Exam 2: Financial Statements, Cash Flows, and Taxes

Parliament allows Canadian corporations to exclude from taxes 100 percent of dividends receivedfrom other Canadian corporations. Parliament did this to

Given the financial manager's preference for faster receipt of cash flows, a longer depreciable life is preferred to a shorter one.

The net working capital investment is defined as the change in current assets minus the change incurrent liabilities.

All of the following are examples of fixed assets EXCEPT

In Canada, the Board of Directors are generally

A firm has just ended the calendar year making a sale in the amount of $200,000 of merchandise purchased during the year at a total cost of $150,500. Although the firm paid in full for the merchandise during the year, it has yet to collect at year end from the customer. One possible problem this firm may face is

RUFF 5ANDPAPER CO. Balance Sheets For the Years Ended 2002 and 2003 2003 2002 Assets Cash 800 600 Marketable securities 200 200 Accounts receivable 1,200 1,000 Inventories 2,000 1,800 Gross fixed asset 3,000 2,800 Less Accumulated amortization 1,000 800 Net fixed assets 2,000 2,000 --- --- Total assets 6,200 5,600 Liabilities Accounts payable 200 100 Notes payable 800 900 Accruals 100 100 Long-term debt 2,000 1,500 Stockholders' equity Common stock 2,500 2,500 Retained eamings 600 500 --- ---- Total liabilities and equity 6,200 5,600 -Common stock dividends paid in 2003 amounted to

The___________ provides a financial summary of the firm's operating results during a specified period.

All of the following are true EXCEPT

Publicly owned corporations are those which are financed by proceeds from government treasury securities.

RUFF 5ANDPAPER CO. Balance Sheets For the Years Ended 2002 and 2003 2003 2002 Assets Cash 800 600 Marketable securities 200 200 Accounts receivable 1,200 1,000 Inventories 2,000 1,800 Gross fixed asset 3,000 2,800 Less Accumulated amortization 1,000 800 Net fixed assets 2,000 2,000 --- --- Total assets 6,200 5,600 Liabilities Accounts payable 200 100 Notes payable 800 900 Accruals 100 100 Long-term debt 2,000 1,500 Stockholders' equity Common stock 2,500 2,500 Retained eamings 600 500 --- ---- Total liabilities and equity 6,200 5,600 -The smallest use of funds for the firm in 2003 is

Earnings per share results from dividing earnings available for common stockholders by the number of shares of common stock authorized.

RUFF 5ANDPAPER CO. Balance Sheets For the Years Ended 2002 and 2003 2003 2002 Assets Cash 800 600 Marketable securities 200 200 Accounts receivable 1,200 1,000 Inventories 2,000 1,800 Gross fixed asset 3,000 2,800 Less Accumulated amortization 1,000 800 Net fixed assets 2,000 2,000 --- --- Total assets 6,200 5,600 Liabilities Accounts payable 200 100 Notes payable 800 900 Accruals 100 100 Long-term debt 2,000 1,500 Stockholders' equity Common stock 2,500 2,500 Retained eamings 600 500 --- ---- Total liabilities and equity 6,200 5,600 -The firm may have increased long-term debts to finance

The first step in preparing a statement of cash flows is to

The after-tax cost of a $40 can of paint to a company with a marginal tax rate of 40% is

$\text { A corporation had the following earnings and loss record for the years } 1997 \text { through 2002: }$ 1997 \ 200,000 1998 100,000 1999 100,000 2000 (800,000) 2001 200,000 2002 300,000 -If the corporation in Figure 2.1 had a 40 percent tax rate for all years, they received a tax refund in2000 in the amount of

RUFF 5ANDPAPER CO. Balance Sheets For the Years Ended 2002 and 2003 2003 2002 Assets Cash 800 600 Marketable securities 200 200 Accounts receivable 1,200 1,000 Inventories 2,000 1,800 Gross fixed asset 3,000 2,800 Less Accumulated amortization 1,000 800 Net fixed assets 2,000 2,000 --- --- Total assets 6,200 5,600 Liabilities Accounts payable 200 100 Notes payable 800 900 Accruals 100 100 Long-term debt 2,000 1,500 Stockholders' equity Common stock 2,500 2,500 Retained eamings 600 500 --- ---- Total liabilities and equity 6,200 5,600 -The primary source of funds for the firm in 2003 is (See Figure 2.2)

A corporation had an operating loss in 2002. All prior years had positive earnings. In utilizing thetax laws on carrybacks and carryforwards on operating losses a corporation

A Canadian-controlled private corporation's first $500,000 of taxable income qualifies for the small business deduction.

The sale of every business requires a premium be paid to cover the cost of goodwill.