Exam 3: Understanding Financial Statements,taxes and Cash Flows

Generally Accepted Accounting Principles (GAAP)require companies to smooth earnings by shifting some profits from good years to bad years.

Which of the following is NOT included in operating income?

The income statement describes the financial performance of a firm over a fixed period such as a quarter or a year.

In 2014 an Australian firm,RJH Inc. ,has local earnings before taxes of $100,000 and its ordinary shareholders have a 37% marginal tax rate.The company's tax expense was

Which of the following would NOT be included as equity in a corporate balance sheet?

The cash flow statement shows amounts that the company has earned but for which it has not yet received cash.

A & K Co.expects to have earnings before taxes of $250,000 to $300,000.The company's marginal tax rate is 39% and its average tax rate about 33%.For every additional dollar of interest expense,A & K's taxes will

The cash flow statement is an alternative term for the balance sheet.

Which of the basic financial statements is best used to answer the questions "What does the company own and how is it financed?"

Which of the following streams of income is not affected by how a firm is financed (whether with debt or equity)?

In 2014 the Australian firm Bouffard Co.has local earnings before taxes of $100,000,000.The ordinary shareholders have a marginal tax rate of 45%.The company's tax expense was

Tax tables are based on ________ tax rates.

Which of the basic financial statements is best used to answer questions about changes in owner's equity that are not explained by the income statement?

In a growing business,negative cash flow from investing activities is normal.

Your firm has the following income statement items: sales of $50,250,000;income tax of $1,744,000;operating expenses of $10,115,000;cost of goods sold of $35,025,000;and interest expense of $750,000.What is the amount of the firm's gross profit?

Which of the basic financial statements is best used to answer the questions "Where did the company's money come from and how was it spent over the preceding year?"

Who owns the retained earnings of a public firm?

A balance sheet is a statement of the financial position of the firm on a given date,including its asset holdings,liabilities,and equity.

Balance sheet and other accounts for GPA are listed below in alphabetical order.Use these accounts to construct GPA's balance sheet for 2013.All balance sheet accounts are shown,but some accounts will not be used.All amounts are in millions of dollars. Accounts payable $1900 Accounts receivable $661 Cash $1,000 Ordinary shares $2,000 EBIT $1,968 Interest expense $8.00 Inventories $1,620 Long-term debt $890 Net plant & equipment $2,563 Other current assets $645 Other long-term assets $576 Retained earnings $2,080 Short-term debt $195 Taxes $778

Reducing a firm's debt will increase its cash flow.