chapter 2 quiz

Kahlil's Dog House had current assets of $67,200 and current liabilities of $71,100 last year. This year, the current assets are $82,600 and the current liabilities are $85,100. The depreciation expense for the past year is $9,600 and the interest paid is $8,700. What is the amount of the change in net working capital?

$1,400

In 2021, what was the maximum average tax rate for corporations?

38%

Which one of the following will increase the cash flow from assets for a tax-paying firm, all else constant?

An increase in depreciation

Pacheo'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?

$105,800

Last year, Northside Pizza added $6,230 to retained earnings from sales of $104,650. The company had costs of $87,300, dividends of $2,500, and interest paid of $1,620. Given a tax rate of 21 percent, what was the amount of the depreciation expense?

$4,679

Di Bacco Winery has net working capital of $29,800, net fixed assets of $64,800, current liabilities of $34,700, and long-term debt of $23,000. What is the value of the owners' equity?

$71,600

McKendree 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?

$75,000

Sunny Disposition, Incorporated, has net working capital of $32,500, current assets of $59,000, equity of $74,500, and long-term debt of $42,500. What is the amount of the net fixed assets?

$84,500

Dakota Pride Farms has sales of $509,600, costs of $448,150, depreciation expense of $36,100, and interest paid of $12,400. The tax rate is 21 percent. How much net income did the firm earn for the period?

$9,324

The DeGrange Carpentry Shop, a sole proprietorship has sales of $398,600, costs of $254,800, depreciation expense of $26,400, interest expense of $1,600, and a tax rate of 21 percent. What is the net income for this firm?

$91,482

Pyri Flours, a sole proprietorship, owes $9,741 in taxes on taxable income of $61,509. If the firm earns $100 more in income, it will owe an additional $22 in taxes. What is the average tax rate on income of $61,609?

15.85%

Which one of the following terms is defined as the total tax paid divided by the total taxable income?

Average tax rate

The concept of marginal taxation is best exemplified by which one of the following?

Burke's Grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes.

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

Depreciation

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?

Positive cash flow to stockholders

Production equipment is classified as:

a tangible fixed asset.

The matching principle states that:

costs of producing an item should be recorded when the sale of that item is recorded as revenue.

Net income increases when:

dividends cease.

Net working capital increases when:

inventory is sold at a profit.

The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the:

marginal tax rate.