Week 3
1. Which of the following are on a Balance Sheet? (there can be more than one)
Cash
Depreciation Expense
Sales Revenue
A/P
Retained Earnings
2. Which of the following are on an Income Statement? (there can
...
Week 3
1. Which of the following are on a Balance Sheet? (there can be more than one)
Cash
Depreciation Expense
Sales Revenue
A/P
Retained Earnings
2. Which of the following are on an Income Statement? (there can be more than one)
Cash
Retained Earnings
Selling, General, and Administrative Expense
Interest Expense
COGS
3. Given the following information (not all of which is relevant), what is Net Income?
• Sales Revenue = $2000
• Dividends Paid = $100
• Cash = $300
• SG&A Expense = $200
• Cost of Goods Sold = $800
$1100
$1200
$900
$1000
$300
$600
4. Which of the following will have a bigger impact on income THIS YEAR?
• Spend $100 on research and development
• Spend $100 on purchases of equipment
• Spend $100 on purchases of inventory that is still not sold at the end of the year.
• Spend $100 to pay off short term debt
Spend $100 on purchases of inventory that is still not sold at the end of the year
Spend $100 to pay off short term debt
Spend $100 on purchases of equipment
Spend $100 on research and development
5. Suppose you buy a machine for $200,000 that is expected to last for 10 years, with no
salvage value at that time. If the firm uses straight line depreciation, how much depreciation
do they charge per year?
$20,000
$200,000
$40,000
$10
6. Which of the following statements are true about depreciation for tax purposes? (there can
be more than one)
It lowers your tax bill
It’s part of the Financing Section of the Cash Flow Statement
It generally is based on Accelerated Depreciation
It depreciates assets faster than Straight Line Depreciation
7. Suppose Sales = $1000 and Receivables went up by $100. How much cash was collected
from customers?
$100
$900
$1100
$1000
8. Suppose Inventory went down by $200 and purchases were $600. What was the cost of the
units sold?
$800
$600
$400
$200
9. Suppose Net Income =$100, Depreciations = $20, and Working Capital increased by $30.
What was Cash From Operations?
$90
$50
$80
$100
$120
$140
10. Suppose Net Income = $200 , Depreciations = $10, and Working Capital went up by $70.
What was Cash from Operations?
$200
$260
$80
$140
$280
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