Professional Documents
Culture Documents
QUIZ 1
SECTION __H___
Please fill-in the final solutions to the questions in the tables below:
Multiple Choice
1. B 2. D
3. C 4. C
5. C 6. D
7. E
1
2093 QUIZ 1 BBA ONTARIO
QWUIZ 1
1-(10 marks)
Which of the following accounts does not relate to working capital management decisions?
A. Accounts payable.
B. Long-term debt.
C. Accounts receivable.
D. Inventory.
E. Short-term debt.
2-(10 marks)
3-(10 marks)
Which one of the following actions by a financial manager creates an agency problem?
A. Refusing to borrow money when doing so will create losses for the firm.
B. Refusing to lower selling prices if doing so will reduce the net profits.
C. Agreeing to expand the company at the expense of stockholders' value.
D. Agreeing to pay bonuses based on the market value of the company stock.
E. Increasing current costs to increase the market value of the stockholders' equity.
2
2093 QUIZ 1 BBA ONTARIO
QWUIZ 1
4-(10 marks)
KLM, Inc.
2018 Statement of comprehensive
income
Net sales $3,685
Cost of goods sold $3,180
Depreciation $104
Earnings before interest and taxes $401
Interest paid $25
Taxable income $376
Taxes $128
Net income $248
Dividends paid $60
Addition to retained earnings $188
KLM, Inc.
Statement of financial positions as of December 31, 2017 and 2018
2017 2018 2017 2018
Cash $520 $601 Accounts payable $621 $704
Accounts rec. $235 $219 Notes payable $333 $272
Inventory $964 $799 Current liabilities $954 $976
Current assets $1,719 $1,619 Long-term debt $350 $60
Net fixed assets $890 $930 Common stock $800 $820
Retained earnings $505 $693
Total assets $2,609 $2,549 Total liabilities and Owner’s $2,609 $2,549
equity
3
2093 QUIZ 1 BBA ONTARIO
QWUIZ 1
5- (20 marks)
2018
Cost of goods sold $3,210
Interest 215
Dividends 160
Depreciation 375
Change in retained earnings 360
Tax rate 35%
4
2093 QUIZ 1 BBA ONTARIO
QWUIZ 1
6-(20 marks)
Kathy's Krafts has sales of $820,000 and costs of $530,000. Interest expense is $35,000. The
tax rate is 34% and the tax amount is $71,400. What is the amount of the depreciation
expense if that is the only remaining expense on the statement of comprehensive income?
A. $37,500
B. $38,000
C. $41,600
D. $45,000
E. $52,400
7-(20 marks)
2017 2018
Sales $2,900 $3,300
COGS 2,030 2,310
Interest 410 420
Dividends 56 79
Depreciation 290 330
Cash 250 150
Receivables 242 412
Current 900 1,100
liabilities
Inventory 1,015 900
Long-term debt 3,200 3,100
Net fixed assets 6,000 5,700
Tax rate 34% 34%
5
2093 QUIZ 1 BBA ONTARIO
QWUIZ 1
6
2093 QUIZ 1 BBA ONTARIO