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Exam 2: Financial Statements, Taxes, and Cash Flow

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Question 31

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The Blue Bonnet's 2010 balance sheet showed net fixed assets of $2.2 million,and the 2011 balance sheet showed net fixed assets of $2.6 million.The company's income statement showed a depreciation expense of $900,000.What was the amount of the net capital spending for 2011?

A) -$500,000
B) $400,000
C) $1,300,000
D) $1,700,000
E) $1,800,000

F) A) and D)
G) C) and E)

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Question 32

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The Widget Co.purchased new machinery three years ago for $4 million.The machinery can be sold to the Roman Co.today for $2 million.The Widget Co.'s current balance sheet shows net fixed assets of $2,500,000,current liabilities of $1,375,000,and net working capital of $725,000.If all the current assets were liquidated today,the company would receive $1.9 million in cash.The book value of the Widget Co.'s assets today is _____ and the market value of those assets is _____.

A) $4,600,000; $3,900,000
B) $4,600,000; $3,125,000
C) $5,000,000; $3,125,000
D) $5,000,000; $3,900,000
E) $6,500,000; $3,900,000

F) A) and E)
G) C) and D)

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Question 33

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At the beginning of the year,the long-term debt of a firm was $72,918 and total debt was $138,407.At the end of the year,long-term debt was $68,219 and total debt was $145,838.The interest paid was $6,430.What is the amount of the cash flow to creditors?

As of 2012,which one of the following statements concerning corporate income taxes is correct?

Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?

Bonner Collision has shareholders' equity of $141,800.The firm owes a total of $126,000 of which 60 percent is payable within the next year.The firm net fixed assets of $161,900.What is the amount of the net working capital?

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

Suppose you are given the following information for Bayside Bakery: sales = $30,000; costs = $15,000; addition to retained earnings = $4,221; dividends paid = $469; interest expense = $1,300; tax rate = 30 percent.What is the amount of the depreciation expense?

Which one of the following statements related to the cash flow to creditors is correct?

Adelson's Electric had beginning long-term debt of $42,511 and ending long-term debt of $48,919.The beginning and ending total debt balances were $84,652 and $78,613,respectively.The interest paid was $4,767.What is the amount of the cash flow to creditors?

Cash flow from assets is also known as the firm's:

During 2011,RIT Corp.had sales of $565,600.Costs of goods sold,administrative and selling expenses,and depreciation expenses were $476,000,$58,800,and $58,800,respectively.In addition,the company had an interest expense of $112,000 and a tax rate of 32 percent.What is the operating cash flow for 2009? Ignore any tax loss carry-back or carry-forward provisions.

Which of the following are expenses for accounting purposes but are not operating cash flows for financial purposes? I.interest expense II.taxes III.costs of goods sold IV.depreciation

Crandall Oil has total sales of $1,349,800 and costs of $903,500.Depreciation is $42,700 and the tax rate is 34 percent.The firm does not have any interest expense.What is the operating cash flow?

The 2010 balance sheet of The Beach Shoppe showed long-term debt of $2.1 million,and the 2011 balance sheet showed long-term debt of $2.3 million.The 2011 income statement showed an interest expense of $250,000.What was the cash flow to creditors for 2011?

Cash flow to stockholders is defined as:

The higher the degree of financial leverage employed by a firm,the:

The managers of a firm wish to expand the firm's operations and are trying to determine the amount of debt financing the firm should obtain versus the amount of equity financing that should be raised.The managers have asked you to explain the effects that both of these forms of financing would have on the cash flows of the firm.Write a short response to this request.

Dee Dee's Marina is obligated to pay its creditors $6,400 today.The firm's assets have a current market value of $5,900.What is the current market value of the shareholders' equity?

Which one of the following represents the most liquid asset?