Question 1

In the direct cash flow method, which part of the cash flow statement do heating expenses paid affect?

Accepted Answer

A)  Operating activities cash inflows. 
B)  Operating activities cash outflows. 
C)  Investing activities cash inflows. 
D)  Investing activities cash outflows. 
E)  Financing activities cash inflows. 
A)  Operating activities cash inflows. 
B)  Operating activities cash outflows. 
C)  Investing activities cash inflows. 
D)  Investing activities cash outflows. 
E)  Financing activities cash inflows. B

Question 2

A company distributed $612,000 3rd quarter dividends to its 900,000 common shareholders and $150,000 to its 300,000 preferred shareholders. It recorded a net income of $1,520,000 for the same quarter. The closing balance of the periods' statement of Retained Earnings was a $1,287,000. It can be concluded that the opening balance on the Statement of Retained Earnings was

Accepted Answer

A)  $529,000 
B)  -$233,000 
C)  $233,000 
D)  -$83,000 
E)  $379,000 
A)  $529,000 
B)  -$233,000 
C)  $233,000 
D)  -$83,000 
E)  $379,000 A

Question 3

A company's financial statements two years ago showed a net income after taxes of $1,235,000 and a year ago, $877,500. This year the company reported a loss of $1,550,000. If the Company's tax rate has remained unchanged at 35% for these years, what refund will it be eligible to receive?

Accepted Answer

A)  No refund. Losses are carried forward. 
B)  $542,500 
C)  $775,250 
D)  $196,875 
E)  $1,550,000 
A)  No refund. Losses are carried forward. 
B)  $542,500 
C)  $775,250 
D)  $196,875 
E)  $1,550,000 B

Question 4

Each of the five sales representatives at CapiCal Enterprises were provided with automobiles valued at $25,000 each. The purchase was made 26 months ago, two months before the end of the fiscal year. The cars have an expected lifetime of seven years each. What is the maximum CCA [capital cost allowance] the Company can claim on its annual tax return at the end of 26 months?

Accepted Answer

A)  $37,500 
B)  $26,250 
C)  $22,313 
D)  $18,375 
E)  $17,857 
A)  $37,500 
B)  $26,250 
C)  $22,313 
D)  $18,375 
E)  $17,857

Question 5

CapiCal Enterprises recorded net income of $20 million for the year. The company has 1,500,000 preferred shares outstanding, with a stated dividend of $.80. It also has 5 million common shares outstanding. If the company wishes its total dividend payout for the year to equal 20% of its net income, what will be the dividend paid on each common share?

Accepted Answer

A)  $.43 
B)  $.56 
C)  $.62 
D)  $.80 
E)  $.82 
A)  $.43 
B)  $.56 
C)  $.62 
D)  $.80 
E)  $.82

Question 6

In the previous year, company XYZ had 500,000 shares outstanding, and an EPS of $1.50 a share. This year, the company performed a buyback of 20% of the outstanding shares and by year end EPS had risen to $1.60 per share. The remaining shareholders should be

Accepted Answer

A)  Positive because the company's earnings increased 
B)  Positive because shareholder earnings increased 
C)  Concerned because the company's earnings declined 
D)  Concerned because the number of shares decreased 
E)  Unconcerned because share price is not affected by company earnings 
A)  Positive because the company's earnings increased 
B)  Positive because shareholder earnings increased 
C)  Concerned because the company's earnings declined 
D)  Concerned because the number of shares decreased 
E)  Unconcerned because share price is not affected by company earnings

Question 7

The following accounts represent the financial status of Fandango Company as of October 1.The business has cash of $100,000. It must pay its suppliers $250,000 within 60 days. It has a mortgage outstanding of $3.1 million, of which $100,000 is owed within the next 12 months. Inventory totals $700,000 and the net book value of its land, building and equipment is $3.6 million. Income tax payable equals $50,000. It has $1 million in shareholder's equity. The value of the Company's working capital is

Accepted Answer

A)  $300,000 
B)  $350,000 
C)  $800,000 
D)  $400,000 
E)  $1 million 
A)  $300,000 
B)  $350,000 
C)  $800,000 
D)  $400,000 
E)  $1 million

Question 8

Over the week, East Wind Chinese Buffet sold 4,820 buffet meals at an average price of $15 each, which cost the company, on average, $5.50 each. Salaries accounted for $24,600, newspaper advertising and coupon expenses were $8,000, rent was $4,500 and administration expenses totaled $3,500. Interest equals $1,000. Their income tax rate is 31%. What was East Wind's operating income?

Accepted Answer

A)  $45,790 
B)  $2,991 
C)  $40,600 
D)  $5,190 
E)  $43,190 
A)  $45,790 
B)  $2,991 
C)  $40,600 
D)  $5,190 
E)  $43,190

Question 9

Fandango company reported current liabilities of $520,000, total assets of $10,560,000, and shareholders equity of $4,750,000 on its July balance sheet. Which of the following would the business have to have reported to complete the balance sheet equation?

