Chapter 3
How much was Firm XYZ's dividends per share if the firm paid $3.20 million in dividends and there were 4 million shares outstanding? -$0.80 per share -$1.25 per share -Not enough information to tell
$0.80 per share
Ace Industries provides you with the following information: Current assets $50,000 Long-term assets $128,000 Current liabilities $30,000 Long-term liabilities $68,000 What is Ace Industries' net working capital? -$20,000 -$178,000 -$80,000
$20,000
Racing Horse Corporation reported net income for 2010 of $200,000, sales of $540,000, expenses (excluding depreciation) of $180,000, and depreciation expense of $60,000. The company's accounts receivable balance increased by $40,000 during the year and its accounts payable balance remained the same. The company's change in cash for the year is estimated to be -$100,000. -$160,000. -$220,000. -$380,000.
$220,000.
PDQ Corp. has sales of $4,000,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm's interest expense is $250,000, and the corporate tax rate is 40%. What is PDQ's tax liability? -$260,000 -$360,000 -$600,000 -$258,000
$260,000
PDQ Corp. has sales of $4,000,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm's interest expense is $250,000, and the corporate tax rate is 40%. The firm paid dividends to preferred stockholders of $40,000, and the firm distributed $60,000 in dividend payments to common stockholders. What is PDQ's "Addition to Retained Earnings"? -$650,000 -$390,000 -$330,000 -$290,000
$290,000
Based on the information in Table 3-1, calculate the after tax cash flow from operations for 2008 (no assets were disposed of during the year, and there was no change in interest payable or taxes payable). -$4,300 -$1,450 -$5,500 -$6,250
$4,300
Corporation B reported earnings per share of $10. Corporation B has 100,000 shares of common stock outstanding and reported an increase in owners equity of $400,000 for the period. Corporation B paid $50,000 in interest expense during the period. Corporation B paid dividends per share of -$6.00 -$5.50 -$6.50 -$14.003
$6.00
Given the following financial statements for ACME Corporation, what amount did the company pay in dividends for 2010? -$45,000 -$25,000 -$100,000 -$80,000
$80,000
In addition to annual financial statements all publicly traded firms are required to file an annual report with the Securities Exchange Commission (SEC) known as a: -401k -403b -10-K
10-K
Firm X has total current liabilities of $5.2 million and long-term debt of $45 million. Given the firm's total assets are $111.4 million, what is Firm X's debt ratio? -11.55% -40.39% -45.06%
45.06%
Which of the following is considered a current liability? -Inventories -Long-term debt -Accounts payable -Retained earnings
Accounts payable
__________ are a major source of unsecured short-term financing for business firms. -Accounts receivable -Notes payable -Accounts payable
Accounts payable
Which of these is a current asset? -Accruals -Accounts receivable -Property, plant and equipment
Accounts receivable
_______ are assets that can be converted to cash within a one-year time period. -Long-term assets -Fixed assets -Current assets
Current assets
Which of these expenses is a non-cash expense? -Interest expense -Depreciation expense -Administrative expense
Depreciation expense
Which of the following is considered to be a financing activity? -Making a dividend payment -Collecting accounts receivables -Using cash to pay for inventory -Selling 200 acres of land
Making a dividend payment
Which type of income may be distributed to the company's owners or reinvested in the company? -Gross profit -Operating income -Net income -Earnings before taxes
Net income
A statement of cash flows has which three parts? -Operating, investing and equity -Operating, investing and financing -Operating, liability and equity -Assets, liabilities and equity
Operating, investing and financing
What are profit margins? What are the different types of profit margins? -The profit margins are the profits-to-sales relationships. Three types are gross profit margin, operating profit margin, and net profit margin. -The profit margins are the profits-to-sales relationships. Three types are cost profit margin, fixed profit margin, and net profit margin. -The profit margins are the profits-to-assets relationships. Three types are current profit margin, gross profit margin, and net profit margin. -The profit margins are the profits-to-assets relationships. Three types are gross profit margin, operating profit margin, and net profit margin.
The profit margins are the profits-to-sales relationships. Three types are gross profit margin, operating profit margin, and net profit margin.
The income statement is also known as _______. -a statement of cash flows -an earnings statement -a profit and loss statement
a profit and loss statement
What information does a firm's income statement provide to the viewing public? -an itemization of all of a firm's assets and liabilities for a defined period of time -a complete listing of all of a firm's cash receipts and cash expenditures for a defined period of time -a report of revenues and expenses for a defined period of time -a report of investments made and their cost for a specific period of time
a report of investments made and their cost for a specific period of time
When a firm uses _______ basis accounting, profits are recorded when earned whether the profits have been received. -cash -accrual -profit
accrual
All of the following are income statement items except: -accrued expenses. -depreciation expense. -cost of goods sold. -interest expense.
accrued expenses.
Which of the following accounts does not belong in the liability section of a balance sheet? -accruals -short-term debt -additional paid-in capital -long-term debt
additional paid-in capital
All of the following are equity accounts on a balance sheet except: retained earnings. -cash. -common stock. -paid-in capital.
cash
A company borrows $2,000,000 and uses the money to purchase high technology machinery for its operations. These are examples of -cash flow from financing and cash flow from operations. -cash flow from investing and cash flow from operations. -cash flow from financing and cash flow from investing. -cash flow from investing and cash flow from financing.
cash flow from financing and cash flow from investing.
Which of the following accounts does not belong on the asset side of a balance sheet? -accounts receivable -marketable securities -cash -common stock
common stock
A balance sheet where the assets and liabilities are expressed as a percentage of the firm's total assets is known as a ______. -common-sized balance sheet -fractional balance sheet -pro forma balance sheet
common-sized balance sheet
On the income statement, the cost of producing or acquiring a product or service to be sold is recorded as: -cost of goods sold. -an operating expense. -a selling expense.
cost of goods sold.
Accounts receivable are: -credit that has not been extended yet. -credit extended to the firm by another company. -credit sales that have not been collected. -credit lines that have been approved but not used.
credit sales that have not been collected.
Net working capital equals: -current assets plus current liabilities. -total assets minus total liabilities. -current assets minus current liabilities. -total assets plus total liabilities.
current assets minus current liabilities.
Costs or expenses that do not vary with production volume are known as: -variable costs. -semivariable costs. -fixed costs.
fixed costs.
Accountants prepare financial statements using a set of guidelines established by the profession to ensure that all financial statements are comparable. These guidelines are known as: -generally accepted accounting principles. -Security Exchange Commission rules. -internal accounting guidelines. -certified financial accounting regulations.
generally accepted accounting principles.
Which of the following accounts belongs on the asset side of a balance sheet? -depreciation expense -accounts payable -inventory -accruals
inventory
The ability to rapidly convert an asset into cash without a significant loss in value is referred to as ______. -convertibility -liquidity -callability
liquidity
Which of the following accounts does not belong in the equity section of a balance sheet? -retained earnings -paid-in-Surplus -long-term debt -preferred stock
long-term debt
Which of the following is a form of long-term debt? -accounts payable -mortgage -accrued expenses
mortgage
The increase in owners equity for a given period is equal to -positive net cash flow minus dividends. -net income minus dividends. -sales minus dividends. -gross profit minus distributions to shareholders.
net income minus dividends.
In the event the firm is liquidated, and any funds remain after paying all credit obligations, _______ stockholders will be the first to receive payment. -treasury -common -preferred
preferred
Retained earnings are the sum of: -previous years' earnings that were distributed as dividends. -previous years' of earnings less dividends. -historical average of earnings per share. -all of the firm's historical earnings.
previous years' of earnings less dividends.