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ACCT 281- Financial and Managerial Accounting Practice Quiz 100% Correct Solution

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Question;Question 1An analysis of changes in selected balance sheet accounts of Pioneer Corporation shows the above for the current year:Pioneer's income statement for the current year includes a $12,000 loss on disposal of plant assets. All payments and proceeds relating to purchase or sale of plant assets were in cash.How should purchases, sales, and depreciation of plant assets be classified in Pioneer's statement of cash flows for the current year? (Assume the direct method is used by Pioneer.)A Purchases of plant assets and depreciation are classified as investing activities, sales of plant assets areclassified as financing activities.B Purchases and sales of plant assets are classified as investing activities, depreciation does not appear as an operating, financing, or investing activity.C Since plant assets are used to generate income from operations, purchases, sales, and depreciation ofplant assets are all classified as operating activitiesD Purchases of plant assets are classified as investing activities, sales of plant assets are classified asfinancing activities, depreciation is classified as an operating activity.Question 2At the end of the first year of operations, Skyline's balance sheet showed the following: AccountsReceivable, $7,800, Inventory, $3,800, and Accounts Payable, $9,050. The company's income statement reports net income of $31,800, including depreciation expense of $4,800. Using only the given information, compute Skyline's net cash flow from operating activities using the indirect method.A $41,650B $34,050C $49,650D $29,550Question 3Which of the following would NOT be presented in the cash flows from operating activities section of the statement of cash flows when the direct method is used?A Neither Dividends paid nor Dividends received would be shownB Dividends paidC Dividends receivedD Both Dividends paid and Dividends received would be shownQuestion 4 Alpine Company reported an increase of $190,000 in its accounts receivable during the year 2005. Thecompany's statement of cash flows for 2005 reported $1 million of cash received from customers. What amount of net sales must Alpine have recorded in 2005?A $ 810,000B $ 190,000C $1,190,000 (cash received + increase)D $1,000,000Question 5When equipment is purchased entirely through a loan:A Neither the loan nor the purchase of equipment are shown in the investing or the financing sections.B The equipment is shown as an increase in the investing activities section.C The equipment is shown as a decrease in the investing activities section.D The loan is shown as an increase in the financing section.Question 6Early in 2006, Platt Corporation purchased marketable securities at a cost of $70,000. In September,dividends of $4,700 were received, Platt sold the securities in December at a gain of $3,500. How would these transactions be reported on Platt's statement of cash flows for 2006?A $8,200 net cash provided by investing activitiesB $3,500 net cash provided by investing activities, $4,700 included in cash provided by operating activities.C $65,300 net cash used in investing activities, $73,500 cash provided by investing activities.D $78,200 cash provided by investing activities, $70,000 cash used in financing activities.Question 7The comparative balance sheets of Flagship, Inc., show a net increase in inventory of $74,000 and a netdecrease in accounts payable of $39,000 during 2006. In computing net cash flow from operating activities under the indirect method, net income for 2006 should be:A Increased by $113,000B Increased by $35,000C Reduced by $113,000 (add inventory + decrease in acct. payable)D Reduced by $35,000Question 8Which method will yield the higher cash flows from financing activities?A The direct methodB Depends upon the situationC The indirect methodD Both direct and indirect methods will yield the same amountQuestion 9An analysis of changes in selected balance sheet accounts of Pioneer Corporation shows the above for the current year:Pioneer's income statement for the current year includes a $12,000 loss on disposal of plant assets. All payments and proceeds relating to purchase or sale of plant assets were in cash.Based solely on the data provided above, Pioneer's net cash flow from investing activities for the current year is:A $89,000 net cash used by investing activitiesB $158,000 net cash used by investing activitiesC $15,000 net cash provided by investing activitiesD $143,000 net cash used by investing activitiesQuestion 10Which of the following is NOT classified among the operating activities in a statement of cash flows?A Payment of an account payable to a merchandise supplierB Payment of income taxesC Payment of interest on a bank loanD Payment of the principal amount owed on a bank loanQuestion 11An analysis of Webb Corporation's Investment in Marketable Securities account during 2005 disclosed the above:Webb's 2005 income statement included a $40,000 loss on sale of marketable