Chapter 2 MCQ

Which one of the following terms is defined as the total tax paid divided by the total taxable income? Variable tax rate Absolute tax rate Contingent tax rate Marginal tax rate Average tax rate

Average tax rate

Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period? Positive operating cash flow Negative net capital spending Positive cash flow to stockholders Positive cash flow from assets Negative cash flow to creditors

Positive cash flow from assets

The financial statement that summarizes a firm's accounting value as of a particular date is called the: cash flow statement. balance sheet. liquidity position. income statement. periodic operating statement.

balance sheet.

Given a profitable firm, depreciation: lowers taxes. increases net income. decreases net working capital. increases net fixed assets. has no effect on net income.

lowers taxes.

Net income increases when: dividends cease. the average tax rate increases. revenue increases. depreciation increases. fixed costs increase.

revenue increases.

Shareholders' equity is best defined as: the net liquidity of a firm. the cumulative profits of a firm over time. positive net working capital. the residual value of a firm. cash inflows minus cash outflows.

the residual value of a firm.

Suzette's Market had long-term debt of $638,100 at the beginning of the year compared to $574,600 at year-end. If the interest expense was $42,300, what was the firm's cash flow to creditors? $21,200 $105,800 $54,900 $102,400 $26,700

$105,800

BT Trucking has taxable income of $617,429. How much does it owe in taxes? $118,542.79 $209,925.86 $96,025.86 $201,354.82 $240,797.31

$209,925.86

ANC Plastics has net working capital of $15,400, current assets of $39,200, equity of $46,600, and long-term debt of $22,100. What is the amount of the net fixed assets? $45,500 $48,100 $56,900 $53,300 $50,800

$53,300

For the year, Movers United has net income of $31,800, net new equity of $7,500, and an addition to retained earnings of $24,200. What is the amount of the dividends paid? $100 $16,700 $7,600 $7,500 $15,100

$7,600