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TMP 130 Midterm 1 (Ch. 1-5) Detailed Questions And Expert Answers
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TMP 130 Midterm 1 (Ch. 1-5) Detailed Questions And Expert Answers
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TMP 130 Midterm 1 (Ch. 1-5) DetailedQuestions And Expert Answers
Which of the following statements concerning the cash flow production cycle is
true? - ANS The movement of cash to inventory, to accounts receivable, and back
to cash is known as the firm's working capital cycle.
A company sells used equipment with a book value of $100,000 for $250,000 cash.
How would this transaction affect the company's balance sheet? - ANS Cash rises
$250,000; net plant and equipment falls $100,000; equity rises $150,000.
Which of the following is a reason why a company's market value of equity differs
from its book value of equity? - ANS Values of assets on the balance sheet typically
reflect historical cost, adjusted for appropriate depreciation.
Depreciation expense - ANS reduces both taxes and net income.
JM Case Inc. has a market value of $5 million with 500,000 shares outstanding. The
book value of its equity is $1,750,000. What is JM Case's price per share? - ANS
$10
ZZZ Corporation's income statement shows a provision for income taxes of $65
million in 2017. At the end of 2016, ZZZ's balance sheet reported income taxes
payable of $12 million and deferred taxes of $18 million. At the end of 2017, their
balance sheet shows income taxes payable of $15 million and deferred taxes of
$17 million. What were ZZZ's taxes paid in 2017? - ANS $63 million
,Playdough Products earned net income of $500,000 in 2017. The firm increased its
accounts receivable during the year by $220,000. The book value of its assets
declined by the year's depreciation charge, which was $140,000, and the market
value of its assets increased by $50,000. Based only on this information, how much
cash did Playdough Products generate during the year? Please ignore taxes for this
problem. - ANS $420,000 of cash during the year
Identify the sources and uses of cash for Blackhurst Corporation for 2017 based on
the following year-end balance sheets. - ANS
A decline in the Net fixed assets account between year-end 2016 and year-end
2017 is a clear indication that fixed assets were sold during 2017 - ANS Sources:
Cash (10), Inventory (10), Bank loan (60), Equity (30)
Uses: Accounts recievable (50), net fixed assets (40), long term debt (20)
A decline in the Net fixed assets account between year-end 2016 and year-end
2017 is a clear indication that fixed assets were sold during 2017. - ANS false
Accounting rules require U.S. companies to depreciate research and development
(R&D) expenditures using the straight-line method. - ANS false
A reduction in long-term debt is a use of cash - ANS true
, You manage a real estate investment company. One year ago, the company
purchased 10 parcels of land distributed throughout the community for $ 11.2
million each. A recent appraisal of the properties indicates that five of the parcels
are now worth $9.2 million each, while the other five are worth $17.0 million each.
Ignoring any income received from the properties and any taxes paid over the
year, calculate the investment company's accounting earnings and its economic
earnings in each of the following cases: - ANS Accounting Income (million) /
Economic Income (million)
(10) / 19
Which of the following statements concerning a firm's cash flows and profits is
false? - ANS A company that sells merchandise at a profit will generate cash soon
enough to replenish cash flows required for continued production.
The sources and uses of cash over a stated period of time are reflected in the - ANS
cash flow statement.
Which one of the following is a source of cash? - ANS decrease in accounts
receivable
Which of the following would NOT be considered a use of cash? - ANS
Depreciation
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