FIN 300 CHAPTER 2 EXAM QUESTIONS
AND ANSWERS ALL CORRECT
Andersen's Nursery has sales of $318,400, costs of $199,400, depreciation expense of
$28,600, interest expense of $1,100, and a tax rate of 35 percent. The firm paid out
$23,400 in dividends. What is the addition to retained earnings? - Answer- $34,645
The accounting statement that measures the revenues, expenses, and net income of a
firm over a period of time is called the: - Answer- Income Statement
The tax rate that determines the amount of tax that will be due on the next dollar of
taxable income earned is called the: - Answer- Marginal tax rate
Which one of the following has nearly the same meaning as free cash flow? - Answer-
Cash flow from assets
Which one of the following is an intangible fixed asset? - Answer- Copyright
Over the past year, a firm decreased its current assets and increased its current
liabilities. As a result, the firm's net working capital: - Answer- had to decrease
Shareholders' equity is best defined as: - Answer- the residual value of a firm
Highly liquid assets: - Answer- can be sold quickly at close to full value.
The market value of a firm's fixed assets: - Answer- is equal to the estimated current
cash value of those assets.
Net income increases when: - Answer- revenue increases.
The matching principle states that: - Answer- the costs of producing an item should be
recorded when the sale of that item is recorded as revenue.
The corporate tax structure in the U.S. is based on a: - Answer- modified flat-rate tax
An increase in which one of the following will increase operating cash flow for a
profitable, tax-paying firm? - Answer- Depreciation
What is the maximum average tax rate for corporations? - Answer- 35 percent
AND ANSWERS ALL CORRECT
Andersen's Nursery has sales of $318,400, costs of $199,400, depreciation expense of
$28,600, interest expense of $1,100, and a tax rate of 35 percent. The firm paid out
$23,400 in dividends. What is the addition to retained earnings? - Answer- $34,645
The accounting statement that measures the revenues, expenses, and net income of a
firm over a period of time is called the: - Answer- Income Statement
The tax rate that determines the amount of tax that will be due on the next dollar of
taxable income earned is called the: - Answer- Marginal tax rate
Which one of the following has nearly the same meaning as free cash flow? - Answer-
Cash flow from assets
Which one of the following is an intangible fixed asset? - Answer- Copyright
Over the past year, a firm decreased its current assets and increased its current
liabilities. As a result, the firm's net working capital: - Answer- had to decrease
Shareholders' equity is best defined as: - Answer- the residual value of a firm
Highly liquid assets: - Answer- can be sold quickly at close to full value.
The market value of a firm's fixed assets: - Answer- is equal to the estimated current
cash value of those assets.
Net income increases when: - Answer- revenue increases.
The matching principle states that: - Answer- the costs of producing an item should be
recorded when the sale of that item is recorded as revenue.
The corporate tax structure in the U.S. is based on a: - Answer- modified flat-rate tax
An increase in which one of the following will increase operating cash flow for a
profitable, tax-paying firm? - Answer- Depreciation
What is the maximum average tax rate for corporations? - Answer- 35 percent
