Question 1

Basic earnings per share is best described as
A) 
B) 
C)

Accepted Answer

The answer of Basic earnings per share is best described...

Question 2

Cash flow from operations for the Albert Company is $4 million. If the cash flow from financing is $1 million and the cash flow for investment is $2 million, the change in cash for the fiscal period is closest to:
A) $1 million.
B) $3 million.
C) $4 million.
D) $7 million.

Accepted Answer

The change in cash for the fiscal period is calculated by adding the cash flows from operations, financing, and investment. Therefore, $4 million (operations) + $1 million (financing) + $2 million (investment) = $7 million. However, since the cash flow for investment is typically an outflow, it should be subtracted, leading to $4 million + $1 million - $2 million = $3 million.

Question 3

Cash flow from operations for the Albert Company is $5 million. If the cash flow from financing is $2 million and the cash flow from investment is $1 million, the change in cash for the fiscal period is closest to:
A) $1 million.
B) $2 million.
C) $6 million.
D) $8 million.

Accepted Answer

The change in cash for the fiscal period is calculated by adding the cash flows from operations, financing, and investment. Therefore, $5 million (operations) + $2 million (financing) + $1 million (investment) = $8 million.

Question 4

The end of year balance of cash for the Foosball Company for 2012 was $10 million, and the end of year cash balance for 2013 was $12 million. If Foosball had cash flow for financing of $1 million and cash flow for investment of $3 million, its cash flow from operations is closest to:
A) $1 million.
B) $2 million.
C) $3 million.
D) $6 million.

Accepted Answer

The cash flow from operations can be calculated by understanding the change in cash balance and adjusting for cash flows from financing and investment. The change in cash balance from 2012 to 2013 is $2 million ($12 million - $10 million). To find the cash flow from operations, add back the cash flows used for investment and financing: $2 million + $3 million (investment) + $1 million (financing) = $6 million.

Question 5

Which method of depreciation is required for tax purposes?
A) Straight-line depreciation
B) Declining balance depreciation
C) Double declining balance depreciation
D) Modified accelerated cost recovery system (MACRS)

Accepted Answer

The Modified Accelerated Cost Recovery System (MACRS) is the method of depreciation required for tax purposes in the United States. It allows for faster depreciation than the straight-line method, providing tax benefits to businesses.

Question 6

The U.S. tax system is a progressive tax system means:
A) it is very forward thinking
B) the rich pay higher tax rates than the poor
C) increasing amounts of income are taxed at higher rates

Accepted Answer

Increasing amounts of income are taxed at higher rates.

Question 7

Suppose the dividends received deduction is 70 percent. If a company with a tax rate on dividend income of 20 percent receives dividends of $10 million in dividends, the effective rate of tax on a $1 of dividends is closest to:
A) 1.4%.
B) 2.4%.
C) 6%.
D) 20%.

Accepted Answer

The answer of Suppose the dividends received deduction is 70...

Question 8

Suppose the dividends received deduction is 80 percent. If a company with a tax rate on dividend income of 15 percent receives dividends of $10 million in dividends, the effective rate of tax on a $1 of dividends is closest to:
A) 1.2%.
B) 3%.
C) 15%
D) 20%.

Accepted Answer

The effective rate of tax on $1 of dividends is calculated by considering the dividends received deduction. With an 80% deduction, the taxable portion of the dividends is 20% ($10 million * 20% = $2 million). The tax rate on this amount is 15%, so the effective tax rate on $1 of dividends is 15% of 20%, which is 3% (0.15 * 0.20 = 0.03).

Question 9

Suppose the Dallas Donut Company buys a donut fryer that costs $50,000. If the donut fryer is classified as a 3-year MACRS asset, the second year's depreciation for tax purposes on this fryer, given the MACRS rates:
 is closest to:
A) $11,110.
B) $16,665.
C) $22,225.
D) $38,890.

Accepted Answer

The answer of Suppose the Dallas Donut Company buys a...

Question 10

Suppose the Dallas Donut Company buys a donut fryer that costs $50,000. If the donut fryer is classified as a 3-year MACRS asset, the book value of the fryer for tax purposes at the end of the third year, given the MACRS rates:
 is closest to:
A) $3,705
B) $11,110.
C) $16,665.
D) $22,225.

Accepted Answer

The answer of Suppose the Dallas Donut Company buys a...

Question 11

Suppose the Apple Company buys a boiler that costs $100,000. If the boiler is classified as a 3-year MACRS asset, the second year's depreciation for tax purposes on this fryer, given the MACRS rates:
 is closest to:
A) $7,410.
B) $33,330.
C) $44,450.
D) $77,780.

Accepted Answer

The answer of Suppose the Apple Company buys a boiler...

Question 12

Suppose the Apple Company buys a boiler that costs $100,000. If the boiler is classified as a 3-year MACRS asset, the book value for tax purposes on this boiler at the end of the second year, given the MACRS rates:
 is closest to:
A) $0.
B) $7,410.
C) $14,810.
D) $22,220.

Accepted Answer

The answer of Suppose the Apple Company buys a boiler...

Question 13

Suppose the Apple Company buys a boiler that costs $100,000. If the boiler is classified as a 3-year MACRS asset, the book value for tax purposes on this boiler at the end of the third year, given the MACRS rates:
 is closest to:
A) $0.
B) $7,410.
C) $14,810.
D) $22,220.

Accepted Answer

The answer of Suppose the Apple Company buys a boiler...

