Exam 2: Financial Statements, Cash Flows, and Taxes

Earnings per share represents the amount earned during the period on each outstanding share ofcommon stock.

Noncash charges are expenses that involve an actual outlay of cash during the period but are notdeducted on the income statement.

Net fixed assets represent the difference between gross fixed assets and the total expense recorded for the depreciation of fixed assets.

The CICA has developed a set of accounting standards that specify the four financial statements that companies must develop and how information is to be presented and disclosed in the financial statements.

When preparing a statement of cash flows, retained earnings adjustments are required so that which of the following are separated on the statement?

All of the following are examples of current liabilities EXCEPT

For the year ended December 31, 2003, a corporation had cash flow from operating activities of$12,000, cash flow from investment activities of -$10,000, and cash flow from financing activities of$4,000. The Statement of Cash Flows would show a

Generally Accepted Accounting Principles are authorized by the Canadian Institute of CharteredAccountants.

The finance definition of operating cash flow excludes interest as an operating flow, whereas the accounting definition includes it as an operating flow.

$\text { A corporation had the following earnings and loss record for the years } 1997 \text { through 2002: }$ 1997 \ 200,000 1998 100,000 1999 100,000 2000 (800,000) 2001 200,000 2002 300,000 -The corporation in Figure 2.1 had taxable income in 2001 of

All of the following are uses of cash EXCEPT

A share of stock was purchased for $2 and sold 3 years later for $5. The $5 increase in value is taxed as a capital gain.

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 -Sources of funds for 2003 totaled__________

The portion of the annual report where management provides analysis and explains the financialresults is the

The ordinary income of a corporation is income earned through the sale of a firm's goods and services and is currently taxed subject to the individual income tax rates.

A capital gain occurs when an asset has been held for

The original price per share received by the firm on a single issue of common stock is equal to thethe contributed capital divided by the number of shares outstanding.

An investor receives a $500 dividend cheque from Bell Canada; this is considered passive income.

Dividends paid to shareholders requires an outflow of cash.

The depreciable life of an asset can significantly affect the pattern of cash flows. The shorter the depreciable life of an asset, the more quickly the cash flow created by the depreciation write-off will be received.