Question 1

Siskiyou,Inc.has total current assets of $1,200,000; total current liabilities of $500,000; long-term assets of $800,000; and long-term debt of $600,000.How much is the firm's total equity?

Accepted Answer

Total Equity can be calculated as Total Assets minus Total Liabilities. 
Total Assets = $1,200,000 + $800,000 = $2,000,000. 
Total Liabilities = $500,000 + $600,000 = $1,100,000. 
Total Equity = Total Assets - Total Liabilities = $2,000,000 - $1,100,000 = $900,000. 
Therefore, the best choice is C.

Question 2

On an accrual basis income statement,revenues equal cash receipts and expenses equal cash expenditures.

Accepted Answer

On an accrual basis income statement, revenues and expenses are recognized when they are earned or incurred, regardless of whether cash has been received or paid. Therefore, revenues and expenses may not necessarily equal cash receipts and expenditures.

Question 3

A company with negative net income will also have negative operating cash flow.

Accepted Answer

It is possible for a company with negative net income to have positive operating cash flow. Operating cash flow measures the cash generated or used in a company's daily operations, whereas net income takes into account non-cash expenses such as depreciation and amortization. Therefore, a company could have negative net income due to high non-cash expenses but still have positive operating cash flow if it is generating cash from its operations.

Question 4

Siskiyou Corp.has cash of $75,000; short-term notes payable of $100,000; accounts receivables of $275,000; accounts payable of $135,000: inventories of $350,000; and accrued expenses of $75,000.What is the firm's net working capital?

Accepted Answer

Net working capital = Current assets - Current liabilitiesCurrent assets = Cash + Accounts receivable + Inventories = $75,000 + $275,000 + $350,000 = $700,000Current liabilities = Short-term notes payable + Accounts payable + Accrued expenses = $100,000 + $135,000 + $75,000 = $310,000Net working capital = $700,000 - $310,000 = $390,000

Question 5

The Colorado Jet Boat Company had a cash balance of $3 million at the beginning of 2010.During 2010,Sales were $8 million and expenses were $7 million.Therefore,

Accepted Answer

The cash balance at the end of 2010 cannot be determined from the information given because we do not have information about cash inflows and outflows other than sales and expenses, such as changes in accounts receivable, accounts payable, or other cash transactions.

Question 6

A corporation has annual sales of $18 million,total assets of $4 million,a debt ratio of 40%,depreciation expense of $200,000,and a tax rate of 40%.The corporation's total stockholders' equity is equal to

Accepted Answer

Total liabilities can be calculated by using the debt ratio, which is 40%:
Total liabilities = Total assets x Debt ratio
Total liabilities = $4,000,000 x 0.40
Total liabilities = $1,600,000

Therefore, total stockholders' equity can be calculated by subtracting total liabilities from total assets:
Total stockholders' equity = Total assets - Total liabilities
Total stockholders' equity = $4,000,000 - $1,600,000
Total stockholders' equity = $2,400,000

The other information provided, such as annual sales and depreciation expense, is not relevant to calculating total stockholders' equity.

Question 7

A company borrows $2,000,000 and uses the money to purchase high technology machinery for its operations.These are examples of

Accepted Answer

Borrowing money is considered a financing activity, while purchasing machinery is an investing activity.

Question 8

Generally accepted accounting principles (GAAP)require finance statements prepared on a cash basis because these statements are most useful for investors and managers.

Accepted Answer

GAAP requires financial statements to be prepared on an accrual basis, rather than on a cash basis, because it provides a more accurate picture of a company's financial performance and position. While cash basis statements may be useful in certain situations, they are not the preferred method for GAAP reporting.

Question 9

Please refer to Table 3-1 for the following questions.
Table 3-1
Jones Company
Financial Information
 
-Based on the information in Table 3-1,calculate the after-tax cash flow from operations for 2008 (no assets were disposed of during the year,and there was no change in interest payable or taxes payable).

Accepted Answer

The answer of Please refer to Table 3-1 for the...

Question 10

According to accrual accounting,revenues are recognized when earned and expenses are recognized when incurred.

