FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Review of Accounting

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Price-earnings (P/E) ratio is influenced by all of the following BUT

A) the business risk the firm takes on.
B) earnings per share.
C) quality of management.
D) All of the options are true.

Correct Answer

verified

Show Answer

Question 22

True/False

Review LaterAdd Note

Review Later

Book value of a company is equal to net worth of a company, which is not always equal to the market value of the company.

Correct Answer

verified

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

Density Farms Inc. had sales of $750,000, cost of goods sold of $200,000, selling and administrative expense of $70,000, and operating profit of $150,000. What was the value of depreciation expense?

Which account represents the cumulative earnings of the firm since the firm started, minus dividends paid?

Balance sheet items consider inflation and market value when assigning the amount to assets, liabilities, and equity accounts.

Although depreciation does not provide cash to the firm directly, the fact that it is tax-deductible can provide cash inflow to the company.

The corporate tax rate change of 2018 means that corporations are no longer responsible to pay state and foreign taxes.

Equity is a measure of the monetary contributions that have been made directly or indirectly on behalf of the owners of the company.

The corporate tax rate reduction to a flat rate of 21% in 2018 was done to make the U.S. corporate tax rate more competitive with rates imposed by other countries and to encourage economic activity in the U.S.

Asset accounts on the balance sheet are listed in order of

Compute the cash flows from operations using the indirect method if Star Corporation had $250,000 in net income, $30,000 in depreciation expense, a decrease of $20,000 in accounts receivable and an increase in bonds payable of $50,000.

A firm's purchase of plant and equipment would be considered a

Total assets of a firm are paid for with liabilities and stockholders' equity.

Dividing earnings after taxes (which includes all profits distributed to both preferred stockholders and common stockholders) by common shares outstanding produces earnings per share.

Given the following, what is free cash flow? $\begin{array} { l } \text { Cash flow from operating activities}&\$200,000 \\ \text { Cash flow from investing activities}&\$140,000 \\ \text {ash flow from financing activities }&\$ 56,000\\ \text { Building purchases}&\$50,000 \\ \text { Dividends Paid}&\$ 20,000\\\end{array}$

The P/E ratio provides no indication of investors' expectations about the future of a company.

Paying cash dividends to common shareholders will not affect the Cash Flow Statement.

Beginning in 2018, one of the major changes regarding the corporate tax rate was its reduction from 35% to a flat rate of 21%.

The major limitation of financial statements are

A balance sheet represents what the firm owns, owes, and ownership of a company at a given date.