Question 1

Firm ABC had operating profits of $100,000,taxes of $17,000,interest expense of $34,000,and preferred dividends of $5,000.What was the firm's net profit after taxes?
A) $66,000
B) $49,000
C) $44,000
D) $83,000

Accepted Answer

Net profit after taxes can be calculated as follows: 
Operating profit - Taxes - Interest - Preferred dividends = Net profit after taxes 
$100,000 - $17,000 - $34,000 - $5,000 = $44,000 
Therefore, the correct answer is B.

Question 2

Retained earnings on the balance sheet represents the ________.
A) net profit after taxes
B) amount of proceeds in excess of the par value received from the original sale of common stock
C) net profit after taxes minus preferred dividends
D) cumulative total of all earnings reinvested in the firm

Accepted Answer

Retained earnings represent the cumulative total of all earnings that have been reinvested in the firm rather than paid out as dividends to shareholders. It includes net profit after taxes minus any dividends paid to preferred shareholders. Option A only represents net profit after taxes, Option B represents additional paid-in capital, and Option C only includes net profit after taxes minus dividends for preferred shareholders.

Question 3

When preparing the retained earnings statement,________ is(are)subtracted in order to derive at the ending balance of retained earnings.
A) net profits after taxes
B) interest expense
C) depreciation
D) dividends

Accepted Answer

Dividends are payments made to shareholders, which are not considered as expenses. Therefore, they are subtracted in order to arrive at the ending balance of retained earnings.

Question 4

A firm had the following accounts and financial data for 2014:  The firm's net profit after taxes for 2014 is ________.
A) -$206.40
B) $213.80
C) $320.40
D) $206.25

Accepted Answer

The firm's net profit after taxes can be calculated by subtracting the total expenses from the revenue, and then subtracting the taxes. In this case, net profit after taxes = ($4,258.50 - $3,822.50) - ($115.10 + $0.50) = $435.00 - $115.60 = $319.40. Rounded to the nearest cent, this is $320.40, which corresponds to choice C.

Question 5

Candy Corporation had pretax profits of $1.2 million,an average tax rate of 34 percent,and it paid preferred stock dividends of $50,000.There were 100,000 shares outstanding and no interest expense.What was Candy Corporation's earnings per share?
A) $3.91
B) $4.52
C) $7.42
D) $7.59

Accepted Answer

The answer of Candy Corporation had pretax profits of $1.2...

Question 6

A firm's year-end retained earnings balances are $320,000 and $400,000,for 2014 and 2015 respectively.The firm reported net profits after taxes of $100,000 in 2015.The firm's dividend payment for 2015 is ________.
A) $0
B) $20,000
C) $80,000
D) $100,000

Accepted Answer

We can use the formula: 
Retained Earnings = Beginning Retained Earnings + Net Income - Dividends

Rearranging the formula to solve for dividends, we get: 
Dividends = Beginning Retained Earnings + Net Income - Ending Retained Earnings

Plugging in the given values, we get: 
Dividends = $320,000 + $100,000 - $400,000 = $20,000

Therefore, the dividend payment for 2015 is $20,000.

Question 7

Operating profit is known as ________.
A) earnings after interest and taxes
B) earnings before interest and taxes
C) earnings before depreciation and taxes
D) earnings after tax

Accepted Answer

Operating profit is defined as earnings before interest and taxes (EBIT). It is a measure of a company's profitability from its core operations before taking into account interest expenses and taxes.

Question 8

The net value of fixed assets is also called its ________.
A) market value
B) par value
C) book value
D) intrinsic value

Accepted Answer

The net value of fixed assets is commonly referred to as its book value, which is the value of the asset reflected on the company's balance sheet after depreciation has been accounted for. A is not correct because market value may be different from book value and it represents the value of an asset in the current marketplace. B is not correct because par value refers to the face value of a financial instrument such as a bond or share of stock. D is not correct because intrinsic value usually refers to the perceived value of an asset based on its fundamental characteristics and is often used in the context of stock valuation.

Question 9

Paid-in capital in excess of par represents the amount of proceeds ________.
A) in deficit of the par value from the original sale of common stock
B) in excess of the par value from the original sale of common stock
C) in excess of the par value from the current value of common stock
D) in excess of the par value from the intrinsic value of common stock

Accepted Answer

Paid-in capital in excess of par represents the amount of proceeds that a company receives from the sale of common stock that is in excess of the par value of the stock. Par value is the minimum price at which a company can issue its stock, and any amount received above par value is considered paid-in capital in excess of par.

Question 10

A firm has the following accounts and financial data for 2014:  The firm's earnings per share for 2014 is ________.
A) $0.5335
B) $0.5125
C) $0.3204
D) $0.3024

Accepted Answer

The answer of A firm has the following accounts and...

Question 11

Which of the following is a fixed asset?
A) land
B) accounts payable
C) accruals
D) notes payable

Accepted Answer

Land is a fixed asset because it is a long-term asset that is not expected to be converted into cash within a year. Accounts payable, accruals, and notes payable are all liabilities and not fixed assets.

Question 12

A firm has a year-end retained earnings balance of $220,000 for 2014.The firm reported net profits after taxes of $50,000 and paid dividends of $30,000 in 2015.The firm's retained earnings balance at 2015 year end is ________.
A) $240,000
B) $250,000
C) $270,000
D) $300,000

Accepted Answer

The answer of A firm has a year-end retained earnings...

