1) Double taxation of corporate profits refers to:
a) corporate tax rates are double the rates of sole proprietorships
b) the use of tax inversions by corporations
c) foreign corporate income tax rates are double the corporate tax rates in the United States
d) corporate tax rates have doubled in the last ten years
e) corporate profits are taxes at the corporate level when they are earned and again when they are paid out to shareholders as dividends
2) Social enterprises emphasize:
a) social or environmental goals
b) increasing profits this year
c) increasing the number of shareholders
d) increasing the compensation of employees
e) all of the above
3) On the balance sheet of Akfi Anvils the company discloses the following information:
Building $1,560,000
Accumulated Depreciation (660,000)
This indicates:
a) The building cost $1,560,000
b) The fair market value of the building is $1,560,000
c) The fair market value of the building is $900,000
d) The building has declined in value by $660,000 since the time it was purchased
e) b) and d)
4) Towns Toenail Clippers of Taylorville (TTC) had the following operating information for 2015:
|
Sales
|
$100,000
|
|
Cost of goods sold
|
30,000
|
|
Depreciation expense
|
6,000
|
|
Interest expense
|
5,000
|
|
Dividends
|
20,000
|
|
Tax rate
|
35%
|
The following information is available from the company's balance sheet:
|
|
01/01/15
|
12/31/15
|
|
Net fixed assets
|
6,000
|
8,600
|
|
Current assets
|
2,200
|
3,300
|
|
Current liabilities
|
1,600
|
1,900
|
|
Long-term debt
|
486
|
326
|
|
Common stock
|
100
|
350
|
Calculate the company's taxable income:
a) 20,650
b) 25,350
c) 38,350
d) 39,000
e) 59,000
5) Calculate TTC's income taxes:
a) 20,650
b) 25,350
c) 38,350
d) 39,000
e) 59,000
6) Calculate TTC's net income:
a) 20,650
b) 25,350
c) 38,350
d) 39,000
e) 59,000
7) Retained earnings for TTC increased by ________ during 2015.
a) 650
b) 5,350
c) 18,350
d) 19,000
e) 39,000
8) Capital spending for TTC was ________ during 2015.
a) -2,600
b) 2,600
c) 4,400
d) 6,000
e) 8,600
9) In 2015, cash flow to creditors for TTC was:
a) -160
b) 160
c) 4,840
d) 5,000
e) 5,160
10) In 2015, cash flow to stockholders for TTC was:
a) -250
b) 250
c) 19,750
d) 20,000
e) 20,250
11) Which of the following items is not an expense?
a) Dividends
b) Income taxes
c) Salaries
d) Interest expense
e) Depreciation
12) Collins Cattle had revenue of $500,000, expenses of $440,000 and paid dividends of $60,000. Based on the corporate tax rates in Table 2.3, the company would pay income taxes of:
a) 0
b) 6,250
c) 7,500
d) 10,000
e) 18,850