Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
Student:
1. Which one of these equations is an accurate expression of the balance sheet?
A. Assets Liabilities Stockholders’ equity
B. Stockholders’ equity Assets + Liabilities
C. Liabilities Stockholders’ equity Assets
D. Assets Stockholders’ equity Liabilities
E. Stockholders’ equity Assets Liabilities
2. Which one of these accounts is classified as a current asset on the balance sheet?
A. intangible asset
B. accounts payable
C. preferred stock
D. inventory
E. net plant and equipment
3. On a balance sheet, deferred taxes are classified as:
A. stockholders’ equity.
B. a current asset.
C. a longterm liability.
D. a fixed asset.
E. a current liability.
4. Net working capital is defined as:
A. current assets plus fixed assets.
B. current assets plus stockholders' equity.
C. fixed assets minus longterm liabilities.
D. total assets minus total liabilities.
E. current assets minus current liabilities.
Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
, Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
5. An asset that can be quickly converted into cash without significant loss in value is referred to as being:
A. marketable.
B. tangible.
C. intangible.
D. liquid.
E. fixed.
6. The financial statement summarizing a firm's accounting performance over a period of time is the:
A. income statement.
B. balance sheet.
C. statement of cash flows.
D. tax reconciliation statement.
E. statement of equity.
7. Noncash items refer to:
A. the credit sales of a firm.
B. the accounts payable of a firm.
C. the costs incurred for the purchase of intangible fixed assets.
D. expenses charged against revenues that do not directly affect cash flow.
E. all accounts on the balance sheet other than cash on hand.
8. For a firm with longterm debt, net income is equal to:
A. Pretax income Interest expense Taxes.
B. EBIT Taxes.
C. Taxes + Addition to retained earnings.
D. Pretax income (1 Marginal tax rate).
E. Dividends + Addition to retained earnings.
9. Which term defines the tax rate that applies to the next dollar of taxable income earned?
A. deductible
B. residual
C. total
D. average
E. marginal
Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
, Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
10. U.S. corporate taxes switch to a constant flatrate tax once the average tax rate reaches:
A. 32 percent.
B. 33 percent.
C. 28 percent.
D. 40 percent.
E. 35 percent.
11. The cash flow resulting from a firm's ongoing, normal business activities is referred to as the:
A. operating cash flow.
B. net capital spending.
C. additions to net working capital.
D. cash flow to retained earnings.
E. cash flow to investors.
12. Capital spending is equal to:
A. ending next fixed assets minus beginning net fixed assets.
B. ending net fixed assets minus beginning net fixed assets plus depreciation.
C. ending total assets minus beginning total assets.
D. ending total assets minus beginning total assets minus depreciation.
E. beginning total assets plus asset purchases minus asset sales.
13. Operating cash flow is defined as:
A. Pretax income Taxes.
B. Net income Dividends.
C. EBIT + Depreciation Taxes.
D. Pretax income + Depreciation.
E. Cash flow to investors + Taxes.
14. In the accounting statement of cash flows, which one of these is calculated by adding back
noncash expenses to net income and adjusting for changes in current assets and liabilities?
A. cash flow from investing activities
B. cash flow from financing activities
C. net working capital
D. cash flow from operating activities
E. cash flow to investors
Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
, Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
15. Which one of these terms refers to the firm's interest payments less any net new borrowing?
A. operating cash flow
B. capital spending
C. net working capital
D. cash flow to stockholders
E. cash flow to creditors
16. A firm's dividend payments less any net new equity raised is referred to as the firm’s:
A. operating cash flow.
B. capital spending.
C. net working capital.
D. cash flow from creditors.
E. cash flow to stockholders.
17. Earnings per share will increase when:
A. depreciation decreases.
B. the number of shares outstanding increase.
C. operating income decreases.
D. dividends per share decrease.
E. the average tax rate increases.
18. Assuming the number of shares outstanding remains constant, an increase in dividends per share will
reduce the:
A. earnings per share.
B. addition to retained earnings.
C. net income.
D. cash flow to stockholders.
E. cash flow from assets.
19. Which one of these is a noncash item?
A. depreciation
B. interest expense
C. current taxes
D. dividends
E. selling expenses
Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
of Technology Exam Solutions Questions
and Answers latest update
Student:
