Q:
The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet, and retained earnings statement.
Answer True
False
4 points
Question 8
During the year, Salaries Payable decreased by $6,000. If Salary Expense amounted to $170,000 for the year, the cash paid to employees (including deductions from gross pay) is
Answer
A.
$164,000.
B.
$176,000.
C.
$170,000.
D.
$182,000.
4 points
Question 9
If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term debt and collection of accounts receivable have on the ratio?
Short-term Borrowing
Collection of Receivable
Answer
A.
Decrease
Decrease
B.
Increase
No effect
C.
Decrease
No effect
D.
Increase
Increase
4 points
Question 10
If a company has sales of $110 in 2010 and $154 in 2011, the percentage increase in sales from 2010 to 2011 is 140%.
Answer True
False
4 points
Question 11
Each of the following is added to net income in computing net cash provided by operating activities except
Answer
A.
a decrease in inventory.
B.
amortization expense.
C.
an increase in accrued expenses payable.
D.
a gain on sale of equipment.
4 points
Question 12
In the vertical analysis of the income statement, each item is generally stated as a percentage of net income.
Answer True
False
4 points
Question 13
Gary Company reports a $15,000 increase in inventory and a $5,000 increase in accounts payable during the year. Cost of Goods Sold for the year was $160,000. The cash payments made to suppliers were
Answer
A.
$140,000.
B.
$155,000.
C.
$170,000.
D.
$160,000.
4 points
Question 14
Comparisons of company data with industry averages can provide some insight into the company's relative position in the industry.
Answer True
False
4 points
Question 15
A ratio calculated in the analysis of financial statements
Answer
A.
is meaningful only if the numerator is greater than the denominator.
B.
restates all items on a financial statement in terms of dollars of the same purchasing power.
C.
expresses a mathematical relationship between two numbers.
D.
shows the percentage increase from one year to another.
4 points
Question 16
Ester's Bunny Barn has experienced a $60,000 loss due to tornado damage to its inventory. Tornados have never before occurred in this area. Assuming that the company's tax rate is 30%, what amount will be reported for this loss on the income statement?
Answer
A.
$18,000
B.
$42,000
C.
$60,000
D.
$54,000
4 points
Question 17
Rasmus Company has income before taxes of $330,000 and an extraordinary loss of $100,000. If the income tax rate is 30% on all items, the income statement should show income before irregular items and an extraordinary loss, respectively, of:
Answer
A.
$231,000 and ($70,000)
B.
$231,000 and ($30,000)
C.
$330,000 and ($100,000)
D.
$99,000 and ($30,000)
4 points
Question 18
Which of the following would not appear in the operating activities section of a statement of cash flows prepared under the direct method?
Answer
A.
Cash receipts from customers
B.
Gain on sale of equipment
C.
Cash paid to employees
D.
Cash paid for income taxes
4 points
Question 19
The discontinued operations section of the income statement refers to
Answer
A.
obsolete equipment and discontinued inventory items.
B.
the disposal of a significant segment of a business.
C.
the income or loss on products that have been completed and sold.
D.
discontinuance of a product line.
4 points
Question 20
Which of the following statements concerning the statement of cash flows is true?
Answer
A.
The statement of cash flows is usually more accurate when using the indirect method.
B.
If the direct method is used, a supplementary schedule reconciling the net income to a net cash from operating activities must still be provided.
C.
The statement of cash flows reflects both earnings per share and cash per share.
D.
The statement of cash flows is an optional financial statement for external reporting purposes.
4 points
Question 21
Cost of goods sold for the year amounted to $130,000, and during the year, accounts payable ______________ by $8,000 and inventory ______________ by $7,000 resulting in cash paid to suppliers of $115,000.
Answer
4 points
Question 22
The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.
Assets
Cash and short-term investments
$ 45,000
Accounts receivable (net)
25,000
Inventory
20,000
Property, plant and equipment
210,000
Total Assets
$300,000
Liabilities and Stockholders' Equity
Current liabilities
$ 50,000
Long-term liabilities
90,000
Stockholders' equity—common
160,000
Total Liabilities and Stockholders' Equity
$300,000
Income Statement
Sales
$ 120,000
Cost of goods sold
66,000
Gross margin
54,000
Operating expenses
30,000
Net income
$ 24,000
Number of shares of common stock
6,000
Market price of common stock
$20
Dividends per share
.50
Reference: Ref 14-1
What is the profit margin for Soho?
Answer
A.
45.0%
B.
17.5%
C.
20.0%
D.
40.0%
4 points
Question 23
The order of presentation of activities on the statement of cash flows is
Answer
A.
operating, financing, and investing.
B.
operating, investing, and financing.
C.
financing, investing, and operating.
D.
financing, operating, and investing.
4 points
Question 24
Land acquired from the issuance of common stock is reported
Answer
A.
in a separate schedule at the bottom of the statement.
B.
as an operating activity.
C.
as a financing activity.
D.
as an investing activity.
4 points
Question 25
In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is
Answer
A.
added to net income.
B.
not reported on a statement of cash flows.
C.
ignored because it does not affect cash.
D.
deducted from net income.
4 points
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Asked 7/20/2013 11:38:23 PM
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