FIN 300 COMPREHENSIVE QUESTIONS AND
ANSWERS SURE A+
✔✔Given the following information, calculate earnings per share:
Interest expense 40,000
Net income 400,000
Preferred dividends paid 65,000
Common dividends paid 100,000
Common stock outstanding 100,000
a. 1.95
b. 3.35
c. 2.35
d. 3.60 - ✔✔b. 3.35
✔✔According to accounting principles:
a. current assets should equal current liabilities
b. net working capital should equal zero
c. operating expenses during the year are tied to revenues they helped to generate
d. depreciation is a cash expense - ✔✔c. operating expenses during the year are tied to
revenues they helped generate
✔✔The common equity section of the balance sheet includes each of the following
except:
a. common stock
b. preferred stock
c. capital in excess of par
d. retained earnings - ✔✔b. preferred stock
✔✔Which of the following equations best describes net working capital?
a. total assets - total liabilities
b. total assets - fixed assets - current liabilities
c. cash + inventory-accounts payables
, .d fixed assets - long-term liabilities - ✔✔b. total assets- fixed assets- current liabilities
✔✔Becker and Company had $150,000 in EBT. Using the schedule below, what was
their effective tax rate?
Before-Tax Income(EBT) Tax Rate
$0 - $50,000 15%
$50,001 - $75,000 25%
$75,001 - $100,000 34%
$100,001 - $335,000 39%
$335,001 - $10,000,000 34%
$10,000,001 - $15,000,000 35%
$15,000,001 - $18,333,333 38%
Over $18,333,333 35%
a. 39%
b. 28%
c. equal to the marginal tax rate
d. 25% - ✔✔28%
✔✔The income statement:
a. is a financial statement that shows the firm's financial position at a particular point in
time.
b. is a financial statement that summarizes a firm's revenues and expenses over a
period of time.
c. is a financial statement that summarizes a firm's revenues and expenses at a
particular point in time.
d. details the firm's assets and liabilities over a period of time. - ✔✔b. is a financial
statement that summarizes a firm's revenues and expenses over a period of time.
✔✔Each of the following items represents a liability with the exception of:
a. long-term debt
b. notes payable
c. prepaid expenses
d. accrued expenses - ✔✔c. prepaid expenses
✔✔Kerney's EBT is $450,000. What is the marginal tax rate?
Before-Tax Income(EBT) Tax Rate
$0 - $50,000 15%
$50,001 - $75,000 25%
$75,001 - $100,000 34%
$100,001 - $335,000 39%
$335,001 - $10,000,000 34%
$10,000,001 - $15,000,000 35%
$15,000,001 - $18,333,333 38%
Over $18,333,333 35%
a. 15%
ANSWERS SURE A+
✔✔Given the following information, calculate earnings per share:
Interest expense 40,000
Net income 400,000
Preferred dividends paid 65,000
Common dividends paid 100,000
Common stock outstanding 100,000
a. 1.95
b. 3.35
c. 2.35
d. 3.60 - ✔✔b. 3.35
✔✔According to accounting principles:
a. current assets should equal current liabilities
b. net working capital should equal zero
c. operating expenses during the year are tied to revenues they helped to generate
d. depreciation is a cash expense - ✔✔c. operating expenses during the year are tied to
revenues they helped generate
✔✔The common equity section of the balance sheet includes each of the following
except:
a. common stock
b. preferred stock
c. capital in excess of par
d. retained earnings - ✔✔b. preferred stock
✔✔Which of the following equations best describes net working capital?
a. total assets - total liabilities
b. total assets - fixed assets - current liabilities
c. cash + inventory-accounts payables
, .d fixed assets - long-term liabilities - ✔✔b. total assets- fixed assets- current liabilities
✔✔Becker and Company had $150,000 in EBT. Using the schedule below, what was
their effective tax rate?
Before-Tax Income(EBT) Tax Rate
$0 - $50,000 15%
$50,001 - $75,000 25%
$75,001 - $100,000 34%
$100,001 - $335,000 39%
$335,001 - $10,000,000 34%
$10,000,001 - $15,000,000 35%
$15,000,001 - $18,333,333 38%
Over $18,333,333 35%
a. 39%
b. 28%
c. equal to the marginal tax rate
d. 25% - ✔✔28%
✔✔The income statement:
a. is a financial statement that shows the firm's financial position at a particular point in
time.
b. is a financial statement that summarizes a firm's revenues and expenses over a
period of time.
c. is a financial statement that summarizes a firm's revenues and expenses at a
particular point in time.
d. details the firm's assets and liabilities over a period of time. - ✔✔b. is a financial
statement that summarizes a firm's revenues and expenses over a period of time.
✔✔Each of the following items represents a liability with the exception of:
a. long-term debt
b. notes payable
c. prepaid expenses
d. accrued expenses - ✔✔c. prepaid expenses
✔✔Kerney's EBT is $450,000. What is the marginal tax rate?
Before-Tax Income(EBT) Tax Rate
$0 - $50,000 15%
$50,001 - $75,000 25%
$75,001 - $100,000 34%
$100,001 - $335,000 39%
$335,001 - $10,000,000 34%
$10,000,001 - $15,000,000 35%
$15,000,001 - $18,333,333 38%
Over $18,333,333 35%
a. 15%
