Question 1

What is net capital spending for 2018?

Accepted Answer

A)  $40 
B)  $70 
C)  $280 
D)  $310 
E)  $350 
A)  $40 
B)  $70 
C)  $280 
D)  $310 
E)  $350 C

Question 2

What is the ending net working capital for 2018?

Accepted Answer

A)  -$60 
B)  $40 
C)  $60 
D)  $643 
E)  $765 
A)  -$60 
B)  $40 
C)  $60 
D)  $643 
E)  $765 D

Question 3

Knickerdoodles, Inc.   What is net capital spending for 2018?

Accepted Answer

A)  -$250 
B)  -$57 
C)  $0 
D)  $57 
E)  $477 
A)  -$250 
B)  -$57 
C)  $0 
D)  $57 
E)  $477 B

Question 4

An impairment loss is defined as the amount by which the carrying value of an asset or cash-generating unit exceeds its recoverable amount. What is the implication of an impairment loss on a firm's financial statements?

Accepted Answer

The difference between a company's carry

Question 5

The R.J. Ramboldt Co. paid dividends of $1,400, interest of $800, and taxes of $2,100 for the year. The tax rate is 35 % and the depreciation expense is $500. What is the operating cash flow for the year?

Accepted Answer

A)  $4,800 
B)  $4,950 
C)  $5,200 
D)  $5,350 
E)  $5,500 
A)  $4,800 
B)  $4,950 
C)  $5,200 
D)  $5,350 
E)  $5,500

Question 6

Cash flow from assets must be negative when:

Accepted Answer

A)  The firm has a taxable loss for the year. 
B)  The cash flow from creditors and the cash flow from stockholders are both negative. 
C)  The cash flow from creditors is negative and the cash flow from stockholders is positive. 
D)  The change in net working capital exceeds the net capital spending. 
E)  Operating cash flow is less than the change in net working capital. 
A)  The firm has a taxable loss for the year. 
B)  The cash flow from creditors and the cash flow from stockholders are both negative. 
C)  The cash flow from creditors is negative and the cash flow from stockholders is positive. 
D)  The change in net working capital exceeds the net capital spending. 
E)  Operating cash flow is less than the change in net working capital.

Question 7

What is the operating cash flow for 2018?

Accepted Answer

A)  $143 
B)  $297 
C)  $325 
D)  $353 
E)  $367 
A)  $143 
B)  $297 
C)  $325 
D)  $353 
E)  $367

Question 8

Calculate the tax difference between a British Columbia resident and a Quebec resident both having $20,000 in interest income and $25,000 in capital gains. $\textbf{   Combined marginal tax rates for individuals in top provincial tax brackets      }$

Accepted Answer

A)  British Columbia resident would pay $1,356.50 less than the Quebec resident. 
B)  British Columbia resident would pay $1,356.50 more than the Quebec resident. 
C)  British Columbia resident would pay $2,456.50 less than the Quebec resident. 
D)  British Columbia resident would pay $2,456.50 more than the Quebec resident. 
E)  There are no tax differences between the two tax payers. 
A)  British Columbia resident would pay $1,356.50 less than the Quebec resident. 
B)  British Columbia resident would pay $1,356.50 more than the Quebec resident. 
C)  British Columbia resident would pay $2,456.50 less than the Quebec resident. 
D)  British Columbia resident would pay $2,456.50 more than the Quebec resident. 
E)  There are no tax differences between the two tax payers.

Question 9

A Saskatchewan resident earned $30,000 in capital gains and $30,000 in non-eligible dividends. Calculate the total tax paid. $\textbf{Combined marginal tax rates for individuals in top provincial tax brackets         }$

Accepted Answer

A)  $17,073 
B)  $17,973 
C)  $18,073 
D)  $18,973 
E)  $19,073 
A)  $17,073 
B)  $17,973 
C)  $18,073 
D)  $18,973 
E)  $19,073

Question 10

Calculate cash flow from assets given the following information: EBIT = $1,000; depreciation = $100; taxes = $240; beginning fixed assets = $30,000; ending fixed assets = $40,000; beginning net working capital = $10,000; ending net working capital = $8,000.

Accepted Answer

A)  ─$6,350 
B)  ─$7,240 
C)  ─$8,130 
D)  ─$9,020 
E)  ─$10,900 
A)  ─$6,350 
B)  ─$7,240 
C)  ─$8,130 
D)  ─$9,020 
E)  ─$10,900

Question 11

Which of the following are characteristics of a liquid asset?

Accepted Answer

A)  Provide high yields. 
B)  Are highly specialized equipment. 
C)  There is a significant loss in value if sold. 
D)  Include the firm's shares and bonds. 
E)  Can be converted into cash quickly, with little or no loss in value, and generally earn low returns. 
A)  Provide high yields. 
B)  Are highly specialized equipment. 
C)  There is a significant loss in value if sold. 
D)  Include the firm's shares and bonds. 
E)  Can be converted into cash quickly, with little or no loss in value, and generally earn low returns.

Question 12

Impairment loss is the amount by which the carrying value of an asset or cash-generating unit exceeds its recoverable amount.