Question 14

Suppose the Cement Company has a mixer that originally cost $100,000. Suppose the mixer is classified as a 3-year MACRS asset, with the MACRS rates:
 If the Cement Company sells the mixer at the end of three years for $10,000, recapture of depreciation is closest to:
A) $0.
B) $2,590.
C) $7,410.
D) $10,000.

Accepted Answer

The answer of Suppose the Cement Company has a mixer...

Question 15

Suppose the Machine Company has production equipment that originally cost $1 million, and is classified as a 5-year MACRS asset, with the MACRS rates:
 If the Machine Company sells the equipment at the end of two years for $1.1 million, the capital gain and recapture of depreciation, respectively, are:
A) $0; $520,000.
B) $0; $620,000.
C) $100,000, $520,000.
D) $100,000; $620,000.

Accepted Answer

The answer of Suppose the Machine Company has production equipment...

Question 16

Suppose the Prune Company has equipment that originally cost $1 million, and is classified as a 5-year MACRS asset, with the MACRS rates:
 If the Prune Company sells the equipment at the end of two years for $1 million, the capital gain and recapture of depreciation, respectively, are:
A) $0; $520,000.
B) $0; $620,000.
C) $100,000, $520,000.
D) $100,000; $620,000.

Accepted Answer

The answer of Suppose the Prune Company has equipment that...

Question 17

Suppose the Tucson Tuxedo Company has equipment that originally cost $1.2 million, and is classified as a 5-year MACRS asset, with the MACRS rates:

If the Tucson Tuxedo Company sells the equipment at the end of five years for $0.2 million, the capital gain and recapture of depreciation, respectively, are closest to:
A) $0; $1,130,880.
B) $0; $1,200,000.
C) $69,120; $1,130,880.
D) $69,120; $1,200,000.

Accepted Answer

The answer of Suppose the Tucson Tuxedo Company has equipment...

Question 18

Auditors, such as Deloitte & Touche L.L.P., prepare the company's financial statements.

Accepted Answer

Auditors, such as Deloitte & Touche L.L.P., review and verify the accuracy of a company's financial statements; they do not prepare them. The company's own accounting team typically prepares these statements.

Question 19

Generally accepted accounting principles (GAAP) vary from country to country.

Accepted Answer

GAAP standards are not universal and can vary significantly between different countries, reflecting variations in legal systems, business practices, and cultural influences.

Question 20

The establishment of Financial Accounting Standards Board (FASB) was necessitated by the globalization of business.

Accepted Answer

The establishment of the Financial Accounting Standards Board (FASB) was primarily to set standards for financial reporting and accounting in the United States, not directly because of globalization.

Quiz 3: Financial Statements

Basic earnings per share is best described as

Cash flow from operations for the Albert Company is $4 million. If the cash flow from financing is $1 million and the cash flow for investment is $2 million, the change in cash for the fiscal period is closest to:

Cash flow from operations for the Albert Company is $5 million. If the cash flow from financing is $2 million and the cash flow from investment is $1 million, the change in cash for the fiscal period is closest to:

The end of year balance of cash for the Foosball Company for 2012 was $10 million, and the end of year cash balance for 2013 was $12 million. If Foosball had cash flow for financing of $1 million and cash flow for investment of $3 million, its cash flow from operations is closest to:

Which method of depreciation is required for tax purposes?

The U.S. tax system is a progressive tax system means:

Suppose the dividends received deduction is 70 percent. If a company with a tax rate on dividend income of 20 percent receives dividends of $10 million in dividends, the effective rate of tax on a $1 of dividends is closest to:

Suppose the dividends received deduction is 80 percent. If a company with a tax rate on dividend income of 15 percent receives dividends of $10 million in dividends, the effective rate of tax on a $1 of dividends is closest to:

Suppose the Dallas Donut Company buys a donut fryer that costs $50,000. If the donut fryer is classified as a 3-year MACRS asset, the second year's depreciation for tax purposes on this fryer, given the MACRS rates: is closest to:

Suppose the Dallas Donut Company buys a donut fryer that costs $50,000. If the donut fryer is classified as a 3-year MACRS asset, the book value of the fryer for tax purposes at the end of the third year, given the MACRS rates: is closest to:

Suppose the Apple Company buys a boiler that costs $100,000. If the boiler is classified as a 3-year MACRS asset, the second year's depreciation for tax purposes on this fryer, given the MACRS rates: is closest to:

Suppose the Apple Company buys a boiler that costs $100,000. If the boiler is classified as a 3-year MACRS asset, the book value for tax purposes on this boiler at the end of the second year, given the MACRS rates: is closest to:

Suppose the Apple Company buys a boiler that costs $100,000. If the boiler is classified as a 3-year MACRS asset, the book value for tax purposes on this boiler at the end of the third year, given the MACRS rates: is closest to:

Suppose the Cement Company has a mixer that originally cost $100,000. Suppose the mixer is classified as a 3-year MACRS asset, with the MACRS rates: If the Cement Company sells the mixer at the end of three years for $10,000, recapture of depreciation is closest to:

Suppose the Prune Company has equipment that originally cost $1 million, and is classified as a 5-year MACRS asset, with the MACRS rates: If the Prune Company sells the equipment at the end of two years for $1 million, the capital gain and recapture of depreciation, respectively, are:

Auditors, such as Deloitte & Touche L.L.P., prepare the company's financial statements.

Generally accepted accounting principles (GAAP) vary from country to country.

The establishment of Financial Accounting Standards Board (FASB) was necessitated by the globalization of business.