Question 1

Donner United has total owners' equity of $18,800.The firm has current assets of $23,100, current liabilities of $12,200, and total assets of $36,400.What is the value of the long-term debt?

Accepted Answer

Long-term debt = Total assets - Current assets - Current liabilities - Owners' equity= $36,400 - $23,100 - $12,200 - $18,800= $5,400

Question 2

Cornerstone Markets has beginning long-term debt of $64,500, which is the principal balance of a loan payable to Centre Bank.During the year, the company paid a total of $16,300 to the bank, including $4,100 of interest.The company also borrowed $11,000.What is the value of the ending long-term debt?

Accepted Answer

The answer of Cornerstone Markets has beginning long-term debt of...

Question 3

Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period?

Accepted Answer

Positive cash flow from assets indicates that a firm has generated enough internal cash flow to cover its operations, investments, and financing activities, reflecting overall financial health.

Question 4

Taylor Industries has current liabilities of $54,900 and accounts receivable of $88,700.The firm has total assets of $395,000 and net fixed assets of $265,100.The owners' equity has a book value of $147,500
)What is the amount of the net working capital?

Accepted Answer

The answer of Taylor Industries has current liabilities of $54,900...

Question 5

Cash flow to creditors increases when:

Accepted Answer

Cash flow to creditors increases when long-term debt is repaid because it involves cash outflows to settle the debt obligations.

Question 6

Plenti-Good Foods has ending net fixed assets of $98,700 and beginning net fixed assets of $84,900.During the year, the firm sold assets with a total book value of $13,200 and also recorded $9,800 in depreciation expense.How much did the company spend to buy new fixed assets?

Accepted Answer

The answer of Plenti-Good Foods has ending net fixed assets...

Question 7

Jackson Automotive has net working capital of $22,600, current assets of $56,500, equity of $62,700, and long-term debt of $31,900.What is the amount of the net fixed assets?

Accepted Answer

The answer of Jackson Automotive has net working capital of...

Question 8

Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100.What is the value of the net working capital?

Accepted Answer

The answer of Donut Delite has total assets of $31,300,...

Question 9

Marenelle Construction has beginning retained earnings of $284,300.For the year, the company earned net income of $13,700 and paid dividends of $9,000.The company also issued $25,000 worth of new stock.What is the value of the retained earnings account at the end of the year?

Accepted Answer

The ending retained earnings are calculated as beginning retained earnings plus net income minus dividends. Thus, $284,300 + $13,700 - $9,000 = $289,000. The issuance of new stock does not affect retained earnings.

Question 10

Dockside Warehouse has net working capital of $42,400, total assets of $519,300, and net fixed assets of $380,200.What is the value of the current liabilities?

Accepted Answer

The answer of Dockside Warehouse has net working capital of...

Question 11

If a firm has a negative cash flow from assets every year for several years, the firm:

Accepted Answer

A firm with negative cash flow from assets could be investing heavily in growth and expansion, leading to an increase in size despite the negative cash flow.

Question 12

Blythe Industries reports the following account balances: inventory of $417,600, equipment of $2,028,300, accounts payable of $224,700, cash of $51,900, and accounts receivable of $313,900.What is the amount of the current assets?

Accepted Answer

Current assets include inventory, cash, and accounts receivable. Adding these amounts: $417,600 (inventory) + $51,900 (cash) + $313,900 (accounts receivable) = $783,400.

Question 13

Michael's Bakery had $236,400 in net fixed assets at the beginning of the year.During the year, the company purchased $53,200 in new equipment.It also sold, at a price of $22,000, some old equipment that had a book value of $5,900.The depreciation expense for the year was $13,400.What is the net fixed asset balance at the end of the year?

Accepted Answer

The answer of Michael's Bakery had $236,400 in net fixed...

Question 14

Tressler Industries opted to repurchase 5,000 shares of stock last year in lieu of paying a dividend.The cash flow statement for last year must have which one of the following assuming that no new shares were issued?

Accepted Answer

Repurchasing shares is considered a cash outflow to stockholders, which would result in a negative cash flow to stockholders, not positive.

Question 15

Wes Motors has total assets of $98,300, net working capital of $11,300, owners' equity of $41,600, and long-term debt of $38,600.What is the value of the current assets?

Accepted Answer

The answer of Wes Motors has total assets of $98,300,...

Question 16

What is the maximum average tax rate for corporations?

Accepted Answer

The maximum average tax rate for corporations in the United States was 35 percent before the Tax Cuts and Jobs Act of 2017, which reduced the corporate tax rate to a flat 21 percent. However, the question seems to refer to the historical maximum rate.

Question 17

Net capital spending is equal to:

Accepted Answer

Net capital spending is calculated as the change in net fixed assets plus depreciation, which is represented by ending net fixed assets minus beginning net fixed assets plus depreciation.

Question 18

Mahalo Tours currently has $10,500 in cash.The company owes $26,900 to suppliers for merchandise and $47,500 to the bank for a long-term loan.Customers owe the company $33,000 for their purchases.The inventory has a book value of $62,400 and an estimated market value of $65,600.If the store compiled a balance sheet as of today, what would be the book value of the current assets?

Accepted Answer

The answer of Mahalo Tours currently has $10,500 in cash.The...

Question 19

An increase in which one of the following will increase operating cash flow for a profitable, tax-paying firm?

Accepted Answer

An increase in depreciation will increase operating cash flow because depreciation is a non-cash expense that reduces taxable income, thus reducing taxes paid and increasing cash flow.

Question 20

Which one of the following changes during a year will increase cash flow from assets but not affect the operating cash flow?

Accepted Answer

An increase in accounts payable means the company is delaying payments to suppliers, which increases cash flow from assets without affecting the operating cash flow directly.

Quiz 2: Financial Statements, Taxes, and Cash Flow