securities and $15,000 dividend income from marketable securities. All payments and proceeds relating to marketable securities transactions were in cash.How should the transactions involving marketable securities be classified in Webb's statement of cash flows for 2005?A The purchase of marketable securities, sales of marketable securities, and receipt of dividends are allclassified as investing activities.B The purchase and the sale of marketable securities are classified as investing activities, the receipt ofdividends is classified as a financing activity.C The purchase of marketable securities is classified as an investing activity, the sale of marketablesecurities is classified as a financing activity, the receipt of dividends is classified as an operating activity.D The purchase and the sale of marketable securities are classified as investing activities, the receipt ofdividends is classified as an operating activity.Question 12Prime Corporation uses the indirect method of computing net cash flow from operating activities andreported the following for 2006: accounts receivable decreased by $9,000, merchandise inventory increased by $14,500, accounts payable decreased by $3,200, and income taxes payable increased by$18,000. If Prime Corporation reported net income for 2006 of $157,000 (including $34,000 of depreciation expense), net cash flow from operating activities for 2006 is:A $200,300B $235,700C $181,700D $199,700Question 13Acme Company uses the indirect method to prepare its statement of cash flows. The above information has been gathered for the current period:On the basis of the above information only, Acme Company's statement of cash flows shows net cash flow from operating activities to be:A $367,000B $185,000C $207,000D $307,000Question 14At the end of 2006, Topps Corporation sold its only piece of equipment for $7,000 cash, a price whichresulted in a loss of $3,000. During 2006, depreciation expense recognized by Topps was $1,000. Topps uses the indirect method to compute net cash flow from operating activities. In reconciling net income to net cash flow from operating activities under the indirect method, the required adjustments based upon the given data:A Increase net income by $3,000B Increase net income by $1,000C Increase net income by $4,000D Decrease net income by $4,000Question 15During 2006, the cash flows related to Dodge Data, Inc.'s lending and borrowing activities are summarized as above:If Dodge Data's income statement for 2006 reports interest expense of $12,000, then:A Either the amount reported in the income statement or the interest payment shown above must beincorrect.B Interest payable increased by $8,000 in 2006.C Interest payable at the end of 2006 amounts to $8,000.D Interest payable decreased by $8,000 in 2006.Question 16An analysis of Webb Corporation's Investment in Marketable Securities account during 2005 disclosed the above:Webb's 2005 income statement included a $40,000 loss on sale of marketable securities and $15,000 dividend income from marketable securities. All payments and proceeds relating to marketable securities transactions were in cash.The cash proceeds received by Webb Corporation in 2005 for the sale of marketable securities was:A $220,000B $180,000C $195,000D $260,000Question 17Which method will yield higher cash flows from operating activities?A The direct method.B The indirect method.C Depends upon the situation.D Both direct and indirect methods will yield the same amountQuestion 18Orlean Cannery issued capital stock in 2006 for $600,000. During 2006, the company paid dividends of$150,000. What is the effect of these events in Orlean's statement of cash flows for 2006?A $600,000 cash provided by investing activities, and $150,000 cash disbursed for financing activities.B $450,000 net cash provided by financing activities.C $600,000 cash provided by financing activities, and $150,000 cash disbursed for investing activities.D $600,000 cash provided by financing activities, and $150,000 cash disbursed for operating activities.Question 19The financial statements of Metro, Inc., provide the above information for the current year: Compute the amount of cash received from customers during the current year.A $260,000 (net sales +decrease in receivable)B $ 35,000C $255,000D $250,000Question 20The financial statements of Metro, Inc., provide the above information for the current year:Compute the amount of Metro's cash payments for purchases of merchandise during the current year.A $128,000 (cost of goods + increased invent ? increase in acct payable)B $125,000C $120,000D $122,000Question 21Which of the following indicates cash receipts?A Credit entries in the Accumulated Depreciation accountB Debit entries in the Notes Receivable accountC Credit entries in the Marketable Securities accountD Debit entries in the Notes Payable accountQuestion 22An analysis of Elmont Corporation's Investment in Marketable Securities account during 2005 disclosed the above:Elmont's 2005 income statement included a $30,000 gain on sale of marketable securities and $20,000 dividend income from marketable securities. All payments and proceeds