chevy Impala from her late Aunt Joop. Aunt Joop purchased the car 40 years ago for $8,000. Cybil is either going to sell the car for $10,000 or have it restored and then sell it for $22,000. The restoration will cost $9,000. Cybil would be financially better off by:

Multiple Choice

• $3,000 to have the vehicle restored

• $6,000 to have the vehicle restored

• $9,000 to have the vehicle restored

• $11,000 to have the vehicle restored

2. Ouzts Corporation is considering Alternative ...

Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below:

	Alternative A			Alternative B
Materials costs	$	44,000		$	58,400
Processing costs	$	40,400		$	40,400
Equipment rental	$	14,000		$	14,000
Occupancy costs	$	15,700		$	23,600

What is the financial advantage (disadvantage) of Alternative B over Alternative A?

Multiple Choice

• $114,100

• $22,300

• $136,400

• $125,250

3. Moates Corporation has...

Moates Corporation has provided the following data concerning an investment project that it is considering:

Initial investment	$	380,000
Annual cash flow	$	124,000	per year
Expected life of the project		4	years
Discount rate		10	%

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided.

The net present value of the project is closest to:

Multiple Choice

• $12,956

• $380,000

• $(256,000)

• $(12,956)

4. The management of Ro Corporation is...

The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $27,000, would be replaced by a new machine. The new machine would be purchased for $432,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $149,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.):

Multiple Choice

• 19.0%

• 17.8%

• 34.5%

• 16.7%

5. In a statement of cash flows, a change ...

In a statement of cash flows, a change in an income taxes payable account would be recorded in the:

Multiple Choice

• operating activities section.

• financing activities section.

• investing activities section.

• stockholders' equity section.

6. Krech Corporation's comparative ...

Krech Corporation's comparative balance sheet appears below:

Comparative Balance Sheet
	Ending Balance			Beginning Balance
Assets:
Current assets:
Cash and cash equivalents	$	31,000		$	28,000
Accounts receivable		18,000			20,000
Inventory		58,000			56,000
Prepaid expenses		12,000			10,000
Total current assets		119,000			114,000
Property, plant, and equipment		374,000			354,000
Less accumulated depreciation		190,000			165,000
Net property, plant, and equipment		184,000			189,000
Total assets	$	303,000		$	303,000
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable	$	13,000		$	9,000
Accrued liabilities		52,000			53,000
Income taxes payable		67,000			69,000
Total current liabilities		132,000			131,000
Bonds payable		76,000			73,000
Total liabilities		208,000			204,000
Stockholders equity:
Common stock		28,000			26,000
Retained earnings		67,000			73,000
Total stockholders equity		95,000			99,000
Total liabilities and stockholders' equity	$	303,000		$	303,000

The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.

Which of the following is correct regarding the operating activities section of the statement of cash flows?

Multiple Choice

• The change in Accounts Receivable will be subtracted from net income; The change in Inventory will be added to net income

• The change in Accounts Receivable will be added to net income; The change in Inventory will be subtracted from net income

• The change in Accounts Receivable will be added to net income; The change in Inventory will be added to net income

• The change in Accounts Receivable will be subtracted from net income; The change in Inventory will be subtracted from net income