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.