Question

1. Which of the following is correct about the income statement: *

It is an equation used by financial analysts

It is an equation used by politicians

It is a report that shows the cash inflows and cash outflows of the company

It is a report that shows the revenues and expenses of the company

None of the above

2. Which of the following is correct about cash flows statement: *

It includes only the cash outflows

It shows the cash flows from operating, investing, and financing activities

It shows the profitability of the company

It is an optional statement reported by the company

None of the above

3. ABC. Co, recently reported $200,000 of sales during the year 2016. The company had $20,000 of outstanding bonds carrying 10% interest rate.Operating costs were $80,000 other than depreciation, and the firm was facing $12,000 as depreciation. Noting that the federal-plus-state income tax rate was 40%. What is the firm's net income at the end of the year 2016? *

$ 60,600

$ 63,600

$ 53,800

$ 69,800

None of the above

4. LSP Construction recently reported $100 million of sales, $50 million of operating costs other than depreciation, and $30 million of depreciation. It had $10 million interest expense, and its federal-plus-state income tax rate was 40%. What was LSP operating income, or EBIT, in millions? *

$ 20

$ 30

$ 10

$ 6

None of the above

5. Assume that Icon Co. 2014 current assets totaled for $40,000, they paid out $16,000 in the form of account payable and $4,000 as accruals and $5,000 in notes payable and in 2015 they had a NWC of $20,000. Calculate the change in net working capital. *

$ 20,000

$ 15,000

$ 0

$ 2,000

None of the above

6. PLI Corporation had net fixed assets of $2,500,000 at the end of 2006 and $1,800,000 at the end of 2005. In addition, the firm had a depreciation expense of $200,000 during 2006. Using this information, how much was PLI's net fixed asset investment for 2006? *

$ 700,000

$ 900,000

$ 500,000

$ 850,000

None of the above

7. During 2006, LSP Corporation had EBIT of $100,000, a change in net fixed assets of $400,000, a change in NWC of $100,000, a depreciation expense of $50,000, and a tax rate of 30%. Based on this information, Calculate LSP free cash flow. *

-$430,000

$430,000

$30,000

$400,000

None of the above

Answer 1

1)income statement: It is a report that shows the revenues and expenses of the company

2)cash flows statement: It shows the cash flows from operating, investing, and financing activities