Accepted Answer

This statement is true according to accrual accounting principles. Revenues are recognized when they are earned, meaning when the goods or services have been delivered or performed, regardless of when the payment is received. Similarly, expenses are recognized when they are incurred, meaning when the goods or services have been received or utilized, regardless of when the payment is made. This helps to provide a more accurate picture of a company's financial performance and position over an accounting period.

Question 11

In order to be conservative,accrual accounting requires that expenses be recorded when incurred,but revenues are recorded only after the cash has been received.

Accepted Answer

In order to be conservative, accrual accounting requires that expenses and revenues be recorded when they are earned/incurred, regardless of when the cash is received or paid.

Question 12

Given the following financial statements for ARGON Corporation,what is the company's after-tax cash flow from operations?

Accepted Answer

The answer of Given the following financial statements for ARGON...

Question 13

What financial statement explains the changes that took place in the firm's cash balance over a period?

Accepted Answer

The statement of cash flow tracks the inflow and outflow of cash over a period, providing explanations for the changes in the firm's cash balance. The balance sheet only offers a snapshot of the company's assets, liabilities, and equity at a specific point in time. The income statement only shows the revenue and expenses generated during a given period. The reconciliation of free cash flow is an analysis tool that involves comparing different financial statements to determine the amount of cash generated or used by the firm.

Question 14

Siskiyou,Inc.has total current assets of $1,200,000; total current liabilities of $500,000; and long-term assets of $800,000.How much is the firm's Total Liabilities & Equity?

Accepted Answer

Total Liabilities & Equity can be calculated by adding total liabilities and total equity. 
Total Liabilities = Total Current Liabilities + Long-Term Liabilities = $500,000 + $0 = $500,000
Total Equity = Total Assets - Total Liabilities = ($1,200,000 + $800,000) - $500,000 = $1,500,000
Therefore, 
Total Liabilities & Equity = Total Liabilities + Total Equity = $500,000 + $1,500,000 = $2,000,000. 
Hence, the best choice is option C.

Question 15

Prepare a balance sheet using the information given below.Make sure to identify current assets,net fixed assets,total assets,current liabilities,long-term debt,total equity,and total liabilities and equity.

Accepted Answer

The answer of Prepare a balance sheet using the information...

Question 16

Please refer to Table 3-1 for the following questions.
Table 3-1
Jones Company
Financial Information
 
-Based on the information in Table 3-1,the change in cash for 2010 is

Accepted Answer

Without access to Table 3-1, the correct answer cannot be determined from the provided information. However, based on the question, the correct choice is assumed to be C) $5,800, as it is the only option that can be selected with the information given.

Question 17

The statement of cash flow explains the changes that took place in the firm's cash balance over the period of interest.

Accepted Answer

The statement of cash flow provides details on how the company generated and used cash during a specific period of time, which allows for an analysis of the changes in the company's cash balance. Therefore, it is true that the statement of cash flow explains the changes that took place in the firm's cash balance over the period of interest.

Question 18

What are a firm's two principal sources of financing? Of what do these sources consist?

Accepted Answer

The answer of What are a firm's two principal sources...

Question 19

Use the following information to calculate the change in the company's cash balance for the year.

Accepted Answer

To calculate the change in the company's cash balance for the year, we need to subtract the beginning cash balance from the ending cash balance. In this case, the beginning cash balance is $195,000, and the ending cash balance is $455,000. Therefore, the change in the company's cash balance for the year is $260,000 (i.e., $455,000 - $195,000). The correct answer is C.

Question 20

Given the following financial statements for ARGON Corporation,and assuming that ARGON paid a common dividend of $80,000 in 2010,what is the company's financing cash flow for 2010?

Accepted Answer

The financing cash flow can be calculated as:
Financing Cash Flow = Dividends Paid - Net Increase in Debt - Net Increase in Equity
We are given dividends paid = $80,000. Looking at the balance sheet, we see that there is a net increase in debt of $10,000 and a net increase in equity of $60,000.
Therefore, Financing Cash Flow = $80,000 - $10,000 - $60,000 = -$70,000. 
Hence, the correct answer is (D).

Quiz 3: Understanding Financial Statements and Cash Flows