1. When net new borrowings are subtracted from the interest payments a firm pays to its creditors the result is called the:
cash flow to creditors.
change in net working capital.
free cash flow.
operating cash flow.
cash flow from assets.
2. The matching principle advocates that:
costs should be recorded when paid.
sales should be recorded only when the sale is matched with a cash receipt.
sales should be recorded when the earnings process is virtually completed and the value of the sale can be determined.
costs should be recorded on the income statement whenever those costs can be reliably determined.
the costs of producing an item should be recorded when the sale of that item is recorded as revenue.
3. Farm Fresh Vegetables, Inc. has net working capital of $3,400, net fixed assets of $30,100, current liabilities of $4,700, and long-term debt of $11,500. What is the value of the owners' equity?
$20,700
$22,000
$25,400
$17,300
$13,900
4. Cindy's Crafts had beginning retained earnings of $51,200. During the year, the company reported sales of $112,400, costs of $75,800, depreciation of $9,100, dividends of $1,500, and interest paid of $2,300. The tax rate is 34 percent. What is the retained earnings balance at the end of the year?
$64,832
$69,350
$66,332
$67,850
$65,342
5. Ra's Hand-device Systems has net income of $26,600, net new equity of $13,200, and an addition to retained earnings of $17,500. What is the amount of the dividends paid?
6. Sha're Inc. has current liabilities of $10,700. The firm has total assets of $42,900 and net fixed assets of $19,200. What is the amount of the net working capital?