Accepted Answer

A)  $14,790,000 in long-term liabilities 
B)  $5,290,000 in long-term liabilities 
C)  $10,040,000 in long-term liabilities 
D)  $10,040,000 in accumulated amortization 
E)  $14,790,000 in accumulated amortization 
A)  $14,790,000 in long-term liabilities 
B)  $5,290,000 in long-term liabilities 
C)  $10,040,000 in long-term liabilities 
D)  $10,040,000 in accumulated amortization 
E)  $14,790,000 in accumulated amortization

Question 10

Accumulated amortization is grouped under

Accepted Answer

A)  Liabilities with other expense accruals 
B)  Shareholders equity and serves to reduce its value 
C)  Long-term liabilities as a penitentiary 
D)  Expenses on the income statement 
E)  Capital assets as a contra account 
A)  Liabilities with other expense accruals 
B)  Shareholders equity and serves to reduce its value 
C)  Long-term liabilities as a penitentiary 
D)  Expenses on the income statement 
E)  Capital assets as a contra account

Question 11

Marcus Lalonde received $1,835.00 in cash dividends from Canadian corporations whose shares are in his personal portfolio. Marcus faces a problem of double taxation because

Accepted Answer

A)  The tax rate on passive income such as dividends is twice as high as on income from employment. 
B)  He is liable for income taxes on these dividends. However, the cash represents income from corporations which have already paid income tax on those earnings 
C)  He is liable for the income tax on these dividends and may be liable for capital gains tax upon sale of the shares that produced the dividends 
D)  The tax treatment on dividends is similar to withdrawals from RRSP's. A portion of the dividend is withheld by Revenue Canada upon the issue of the dividends and the portion that is taken into income is taxed 
E)  He will be taxed on the dividends taken into income this year and will be taxed for the total amount of dividends he has received while holding the shares upon the sale of shares 
A)  The tax rate on passive income such as dividends is twice as high as on income from employment. 
B)  He is liable for income taxes on these dividends. However, the cash represents income from corporations which have already paid income tax on those earnings 
C)  He is liable for the income tax on these dividends and may be liable for capital gains tax upon sale of the shares that produced the dividends 
D)  The tax treatment on dividends is similar to withdrawals from RRSP's. A portion of the dividend is withheld by Revenue Canada upon the issue of the dividends and the portion that is taken into income is taxed 
E)  He will be taxed on the dividends taken into income this year and will be taxed for the total amount of dividends he has received while holding the shares upon the sale of shares

Question 12

When drawing up the Cash Flow statement, a step in determining the cash flow from operating activities is

Accepted Answer

A)  Adding accumulated amortization to net income after-tax 
B)  Adding accumulated amortization to net income before tax 
C)  Deducting increases in current liabilities and adding decreases in current liabilities 
D)  Adding the gain on the sale of capital assets, such as land and buildings 
E)  Deducting increases in current assets and adding decreases in current assets 
A)  Adding accumulated amortization to net income after-tax 
B)  Adding accumulated amortization to net income before tax 
C)  Deducting increases in current liabilities and adding decreases in current liabilities 
D)  Adding the gain on the sale of capital assets, such as land and buildings 
E)  Deducting increases in current assets and adding decreases in current assets

Question 13

The current assets of KLM Inc. totalled $145,000 while its current liabilities were $200,000. Which of the following best describes KLM's situation?

Accepted Answer

A)  KLM's cash sales were too low during the current year. 
B)  KLM's spending was too high during the current period. 
C)  KLM's financial viability is at risk for the current period. 
D)  KLM's inventory was too high during the current period. 
E)  KLM's accrued wages were too high during the current period. 
A)  KLM's cash sales were too low during the current year. 
B)  KLM's spending was too high during the current period. 
C)  KLM's financial viability is at risk for the current period. 
D)  KLM's inventory was too high during the current period. 
E)  KLM's accrued wages were too high during the current period.

Question 14

Allison Controls Ltd. follows a policy of paying cash for everything it buys. At the end of 2011 Allison had a balance in its machine account of $90,000 and the associated accumulated depreciation account of $45,000. Similar amounts at the end of 2010 were $100,000 and $50,000 respectively. During 2011 Allison sold a machine for $10,000. It had cost $25,000 and had accumulated depreciation of $10,000 at the time of the sale. How would these amounts appear on the cash flow statement?

