Exam 2: Financial Statements, Cash Flows, and Taxes

Firm ABC has operating profits of $100,000, taxes of $17,000, interest expense of $34,000 and preferred dividends of $5,000. What is the firm's net income after taxes?

The manufacturing and processing deduction allows manufacturing and processing businesses a 7 percent reduction from the effective general federal tax rate in 2001.

A statement of cash flows reconciles the net income earned during a given year, and any cash dividends paid, with the change in retained earnings between the start and end of that year.

Three important inputs to the statement of cash flows must be obtained from an income statement for the period of concern. These inputs are all of the following EXCEPT

The rule-setting body, which authorizes generally accepted accounting principles is the

Accounting practices and procedures used to prepare financial statements are called

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 amortization expense for 2003 is___________

The Canadian Institute of Chartered Accountants, part of the Accounting Standards Board, is the accounting profession's rule-setting body that authorizes accounting practices and principles.

A firm has year end 2001 and 2002 retained earnings balances of $670,000 and $560,000,respectively. The firm paid $10,000 in dividends in 2002. The firm's net income after taxes in 2002is ___________.

The___________ represents a summary statement of the firm's financial position at a given point in time.

Corporations experiencing operating losses are allowed to

A benefit of holding cash is the liquidity it gives the firm.

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's cash flow from operations is___________

The dividend exemption for Canadian corporations receiving dividends from another Canadiancorporation has resulted in

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

The depreciable value of an asset, under CCA, is

Amortization is the systematic expensing of a portion of the cost of a fixed asset against sales.

Candy Corporation has pretax profits of $1.2 million, an average tax rate of 34 percent, and it pays preferred dividends of $50,000. There are 100,000 shares outstanding and no interest expenses. What is Candy Corporation's earnings per share?

All of the following are sources of cash EXCEPT

For the year ended December 31, 2003, a corporation had cash flow from operating activities of$20,000, cash flow from investment activities of -$15,000, and cash flow from financing activities of-$10,000. The Statement of Cash Flows would show a