FIN 300 MARIA'S SOUP SHACK
FINANCIAL STATEMENTS FINAL TEST 2026
QUESTIONS WITH CORRECT ANSWERS
GRADED A+
◍ Smashed Pumpkins Co. paid $224 in dividends and $645 in interest over the
past year. The company increased retained earnings by $540 and had
accounts payable of $726. Sales for the year were $16,650 and depreciation
was $764. The tax rate was 40 percent. What was the company's EBIT?.
Answer: Net income = $224 + 540 = $764 EBT = $764/( 1 − .40) = $1,273
EBIT = $1,273 + 645 = $1,918
◍ The Daily News has projected annual net income of $272,600, of which 28
percent will be distributed as dividends. Assume the company will have net
sales of $75,000 worth of common stock. What will be the cash flow to
stockholders if the tax rate is 21 percent?.
Answer: CFS = .28($272,600) − $75,000CFS = $1,328
◍ financial asset.
Answer: assets that are claims on the cash flows from other assets (loans,
stocks and bonds)claims on cash flows from real assets
◍ capital market.
Answer: long term securities -stocks-bonds market in which financial capital
is loaned and/or borrowed for more than one year
◍ Teddy's Pillows had beginning net fixed assets of $470 and ending net fixed
assets of $548. Assets valued at $318 were sold during the year.
Depreciation was $40. What is the amount of net capital spending?.
Answer: Net capital spending = $548 (ending net fixed assets) + 40
, (Depreciation) - 470 (beginning net fixed assets)Net capital spending = $118
◍ Efficiency.
Answer: measures the assets efficiency and the ability of assets in generating
sales how efficiently a firm uses its assets
◍ Depreciation for a tax-paying firm:.
Answer: Increase Expenses and Lower Taxes
◍ JJ Enterprises has inventory of $11,600, fixed assets of $22,400, total
liabilities of $12,900, cash of $1,900, accounts receivable of $8,700, and
long-term debt of $6,500. What is the net working capital?.
Answer: NWC = $1,900 + 8,700 + 11,600 − ($12,900 − 6,500)NWC =
$15,800
◍ Net working capital is defined as:.
Answer: Current Assets-Current Liabilities
◍ Griffin's Goat Farm, Inc., has sales of $694,000, costs of $345,000,
depreciation expense of $42,000, interest expense of $24,000, and a tax rate
of 21 percent. What is the net income for this firm?.
Answer: The income statement for the company is: Income Statement Sales
$694,000 Costs $345,000 Depreciation $42,000 EBIT $307,000 Interest
$24,000 EBT $283,000 Taxes (21%) $59,430 Net income $223,570
◍ Three areas of finance:.
Answer: 1. Financial Management -buying/selling of assets-financing
choices-control costs 2. Investments -purchasing and holding assets &
securities -stocks and bonds 3. Financial Markets-capital markets -money
markets -financial intermediaries (banks or credit unions)
◍ Noncash items refer to:.
Answer: Expenses that do not directly effect cash flows
◍ Quick Ratio.
Answer: (Current Assets - Inventory) / Current Liabilities
◍ Andre's Bakery has sales of $487,000 with costs of $263,000. Interest
, expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent.
What is the net income?.
Answer: Net income = ($487,000 − 263,000 − 26,000 − 42,000)(1 − .21)Net
income = $123,240
◍ At the beginning of the year, Trees Galore had current liabilities of $15,932
and total debt of $68,847. By year end, current liabilities were $13,870 and
total debt was $72,415. What is the amount of net new borrowing for the
year?.
Answer: Net new borrowing = ($72,415 − 13,870) − ($68,847 − 15,932)Net
new borrowing = $5,630
◍ At the beginning of the year, Vendors, Inc., had owners' equity of $48,485.
During the year, net income was $4,925 and the company paid dividends of
$3,585. The company also repurchased $7,335 in equity. What was the cash
flow to stockholders for the year?.
Answer: Cash flow to stockholders = $3,585 + 7,335 = $10,920
◍ Rousey, Inc., had a cash flow to creditors of $17,280 and a cash flow to
stockholders of $8,000 over the past year. The company also had net fixed
assets of $49,880 at the beginning of the year and $57,340 at the end of the
year. Additionally, the company had a depreciation expense of $12,420 and
an operating cash flow of $51,605. What was the change in net working
capital during the year?.
Answer: Cash flow from assets = $17,280 + 8,000 = $25,280 Net capital
spending = $57,340 − 49,880 + 12,420 = $19,880 Change in net working
capital = $51,605 − 19,880 − 25,280 = $6,445
◍ C Corporation.
Answer: The most common type of corporation, which is a legal entity,
public that offers limited liability to ownerstaxed = doubledat corporate and
personal (on income earned and dividends) capital = excellent access
◍ Galaxy Interiors income statement shows depreciation of $1,611, sales of
$21,415, interest paid of $1,282, net income of $1,374, and costs of goods
sold of $16,408. What is the amount of the noncash expenses?.