Accepted Answer

A)  Operating activities $(5,000); investing activities $(10,000); financing activities $15,000. 
B)  Operating activities $0; investing activities $(5,000); financing activities $0. 
C)  Operating activities $25,000; investing activities $35,000; financing activities $90,000. 
D)  Operating activities $0; investing activities $0; financing activities $15,000. 
E)  Operating activities $5,000; investing activities $0; financing activities $0. 
A)  Operating activities $(5,000); investing activities $(10,000); financing activities $15,000. 
B)  Operating activities $0; investing activities $(5,000); financing activities $0. 
C)  Operating activities $25,000; investing activities $35,000; financing activities $90,000. 
D)  Operating activities $0; investing activities $0; financing activities $15,000. 
E)  Operating activities $5,000; investing activities $0; financing activities $0.

Question 15

Which of the following statements best describes the purpose of the dividend tax credit?

Accepted Answer

A)  The dividend tax credit attempts to counteract other tax breaks enjoyed by investors. 
B)  The dividend tax credit attempts to provide more revenue for cash-strapped governments. 
C)  The dividend tax credit attempts to entice more corporations to list their shares on the TSX. 
D)  The dividend tax credit attempts to counteract double taxation on investors. 
E)  The dividend tax credit attempts to counteract the non-deductibility of dividends for corporations. 
A)  The dividend tax credit attempts to counteract other tax breaks enjoyed by investors. 
B)  The dividend tax credit attempts to provide more revenue for cash-strapped governments. 
C)  The dividend tax credit attempts to entice more corporations to list their shares on the TSX. 
D)  The dividend tax credit attempts to counteract double taxation on investors. 
E)  The dividend tax credit attempts to counteract the non-deductibility of dividends for corporations.

Question 16

Which part(s) of the cash flow statement does the direct method cash flow statement alter?

Accepted Answer

A)  Operating activities. 
B)  Investing activities. 
C)  Financing activities. 
D)  Operating and investing activities. 
E)  Investing and financing activities. 
A)  Operating activities. 
B)  Investing activities. 
C)  Financing activities. 
D)  Operating and investing activities. 
E)  Investing and financing activities.

Question 17

Short Ltd. received cash of $400,000 from a sale to Toronto Glass and $450,000 from a sale of a used machine to Oshawa Fibres. Short Ltd. paid $35,000 interest on bonds it had sold to Bankers' Trust. How would these items appear on the cash flow statement?

Accepted Answer

A)  Operating activities $400,000; investing activities $450,000; financing activities $35,000. 
B)  Operating activities $450,000; investing activities $35,000; financing activities $400,000. 
C)  Operating activities $35,000; investing activities $400,000; financing activities $450,000. 
D)  Operating activities $400,000; investing activities $450,000; financing activities $(35,000). 
E)  Operating activities $(400,000); investing activities $(450,000); financing activities $(35,000). 
A)  Operating activities $400,000; investing activities $450,000; financing activities $35,000. 
B)  Operating activities $450,000; investing activities $35,000; financing activities $400,000. 
C)  Operating activities $35,000; investing activities $400,000; financing activities $450,000. 
D)  Operating activities $400,000; investing activities $450,000; financing activities $(35,000). 
E)  Operating activities $(400,000); investing activities $(450,000); financing activities $(35,000).

Question 18

A factory was gutted by fire and none of its machinery was salvaged. The machinery was underinsured. The closing balance of the undepreciated capital cost (UCC) account to which the machinery had belonged was $9,750,000 of which $1,113,500 represented the lost assets. The CCA rate on this asset class is 30%. On the year's income tax return, the company

Accepted Answer

A)  Can claim $3,704,450 to realize the full CCA on the lost assets 
B)  Can claim $2,590,950 
C)  Cannot use any portion of the $1,113,500 nor can it use it in the future as the assets no longer exist 
D)  Can claim $2,925,000 
E)  Cannot use any portion of the $1,113,500 until replacement assets have been purchased 
A)  Can claim $3,704,450 to realize the full CCA on the lost assets 
B)  Can claim $2,590,950 
C)  Cannot use any portion of the $1,113,500 nor can it use it in the future as the assets no longer exist 
D)  Can claim $2,925,000 
E)  Cannot use any portion of the $1,113,500 until replacement assets have been purchased

Question 19

Trekker Trash & Recycling Ltd. bought a prefabricated building at a cost of $150,000 to house partially processed materials. The building was erected at the end of March, and it's expected lifetime is 15 years. Buildings have a 4% CCA rate. What is the maximum amount of CCA can Trekker Trash claim for the fiscal year at its end in December?