Accepted Answer

A) True 
 B)False

Question 13

The statement of financial position identity states that:

Accepted Answer

A)  Current assets + Fixed assets = Total assets 
B)  Assets = Liabilities + Shareholders' equity 
C)  Current liabilities + Long-term debt = Total liabilities 
D)  Common stock + Retained earnings = Shareholders' equity 
E)  Cash flow = Market value - Book value 
A)  Current assets + Fixed assets = Total assets 
B)  Assets = Liabilities + Shareholders' equity 
C)  Current liabilities + Long-term debt = Total liabilities 
D)  Common stock + Retained earnings = Shareholders' equity 
E)  Cash flow = Market value - Book value

Question 14

Which one of the following will increase the net working capital of a retail bakery shop?

Accepted Answer

A)  Purchase of inventory on credit 
B)  Purchase of new office equipment 
C)  Payment received from a customer 
D)  Sale of excess equipment 
E)  Sale of inventory on credit 
A)  Purchase of inventory on credit 
B)  Purchase of new office equipment 
C)  Payment received from a customer 
D)  Sale of excess equipment 
E)  Sale of inventory on credit

Question 15

If provincial tax rates are 16% on the first $40,100; 20% on the next $40,100; and 24% on any income after that. If a resident had income of $102,000, then determine the average provincial tax rate.

Accepted Answer

A)  19.28% 
B)  20.25% 
C)  21.28% 
D)  25.38% 
E)  25.58% 
A)  19.28% 
B)  20.25% 
C)  21.28% 
D)  25.38% 
E)  25.58%

Question 16

A Quebec resident earned $30,000 in capital gains and $30,000 in non-eligible dividends. Calculate the total tax paid. $\textbf{    Combined marginal tax rates for individuals in top provincial tax brackets     }$

Accepted Answer

A)  $18,434 
B)  $19,434 
C)  $20,434 
D)  $21,434 
E)  $22,434 
A)  $18,434 
B)  $19,434 
C)  $20,434 
D)  $21,434 
E)  $22,434

Question 17

An Alberta resident earned $30,000 in capital gains and $30,000 in non-eligible dividends. Calculate the total tax paid. $\textbf{    Combined marginal tax rates for individuals in top provincial tax brackets      }$

Accepted Answer

A)  $13,105 
B)  $13,658 
C)  $14,105 
D)  $14,658 
E)  $15,105 
A)  $13,105 
B)  $13,658 
C)  $14,105 
D)  $14,658 
E)  $15,105

Question 18

Which of the following is a component of cash flow to creditors? 
I. Interest paid.
II) Net new borrowing.
III) Dividends paid.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II only 
D)  I and III only 
E)  II and III only 
A)  I only 
B)  II only 
C)  I and II only 
D)  I and III only 
E)  II and III only

Question 19

____________ normally must be paid by a firm within 12 months.

Accepted Answer

A)  Long-term bank loans 
B)  Current liabilities 
C)  Bonds 
D)  Marketable securities 
E)  Accounts receivable 
A)  Long-term bank loans 
B)  Current liabilities 
C)  Bonds 
D)  Marketable securities 
E)  Accounts receivable

Question 20

The financial statement summarizing a firm's performance over a period of time is the:

Accepted Answer

A)  Statement of comprehensive income. 
B)  Statement of financial position. 
C)  Statement of cash flows. 
D)  Tax reconciliation statement. 
E)  Shareholders' equity sheet. 
A)  Statement of comprehensive income. 
B)  Statement of financial position. 
C)  Statement of cash flows. 
D)  Tax reconciliation statement. 
E)  Shareholders' equity sheet.

Exam 2: Financial Statements, Cash Flow, and Taxes

What is net capital spending for 2018?

What is the ending net working capital for 2018?

Knickerdoodles, Inc. What is net capital spending for 2018?

An impairment loss is defined as the amount by which the carrying value of an asset or cash-generating unit exceeds its recoverable amount. What is the implication of an impairment loss on a firm's financial statements?

The R.J. Ramboldt Co. paid dividends of $1,400, interest of $800, and taxes of $2,100 for the year. The tax rate is 35 % and the depreciation expense is $500. What is the operating cash flow for the year?

Cash flow from assets must be negative when:

What is the operating cash flow for 2018?

Calculate cash flow from assets given the following information: EBIT = $1,000; depreciation = $100; taxes = $240; beginning fixed assets = $30,000; ending fixed assets = $40,000; beginning net working capital = $10,000; ending net working capital = $8,000.

Which of the following are characteristics of a liquid asset?

Impairment loss is the amount by which the carrying value of an asset or cash-generating unit exceeds its recoverable amount.

The statement of financial position identity states that:

Which one of the following will increase the net working capital of a retail bakery shop?

If provincial tax rates are 16% on the first $40,100; 20% on the next $40,100; and 24% on any income after that. If a resident had income of $102,000, then determine the average provincial tax rate.

Which of the following is a component of cash flow to creditors? I. Interest paid. II) Net new borrowing. III) Dividends paid.

____________ normally must be paid by a firm within 12 months.

The financial statement summarizing a firm's performance over a period of time is the:

Introduction to Corporate Finance

Working With Financial Statements

Long-Term Financial Planning and Corporate Growth

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Dividend Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Leasing

Mergers and Acquisitions

Enterprise Risk Management

Options and Corporate Securities

Behavioural Finance: Implications for Financial Management

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