FINANCIAL STATEMENTS FINAL TEST 2026
QUESTIONS WITH CORRECT ANSWERS
GRADED A+
◍ Smashed Pumpkins Co. paid $224 in dividends and $645 in interest over the
past year. The company increased retained earnings by $540 and had
accounts payable of $726. Sales for the year were $16,650 and depreciation
was $764. The tax rate was 40 percent. What was the company's EBIT?.
Answer: Net income = $224 + 540 = $764 EBT = $764/( 1 − .40) = $1,273
EBIT = $1,273 + 645 = $1,918
◍ The Daily News has projected annual net income of $272,600, of which 28
percent will be distributed as dividends. Assume the company will have net
sales of $75,000 worth of common stock. What will be the cash flow to
stockholders if the tax rate is 21 percent?.
Answer: CFS = .28($272,600) − $75,000CFS = $1,328
◍ financial asset.
Answer: assets that are claims on the cash flows from other assets (loans,
stocks and bonds)claims on cash flows from real assets
◍ capital market.
Answer: long term securities -stocks-bonds market in which financial capital
is loaned and/or borrowed for more than one year
◍ Teddy's Pillows had beginning net fixed assets of $470 and ending net fixed
assets of $548. Assets valued at $318 were sold during the year.
Depreciation was $40. What is the amount of net capital spending?.
Answer: Net capital spending = $548 (ending net fixed assets) + 40
, (Depreciation) - 470 (beginning net fixed assets)Net capital spending = $118
◍ Efficiency.
Answer: measures the assets efficiency and the ability of assets in generating
sales how efficiently a firm uses its assets
◍ Depreciation for a tax-paying firm:.
Answer: Increase Expenses and Lower Taxes
◍ JJ Enterprises has inventory of $11,600, fixed assets of $22,400, total
liabilities of $12,900, cash of $1,900, accounts receivable of $8,700, and
long-term debt of $6,500. What is the net working capital?.
Answer: NWC = $1,900 + 8,700 + 11,600 − ($12,900 − 6,500)NWC =
$15,800
◍ Net working capital is defined as:.
Answer: Current Assets-Current Liabilities
◍ Griffin's Goat Farm, Inc., has sales of $694,000, costs of $345,000,
depreciation expense of $42,000, interest expense of $24,000, and a tax rate
of 21 percent. What is the net income for this firm?.
Answer: The income statement for the company is: Income Statement Sales
$694,000 Costs $345,000 Depreciation $42,000 EBIT $307,000 Interest
$24,000 EBT $283,000 Taxes (21%) $59,430 Net income $223,570
◍ Three areas of finance:.
Answer: 1. Financial Management -buying/selling of assets-financing
choices-control costs 2. Investments -purchasing and holding assets &
securities -stocks and bonds 3. Financial Markets-capital markets -money
markets -financial intermediaries (banks or credit unions)
◍ Noncash items refer to:.
Answer: Expenses that do not directly effect cash flows
◍ Quick Ratio.
Answer: (Current Assets - Inventory) / Current Liabilities
◍ Andre's Bakery has sales of $487,000 with costs of $263,000. Interest
, expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent.
What is the net income?.
Answer: Net income = ($487,000 − 263,000 − 26,000 − 42,000)(1 − .21)Net
income = $123,240
◍ At the beginning of the year, Trees Galore had current liabilities of $15,932
and total debt of $68,847. By year end, current liabilities were $13,870 and
total debt was $72,415. What is the amount of net new borrowing for the
year?.
Answer: Net new borrowing = ($72,415 − 13,870) − ($68,847 − 15,932)Net
new borrowing = $5,630
◍ At the beginning of the year, Vendors, Inc., had owners' equity of $48,485.
During the year, net income was $4,925 and the company paid dividends of
$3,585. The company also repurchased $7,335 in equity. What was the cash
flow to stockholders for the year?.
Answer: Cash flow to stockholders = $3,585 + 7,335 = $10,920
◍ Rousey, Inc., had a cash flow to creditors of $17,280 and a cash flow to
stockholders of $8,000 over the past year. The company also had net fixed
assets of $49,880 at the beginning of the year and $57,340 at the end of the
year. Additionally, the company had a depreciation expense of $12,420 and
an operating cash flow of $51,605. What was the change in net working
capital during the year?.
Answer: Cash flow from assets = $17,280 + 8,000 = $25,280 Net capital
spending = $57,340 − 49,880 + 12,420 = $19,880 Change in net working
capital = $51,605 − 19,880 − 25,280 = $6,445
◍ C Corporation.
Answer: The most common type of corporation, which is a legal entity,
public that offers limited liability to ownerstaxed = doubledat corporate and
personal (on income earned and dividends) capital = excellent access
◍ Galaxy Interiors income statement shows depreciation of $1,611, sales of
$21,415, interest paid of $1,282, net income of $1,374, and costs of goods
sold of $16,408. What is the amount of the noncash expenses?.