relating to marketable securities transactions were in cash.The cash proceeds received by Elmont Corporation in 2005 for the sale of marketable securities was:A $200,000B $260,000 (Credit entry + gain)C $150,000D $230,000Question 23All of the following are financing activities except:A Paying dividendsB Borrowing moneyC Lending moneyD Selling capital stockQuestion 24Which of the following is impossible?A Net income is less than cash from operating activities.B Net income is greater than cash from operating activities.C Net income is equal to cash from operating activities.D None of the three above is impossible.Question 25In a statement of cash flows, cash transactions are classified into three major categories. Which of thefollowing is NOT one of these three categories?A Managing activitiesB Investing activitiesC Operating activitiesD Financing activitiesQuestion 26In the statement of cash flows, the purchase of supplies is classified as:A Operating activitiesB Financing activitiesC Investing activitiesD None of the aboveQuestion 27The financial statements of Wines, Inc., provide the above information for the current year:Compute the amount of Wine's cash payments for purchases of merchandise during the current year.A $1,500,000B $1,495,000C $1,505,000D Some other amount.Question 28Which of the following indicates a cash receipt?A A decrease in accrued expenses, such as wages payableB A decrease in accounts receivableC A decrease in accounts payableD An increase in inventoryQuestion 29Cash flows from operating activities include all of the following except:A Collections from customers for sales of goodsB Payments of dividendsC Payments of interestD Interest and dividends receivedQuestion 30The financial statements of Metro, Inc., provide the above information for the current year: Compute the amount of Metro's cash payments for operating expenses.A $73,000B $65,000C $59,000D $81,000Question 31During 2006, the cash flows related to Dodge Data, Inc.'s lending and borrowing activities are summarized as above:If interest receivable was $3,000 at December 31, 2005, and is $5,000 at the end of 2006, interest revenue reported in Dodge Data's income statement for 2006 must have been:A $8,000B $10,000C $17,000D Some other amountQuestion 32Which of the following does NOT create a difference between net income and the net cash flow fromoperations?A Timing differences between credit sales and collections from customersB Nonoperating gains and lossesC Payment of a cash dividendD Depreciation expenseQuestion 33An example of a noncash investing or financing activity that is disclosed in a supplementary scheduleaccompanying the statement of cash flows is:A Recording depreciation expense for the current year.B Selling land in exchange for a note receivable.C Declaring, but not paying, dividends on common stock.D Transferring cash from a checking account into a money market fund.Question 34Cash flows from investing activities include all of the following exceptA Cash advanced to borrowersB Cash proceeds from borrowingC Cash proceeds from selling investmentsD Cash proceeds from collections on loansQuestion 35A stock dividend is reported on the:A Income statementB Financing section of the statement of cash flowsC Balance sheetD Operating section of the statement of cash flowsQuestion 36Cinque Corporation's reported net income for 2005 is less than its net cash flow from operatingactivities. One reason for this could be:A An increase in inventory levels during 2005.B The sale of machinery at a loss in 2005.C The sale of investments at a gain in 2005.D An error in the preparation of the statement of cash flows, net income should be greater than or equalto net cash flow from operating activities.Question 37Which of the following is NOT classified among the financing activities in a statement of cash flows?A Long-term borrowingB Short-term borrowingC Payment of interest to creditorsD Payment of dividends to stockholdersQuestion 38All of the following are considered cash equivalents except:A Commercial paperB Marketable securitiesC Money market fundsD Treasury billsQuestion 39An analysis of changes in selected balance sheet accounts of Gotham Corporation shows the above for the current year:Gotham's income statement for the current year includes a $4,000 gain on disposal of plant assets. All payments and proceeds relating to purchase or sale of plant assets were in cash.How should purchases, sales, and depreciation of plant assets be classified in Gotham's statement of cash flows for the current year? (Assume the direct method is used by Gotham.)A Since plant assets are used to generate income from operations, purchases, sales, and depreciation ofplant assets are all classified as operating activities.B Purchases of plant assets and depreciation are classified as investing activities, sales of plant assets areclassified as financing activities.C Purchases of plant assets are classified as investing activities, sales of plant assets are classified asfinancing activities, depreciation is classified as an operating activity.D Purchases and sales of plant assets are classified as investing