Finance Exam 2

Tumbling Haven, a gymnastic equipment manufacturer, provided the following information to its accountant. The company had net fixed assets of $356,190, and other assets of $4,176. The firm has current liabilities of $94,792, long-term debt of $76,445, common stock of $200,000, and retained earnings of $134,461. What amount of current assets did this firm have?

$145,332

Trekkers Footwear bought a piece of machinery on January 1, 2006 at a cost of $2.3 million, and the machinery is being depreciated annually at an amount of $230,000 for 10 years. Its market value on December 31, 2008 is $1.75 million. The firm's accountant is preparing its financial statement for the fiscal year end on December 31, 2008. The net value of the asset that should be reported on the balance sheet is:

$1.61 million

Cash flows from financing activities include all but one of the following: Buying and selling bonds or stock of other firms. Cash proceeds from a bank loan. Cash purchases of treasury stock. Cash payments on the principal of long-term debt.

buying and selling bonds or stock of other firms

Which of the following is NOT true about treasury stock? It is a firm's own shares repurchased in the market by the firm. It increases the net worth of the company. It can be reissued under stock option and other employee benefit plans. It lowers the value of the company.

it lowers the value of the company

Which of the following would appear as a liability on a company's balance sheet?

notes payable

Which of the following is an assumption of fundamental accounting principles?

revenue is recognized only when the sale is virtually completed and the exchange value for the goods or services can be reliably determined

Tyson Corporation bought raw materials on April 23, 2008 and also on July 2, 2008. Products produced during the months of May were sold in July. The firm uses FIFO to value its inventory. According to the matching principle, the firm's accountant should associate:

the inventory acquired on April 23 with the products sold

Trident Manufacturing Company's treasurer identified the following cash flows during this year as significant. The company repaid existing debt of $425,110, while raising additional debt capital of $750,000. It also repurchased stock in the open markets for a total of $63,250 and paid $233,144 in dividends to its shareholders. What is the net cash provided by (used in) financing activities?

$28,496 Cash inflows from financing activities = $750,000 Cash outflows from financing activities = $425,110 + $63,250 + $233,144 = $721,504 Net cash flows from financing activities = $750,000 - $721,504 = $28,496

Natural Lite, Inc. reported the following items during fiscal 2010. The firm purchased marketable securities of $87,500, paid down a long-term loan in the amount of $650,000, purchased $4,250,000 of new equipment. The firm also issued $6,250,000 of common stock, paid $350,225 in dividends to its common shareholders, and repurchased $1,250,000 of common stock in the open market. What is the net cash provided by financing activities?

$3,999,775

Triumph Trading Company provided the following information to its auditors. For the year ended March 31, 2008, the company had revenues of $1,122,878, operating expenses (excluding depreciation and leasing expenses) of $612,663, depreciation expenses of $231,415, leasing expenses of $126,193, and interest expenses of $87,125. If the company's average tax rate was 34 percent, what is its net income after taxes? (Round your final answer to the nearest dollar.)

$43,218 EBIT = $1,122,878 - ($612,663 + $231,415 + $126,193) = $152,607 Earnings before taxes = ($152,607 - $87,125) = $65,482 Net income = $65,482 (1 - 0.34) = $43,218

Tre-Bien Bakeries generated net income of $233,412 this year. At year end, the company had accounts receivables of $47,199, inventory of $63,781, and cash of $21,461. It also had accounts payables of $51,369, short-term notes payables of $11,417, and accrued taxes of $6,145. The net working capital of the firm is

$63,510

Shane, Inc., has completed its fiscal year and reported Total Assets of $1,000,000 and Total Liabilities of $300,000. Calculate the value of common equity.

$700,000 Common Equity = Total Assets - Total Liabilities

Teakap, Inc., has current assets of $1,456,312 and total assets of $4,812,369 for the year ending September 30, 2016. It also has current liabilities of $1,041,012, common equity of $1,500,000, and retained earnings of $1,468,347. What is the value of long term debt?

$803,010 Total Stockholders' equity = $1,500,000 + $1,468,347 = $2,968,347 Long-term debt = Total assets - Current liabilities - Total Stockholders' equity Long-term debt = $4,812,369 - $1,041,012 - $2,968,347 = $803,010

On June 23, 2008, Mikhal Cosmetics sold $250,000 worth of its products to Rynex Corporation, with the payment to be made in 90 days on September 20. The goods were shipped to Rynex on July 2. The firm's accountants should recognize the sale on:

June 23, 2008

When prices are rising, the value of ending inventory using the FIFO method rather than LIFO gives:

both inventory and net income a higher value

The assumption of arm's length transaction states that:

both parties to a transaction can act independently of each other and make economically rational decisions

Your uncle is planning to sell his second home in Bethany Beach, Delaware in the next few weeks. You are interested in buying this beachside property, so your agent negotiates a price for the house with your uncle's agent. This transaction is an example of the:

assumption of arm's length transactions

The average tax rate is:

calculated by dividing the total taxes paid by the taxable income

Which of the following is NOT a cash flow from investing activities? Buying and selling stocks of other firms. Cash payments of dividends to shareholders. Buying and selling bonds of other firms. Buying or selling of land, buildings, and plant and equipment.

cash payments of dividends to shareholders

Which of the following is NOT a cash flow from operating activities? Payments for utilities and rent Cash payments on the principal of long-term debt Cash receipts from selling goods and services Payments to purchase raw materials

cash payments on the principal of long-term debt