QUESTION 1

Accounting profits include noncash expenses like depreciation. These noncash expenses are "added back" when we calculate the cash flows.

True

False

5 points

QUESTION 2

The income statement identifies the major sources of revenues generated by the firm and the corresponding expenses that were needed to generate those revenues.

True

False

5 points

QUESTION 3

The net book value of an asset on the balance sheet is the historical cost of the asset less the accumulated depreciation.

True

False

5 points

QUESTION 4

The current market value of an asset is the amount of cash that a firm would receive for the asset if the asset was sold on the open market.

True

False

5 points

QUESTION 5

On the Statement of Cash Flows, the cash flows from operating activities relate to the buying and selling of long-term assets like plant and equipment.

True

False

5 points

QUESTION 6

The generally accepted accounting principles (GAAP) are

		rules that outline how a firm can operate ethically.
		rules on how the firm will be valued in the event of a merger.
		rules and procedures that define how companies are to maintain financial records and prepare financial reports.
		rules for how a company can issue stock to raise money.

5 points

QUESTION 7

On June 23, Sunshine Cosmetics sold $250,000 worth of its products to Rynex Corporation, with the payment to be made in 90 days on September 20. The firm's accountants should recognize the sale on

		June 23
		July 2
		September 20
		When the payment from the customer is actually received

5 points

QUESTION 8

The cost principle states that an asset should be recognized on the balance sheet at

		the market value of the asset.
		the market value of the asset less the accumulated depreciation on the asset.
		its historical cost.
		its historical cost plus any expected revenue on the asset.

5 points

QUESTION 9

The convntional way of preparing a balance sheet is to list all assets in the order of their

		market value.
		risk.
		liquidity.
		historical cost.

5 points

QUESTION 10

Which one of the following is NOT true for a corporation?

		Interest paid on bonds issued last year is tax deductible.
		Common-stock dividends to be paid this year are not tax deductible.
		Common-stock dividends to be paid this year will be tax deductible if the firm has a net loss for the year.
		Preferred stock dividends to be paid this year are not tax deductible.

5 points

QUESTION 11

Depreciation and amortization expenses are:

		Part of current assets on the balance sheet.
		After-tax expenses that reduce a firm's cash flows.
		Long-term liabilities that reduce a firm's net worth.
		Noncash expenses that cause a firm's after-tax cash flows to exceed its net income.

QUESTION 14

Diaz Manufacturing, Inc. reports EBIT of $168,000, current taxes of $44,000, and depreciation and amortization of $83,000. What is their cash flow from operating activities (CFOA)?

5 points

QUESTION 15

Laurel Electronics reported the following information at its annual meeting. The company had cash and marketable securities worth $1,235,000, accounts payable worth $10,500,000, inventory of $7,500,000, accounts receivable of $3,400,500, notes payable worth $1,260,500, and other current assets of $125,000. What is the companys net working capital?

5 points

QUESTION 16

Hillman Corporation reported current assets of $3,500,000 for the year ending December 31, 2016 and current assets of $3,000,000 for the year ending December 31, 2015. Current liabilities for the firm were $2,500,000and $2,750,000 at the end of 2016 and 2015, respectively. Compute the cash flows to working capital (CFNWC) at Hillman Corporation during 2016 (ENTER AS A POSITIVE NUMBER).

5 points

QUESTION 17

Nimitz Rental Company provided the following information to its auditors. For the year ended March 31, 2016, the company had revenues of $875,000, general and administrative expenses of $350,000, depreciation expenses of $130,500, other expenses of $119,500, and interest expenses equal to $75,000. If the companys tax rate was 35 percent, what is its net income after taxes?

5 points

QUESTION 18

Columbia Construction Company earned $450,000 during the year ended June 30, 2016. After paying out $225,000 in dividends, the balance went into retained earnings. If the firms total retained earnings were $845,000, what was the retained earnings on its balance sheet at the beginning of the year?

5 points

QUESTION 19

Tim Dye, the CFO of Blackwell Automotive, Inc., is putting together this years financial statements. He has gathered the following information. The firm had a cash balance of $23,500, accounts payable of $160,000, common stock of $310,000, retained earnings of $550,500, inventory of $215,000, other assets equal to $75,000, net plant and equipment of $755,000, and short-term notes payable of $20,000. It also has accounts receivables of $145,250 and other current assets of $10,000. How much long-term debt does Blackwell Automotive have?

5 points

QUESTION 20

Suppose you start your own corporation when you are 25 years old and you work there until you retire 40 years later. How many years' worth of your profits are taken by the US Government if the federal corporate income tax rate is 30 percent?