Question 13

On the balance sheet,net fixed assets represent ________.
A) gross fixed assets at cost minus depreciation expense
B) gross fixed assets at market value minus depreciation expense
C) gross fixed assets at cost minus accumulated depreciation
D) gross fixed assets at market value minus accumulated deprecation

Accepted Answer

Net fixed assets represent the amount of the company's property, plant, and equipment (PP&E) that are currently in use and have a useful life beyond the current accounting period, minus accumulated depreciation. This means that net fixed assets are calculated by subtracting accumulated depreciation from the book value (or historical cost) of the company's PP&E. This gives us the cost of the PP&E that has not yet been depreciated, which is the net fixed asset value. Therefore, choice C is the correct answer because it reflects this definition.

Question 14

The ________ represents a summary statement of a firm's financial position at a given point in time.
A) income statement
B) balance sheet
C) statement of cash flows
D) statement of retained earnings

Accepted Answer

A balance sheet represents a firm's financial position at a given point in time by listing its assets, liabilities, and shareholders' equity. The income statement shows the firm's performance over a period of time, the statement of cash flows shows changes in cash and cash equivalents over a period of time, and the statement of retained earnings explains changes in the retained earnings account over a period of time.

Question 15

Which of the following represents a current asset?
A) automobiles
B) buildings
C) marketable securities
D) equipment

Accepted Answer

Marketable securities are considered current assets as they are easily convertible to cash within a year. Automobiles, buildings, and equipment are typically considered fixed assets.

Question 16

The statement of cash flows ________.
A) shows the financial position of a firm at a given point of time
B) summarizes all the purchase and sale of fixed assets and raw materials
C) provides insight into a firm's operating, investment, and financing cash flows
D) classifies a firm's cash flows as operating, investing, financing, and other activities

Accepted Answer

DThe statement of cash flows provides insight into a firm's cash flows from operating, investing, and financing activities, but it does not classify cash flows as "other activities." It specifically details how cash is generated and used in these three main categories, helping users understand the company's liquidity and financial flexibility.

Question 17

Which of the following is a current liability?
A) accounts receivable
B) cash
C) notes payable
D) inventory

Accepted Answer

Notes payable is a liability that represents the amount of money owed to creditors or lenders and is expected to be paid within a year. Accounts receivable, cash, and inventory are not current liabilities but rather current assets or working capital items.

Question 18

A firm's year-end retained earnings balances are $670,000 and $560,000,for 2014 and 2015 respectively.The firm paid $10,000 in dividends in 2015.The firm's net profit after taxes in 2015 was ________.
A) -$100,000
B) -$110,000
C) $100,000
D) $110,000

Accepted Answer

The answer of A firm's year-end retained earnings balances are...

Question 19

Earnings available for common stockholders is calculated as net profits ________.
A) before taxes minus preferred dividends
B) after taxes minus preferred dividends
C) after taxes minus common dividends
D) before taxes minus common dividends

Accepted Answer

Earnings available for common stockholders is the profit available after all expenses including taxes and preferred dividends have been paid. Therefore, it is calculated as net profits after taxes minus preferred dividends.

Question 20

A firm has the following accounts and financial data for 2014:  The firm's earnings available to common shareholders for 2014 is ________.
A) -$224.25
B) $195.40
C) $302.40
D) $516.60

Accepted Answer

To find the earnings available to common shareholders, we need to subtract dividends paid to preferred stockholders from net income. 
Net Income = $1,333.80 
Preferred dividends = $452.40 
Earnings available to common shareholders = Net Income - Preferred dividends = $1,333.80 - $452.40 = $881.40 
Therefore, the correct answer is C) $302.40.

Quiz 3: Financial Statements and Ratio Analysis

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

Retained earnings on the balance sheet represents the ________.

When preparing the retained earnings statement,________ is(are) subtracted in order to derive at the ending balance of retained earnings.

A firm had the following accounts and financial data for 2014: The firm's net profit after taxes for 2014 is ________.

Candy Corporation had pretax profits of $1.2 million,an average tax rate of 34 percent,and it paid preferred stock dividends of $50,000.There were 100,000 shares outstanding and no interest expense.What was Candy Corporation's earnings per share?

A firm's year-end retained earnings balances are $320,000 and $400,000,for 2014 and 2015 respectively.The firm reported net profits after taxes of $100,000 in 2015.The firm's dividend payment for 2015 is ________.

Operating profit is known as ________.

The net value of fixed assets is also called its ________.

Paid-in capital in excess of par represents the amount of proceeds ________.

A firm has the following accounts and financial data for 2014: The firm's earnings per share for 2014 is ________.

Which of the following is a fixed asset?

A firm has a year-end retained earnings balance of $220,000 for 2014.The firm reported net profits after taxes of $50,000 and paid dividends of $30,000 in 2015.The firm's retained earnings balance at 2015 year end is ________.

On the balance sheet,net fixed assets represent ________.

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

Which of the following represents a current asset?

The statement of cash flows ________.

Which of the following is a current liability?

A firm's year-end retained earnings balances are $670,000 and $560,000,for 2014 and 2015 respectively.The firm paid $10,000 in dividends in 2015.The firm's net profit after taxes in 2015 was ________.

Earnings available for common stockholders is calculated as net profits ________.

A firm has the following accounts and financial data for 2014: The firm's earnings available to common shareholders for 2014 is ________.