Accepted Answer

A)  $4,500 
B)  $3,000 
C)  $10,000 
D)  $7,500 
E)  $6,000 
A)  $4,500 
B)  $3,000 
C)  $10,000 
D)  $7,500 
E)  $6,000

Question 20

When an asset, which had been in use for several years, is sold at a price that exceeds the balance in the UCC account but is less than book value

Accepted Answer

A)  The excess amount is called CCA 
B)  The excess amount is called is a capital gain 
C)  The excess amount is called recaptured CCA 
D)  The excess amount reduce taxable income 
E)  The excess amount is not considered income 
A)  The excess amount is called CCA 
B)  The excess amount is called is a capital gain 
C)  The excess amount is called recaptured CCA 
D)  The excess amount reduce taxable income 
E)  The excess amount is not considered income

In the direct cash flow method, which part of the cash flow statement do heating expenses paid affect?

A company's financial statements two years ago showed a net income after taxes of $1,235,000 and a year ago, $877,500. This year the company reported a loss of $1,550,000. If the Company's tax rate has remained unchanged at 35% for these years, what refund will it be eligible to receive?

In the previous year, company XYZ had 500,000 shares outstanding, and an EPS of $1.50 a share. This year, the company performed a buyback of 20% of the outstanding shares and by year end EPS had risen to $1.60 per share. The remaining shareholders should be

Fandango company reported current liabilities of $520,000, total assets of $10,560,000, and shareholders equity of $4,750,000 on its July balance sheet. Which of the following would the business have to have reported to complete the balance sheet equation?

Accumulated amortization is grouped under

Marcus Lalonde received $1,835.00 in cash dividends from Canadian corporations whose shares are in his personal portfolio. Marcus faces a problem of double taxation because

When drawing up the Cash Flow statement, a step in determining the cash flow from operating activities is

The current assets of KLM Inc. totalled $145,000 while its current liabilities were $200,000. Which of the following best describes KLM's situation?

Which of the following statements best describes the purpose of the dividend tax credit?

Which part(s) of the cash flow statement does the direct method cash flow statement alter?

Short Ltd. received cash of $400,000 from a sale to Toronto Glass and $450,000 from a sale of a used machine to Oshawa Fibres. Short Ltd. paid $35,000 interest on bonds it had sold to Bankers' Trust. How would these items appear on the cash flow statement?

When an asset, which had been in use for several years, is sold at a price that exceeds the balance in the UCC account but is less than book value

Introduction to Financial Management

Financial Planning and Pro Forma Financial Statements

Analyzing and Interpreting Financial Statements

The Time Value of Money

Making Capital Investment Decisions

Making Capital Investment Decisions: Further Issues

Financing a Business 1: Sources of Funds

Financing a Business 2: Raising Long-Term Funds

The Cost of Capital and the Capital Structure Decision

Developing a Dividend Policy

Managing Working Capital

Measuring and Managing for Shareholder Value

Mergers, Acquisitions, and the Valuation of Shares

Filters

Exam 2: Accounting - the Language of Business

In the direct cash flow method, which part of the cash flow statement do heating expenses paid affect?

A company's financial statements two years ago showed a net income after taxes of $1,235,000 and a year ago, $877,500. This year the company reported a loss of $1,550,000. If the Company's tax rate has remained unchanged at 35% for these years, what refund will it be eligible to receive?

In the previous year, company XYZ had 500,000 shares outstanding, and an EPS of $1.50 a share. This year, the company performed a buyback of 20% of the outstanding shares and by year end EPS had risen to $1.60 per share. The remaining shareholders should be

Fandango company reported current liabilities of $520,000, total assets of $10,560,000, and shareholders equity of $4,750,000 on its July balance sheet. Which of the following would the business have to have reported to complete the balance sheet equation?

Accumulated amortization is grouped under

Marcus Lalonde received $1,835.00 in cash dividends from Canadian corporations whose shares are in his personal portfolio. Marcus faces a problem of double taxation because

When drawing up the Cash Flow statement, a step in determining the cash flow from operating activities is

The current assets of KLM Inc. totalled $145,000 while its current liabilities were $200,000. Which of the following best describes KLM's situation?

Which of the following statements best describes the purpose of the dividend tax credit?

Which part(s) of the cash flow statement does the direct method cash flow statement alter?

Short Ltd. received cash of $400,000 from a sale to Toronto Glass and $450,000 from a sale of a used machine to Oshawa Fibres. Short Ltd. paid $35,000 interest on bonds it had sold to Bankers' Trust. How would these items appear on the cash flow statement?

When an asset, which had been in use for several years, is sold at a price that exceeds the balance in the UCC account but is less than book value

Introduction to Financial Management

Financial Planning and Pro Forma Financial Statements

Analyzing and Interpreting Financial Statements

The Time Value of Money

Making Capital Investment Decisions

Making Capital Investment Decisions: Further Issues

Financing a Business 1: Sources of Funds

Financing a Business 2: Raising Long-Term Funds

The Cost of Capital and the Capital Structure Decision

Developing a Dividend Policy

Managing Working Capital

Measuring and Managing for Shareholder Value

Mergers, Acquisitions, and the Valuation of Shares

Filters