QUESTION 1

1. The balance sheet identifies the productive resources (assets) that a firm uses to generate income, as well as the sources of funding from creditors (liabilities) and owners (shareholders' equity) that were used to buy the assets.
2. True
3. False

5 points

QUESTION 2

1. The Wildcat Corp's accounts receivables (A/R) increase by $4 Million while Accounts Payable increases by $3 Million. Overall, Cash Flow increases by $1 Million due to the increase in A/R and Accounts Payable.
2. True
3. False

5 points

QUESTION 3

1. Annual reports are prepared by a firm's management to
2. communicate to shareholders the firm's failures in the previous year.provide overview of the firm's financial and operating performance.highlight the performance of its chief competitors.provide a forecast of the economy in the coming years.

5 points

QUESTION 4

1. The going concern assumption implies that
2. a firm will continue to be in business for the foreseeable future.a firm will be going out of business in the near future.a firm will continue to operate in the near future but only after being acquired by another firm.none of the above

5 points

QUESTION 5

1. On June 23, 2008, Mikhal Cosmetics sold $250,000 worth of its products to Rynex Corporation, with the payment to be made in 90 days on September 20. The goods were shipped to Rynex on July 2. The firm's accountants should recognize the sale on
2. June 23, 2008.July 2, 2008.September 20, 2008.none of the above.

5 points

QUESTION 6

1. Trekkers Footwear bought a piece of machinery on January 1, 2006 at a cost of $2.3 million, and the machinery is being depreciated annually at an amount of $230,000 for 10 years. Its market value on December 31, 2008 is $1.75 million. The firm's accountant is preparing its financial statement for the fiscal year end on December 31, 2008. The asset's value should be recognized on the balance sheet at:
2. $2.3 million.
3. $1.1 million.
4. $230,000.
5. $1.61 million.

5 points

QUESTION 7

1. Current assets can generally considered to
2. have little value.have been completely depreciated.be converted to cash within one year.have been financed with owners equity.

5 points

QUESTION 8

1. Clarity Music Company has a marginal tax rate of 34 percent and an average tax rate of 32 percent this year. It is planning to construct a new recording studio next year. The appropriate tax rate to be applied on the income generated from the new studio is
2. the average tax rate.the marginal tax rate.either one.none of the above.

5 points

QUESTION 9

1. Maddux, Inc., has completed its fiscal year and reported the following information. The company had current assets of $153,413, net fixed assets of $ 412,331, and other assets of $7,822. The firm also has current liabilities worth $65,314, long-term debt of $178,334, and common stock of $162,000. How much retained earnings does the firm have?
2. $ 405,648$243,648$167,918$573,566

5 points

QUESTION 10

1. Chandler Sporting Goods produces baseball and football equipment and lines of clothing. This year the company had cash and marketable securities worth $335,485, accounts payables worth $1,159,357, inventory of $1,651,599, accounts receivables of $1,488,121, short-term notes payable worth $313,663, and other current assets of $121,427. What is the company's net working capital?
2. $3,596,632$1,801,784$2,123,612$1,673,421