The income statement for Simpson, Inc. indicates that tax expense was 30,000. The balance sheet
indicates that taxes payable for the same year increased by 5,000. What amount did Simpson, Inc.
actually pay in taxes during this year?
A) 20,000
B) 25,000
C) 15,000
D) Cannot be determined without the cash balance
Question 2
A firm that is growing more slowly than its sustainable growth rate may generates excess cash. If the firm chooses to keep the excess cash which of the following is NOT true?
A) Holding on to excess cash may signal OVER utilization of assets.
B) Holding on to excess cash often is a negative stock signal in that investors interpret the excess cash is a result of no attractive investment alternatives.
C) Holding on to excess cash may attract unwanted potential investors who are attracted to the excess cash for their own purposes.
D) Holding on to excess cash may signal UNDER utilization of assets.
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