1. A transfer price is the price that is used to value transfers of goods and services

from one subunit of a company to another subunit in the company.

from Work in Process Inventory to Finished Goods Inventory in a standard costing system.

from a subunit of the company to a wholesaler or retailer.

back to one of the company's suppliers.

2. The 2011 income statement for the east division of General Store Company is as follows:

Sales	$2,000,000
Operating expenses	1,250,000
Net operating income	750,000
Interest expense	150,000
Earnings before taxes	600,000
Tax expense (40%)	240,000
Net Income	$360,000

If this division's invested capital is $3,000,000 then its return on investment is:

20%

15%

17%

12%

3. Bradstreet is a division of Kindling Products, Inc. For the most recent year, Bradstreet had net income of $16,000,000. Included in income was interest expense of $1,200,000. The operation's tax rate is 40 percent. Total assets of Bradstreet are $225,000,000, current liabilities are $40,000,000, and $35,000,000 of the current liabilities are noninterest-bearing. How much is return on investment for Bradstreet?

8.0%

8.8%

9.1%

7.4%

4. Which of the following is considered to be cash flow from investing activities?

Depreciation.

Cash paid to acquire new equipment.

Cash received for sale of stock to investors.

Interest received.

5. Warlace Company provided the following information from its accounting records during the year:

Acquired land by signing a loan	$ 150,000
Proceeds from issuing stock	90,000
Dividends paid to stockholders	55,000
Proceeds from sale of building	120,000
Purchases of inventories	45,000
Collections from customers	225,000
Payment of loan	50,000

How much is net cash provided (used) by financing activities?

$35,000

$135,000

($15,000)

$435,000

Answer rating: 100% (QA)

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