1. Which one of these equations is an accurate expression of the balance sheet?
A. Assets Liabilities Stockholders’ equity
B. Stockholders’ equity Assets + Liabilities
C. Liabilities Stockholders’ equity Assets
D. Assets Stockholders’ equity Liabilities
E. Stockholders’ equity Assets Liabilities
2. Which one of these accounts is classified as a current asset on the balance sheet?
A. intangible asset
B. accounts payable
C. preferred stock
D. inventory
E. net plant and equipment
3. On a balance sheet, deferred taxes are classified as:
A. stockholders’ equity.
B. a current asset.
C. a longterm liability.
D. a fixed asset.
E. a current liability.
4. Net working capital is defined as:
A. current assets plus fixed assets.
B. current assets plus stockholders' equity.
C. fixed assets minus longterm liabilities.
D. total assets minus total liabilities.
E. current assets minus current liabilities.
Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
, Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
5. An asset that can be quickly converted into cash without significant loss in value is referred to as being:
A. marketable.
B. tangible.
C. intangible.
D. liquid.
E. fixed.
6. The financial statement summarizing a firm's accounting performance over a period of time is the:
A. income statement.
B. balance sheet.
C. statement of cash flows.
D. tax reconciliation statement.
E. statement of equity.
7. Noncash items refer to:
A. the credit sales of a firm.
B. the accounts payable of a firm.
C. the costs incurred for the purchase of intangible fixed assets.
D. expenses charged against revenues that do not directly affect cash flow.
E. all accounts on the balance sheet other than cash on hand.
8. For a firm with longterm debt, net income is equal to:
A. Pretax income Interest expense Taxes.
B. EBIT Taxes.
C. Taxes + Addition to retained earnings.
D. Pretax income (1 Marginal tax rate).
E. Dividends + Addition to retained earnings.
9. Which term defines the tax rate that applies to the next dollar of taxable income earned?
A. deductible
B. residual
C. total
D. average
E. marginal
Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
, Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
10. U.S. corporate taxes switch to a constant flatrate tax once the average tax rate reaches:
A. 32 percent.
B. 33 percent.
C. 28 percent.
D. 40 percent.
E. 35 percent.
11. The cash flow resulting from a firm's ongoing, normal business activities is referred to as the:
A. operating cash flow.
B. net capital spending.
C. additions to net working capital.
D. cash flow to retained earnings.
E. cash flow to investors.
12. Capital spending is equal to:
A. ending next fixed assets minus beginning net fixed assets.
B. ending net fixed assets minus beginning net fixed assets plus depreciation.
C. ending total assets minus beginning total assets.
D. ending total assets minus beginning total assets minus depreciation.
E. beginning total assets plus asset purchases minus asset sales.
13. Operating cash flow is defined as:
A. Pretax income Taxes.
B. Net income Dividends.
C. EBIT + Depreciation Taxes.
D. Pretax income + Depreciation.
E. Cash flow to investors + Taxes.
14. In the accounting statement of cash flows, which one of these is calculated by adding back
noncash expenses to net income and adjusting for changes in current assets and liabilities?
A. cash flow from investing activities
B. cash flow from financing activities
C. net working capital
D. cash flow from operating activities
E. cash flow to investors
Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
, Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
15. Which one of these terms refers to the firm's interest payments less any net new borrowing?
A. operating cash flow
B. capital spending
C. net working capital
D. cash flow to stockholders
E. cash flow to creditors
16. A firm's dividend payments less any net new equity raised is referred to as the firm’s:
A. operating cash flow.
B. capital spending.
C. net working capital.
D. cash flow from creditors.
E. cash flow to stockholders.
17. Earnings per share will increase when:
A. depreciation decreases.
B. the number of shares outstanding increase.
C. operating income decreases.
D. dividends per share decrease.
E. the average tax rate increases.
18. Assuming the number of shares outstanding remains constant, an increase in dividends per share will
reduce the:
A. earnings per share.
B. addition to retained earnings.
C. net income.
D. cash flow to stockholders.
E. cash flow from assets.
19. Which one of these is a noncash item?
A. depreciation
B. interest expense
C. current taxes
D. dividends
E. selling expenses
Finance 600 Chapter 2 -New Jersey Institute
of Technology Exam Solutions Questions
and Answers latest update