activities, depreciation does not appear asan operating, financing, or investing activity.Question 40An analysis of changes in selected balance sheet accounts of Gotham Corporation shows the above for the current year:Gotham's income statement for the current year includes a $4,000 gain on disposal of plant assets. All payments and proceeds relating to purchase or sale of plant assets were in cash.The amount of cash paid by Gotham to acquire plant assets during the current year was:A $130,000B $210,000C $320,000D Some other amountQuestion 41Free cash flow arises out ofA Operating activitiesB Investing activitiesC Financing activitiesD All of the aboveQuestion 42Cash flows from operating activities include all of the following except:A Collections from customers for sales of goodsB Interest and dividends receivedC Payments of interestD Payments of dividendsQuestion 43Cash flows from investing activities include all of the following except:A Cash proceeds from selling investments.B Cash proceeds from collections on loans.C Cash advanced to borrowers.D Cash proceeds from borrowing.Question 44All of the following are considered cash equivalents except:A Marketable securitiesB Money market fundsC Commercial paperD Treasury billsQuestion 45Net income differs from net cash flows from operations because of all the following except:A Non-cash expenses such as depreciationB Timing differences between recognizing revenue and expenses and their cash flowsC Gains and losses included in net income but classified as investing or financings activitiesD All of the above will cause a difference between net income and cash flowsQuestion 46A statement of cash flows is not intended to assist investors in evaluating:A Reasons for differences between the amount of net income and net cash flow from operations.B The company's ability to meet its obligations and to pay dividendsC Non-cash aspects of investing and financing activitiesD The profitability of business operationsQuestion 47In a statement of cash flows, payments of dividends are classified as:A Operating activitiesB Financing activitiesC Investing activitiesD None of the aboveQuestion 48Which of the following would indicate a cash disbursement?A Selling equipment at a lossB A decrease in accounts receivableC An increase in prepaid expensesD A decrease in inventoryQuestion 49Depreciation expense:A Increases net cash flow from operationsB Decreases net cash flow from operationsC Does not affect net incomeD Does not affect net cash flow from operationsQuestion 50A comparative financial statement:A Places the balance sheet, the income statement and the statement of cash flows side by side in order to compare the results.B Places two or more years of a financial statement side by side in order to compare results.C Places the financial statements of two or more companies side by side in order to compare results.D Places the dollar amounts next to the percentage amounts of a given year for the income statement.Question 51The changes in financial statement items from a base year to following years are called:A Money changesB Trend percentagesC Component percentagesD RatiosQuestion 52One number expressed as a percentage of another is called:A Money changesB Trend percentagesC Component percentagesD RatiosQuestion 53Quick assets include:A Cash, marketable securities and receivablesB Cash, marketable securities and inventoriesC Cash, inventories and receivablesD Market securities, receivables and inventoriesQuestion 54The price/earnings ratio is measured by dividing:A Book value by earnings per shareB Par value by earnings per shareC Market value by earnings per shareD Market value by total net incomeQuestion 55The term classified financial statements refers:A To the financial statements of all companies working on government projects.B To the financial statements of all companies working on government projects.C To financial statements prepared for use by management, but not for distribution outside of the organization.D To financial statements prepared for use by management, but not for distribution outside of theorganization.Question 56Current assets are those assets that can be converted into cash within:A One year and never longer.B One year or the operating cycle, whichever is longer.C One year or the operating cycle, whichever is shorter.D Management's discretionQuestion 57Short-term creditors are most likely to use the quick ratio instead of the current ratio in evaluating thesolvency of a company with large, slow-moving:A Plant and equipmentB ReceivablesC InventoriesD EmployeesQuestion 58Which of the following transactions would cause a change in the amount of a company's workingcapital?A Collection of an account receivableB Payment of an account payableC Borrowing cash over a 60-day periodD Selling merchandise at a price above its costQuestion 59All of the following captions or subtotals are typical of a multiple-step income statement except for:A Net salesB Gross profitC Total costs and expensesD Operating incomeQuestion 60The principal purpose of a statement of cash flows is to measure the profitability of a business thatmaintains its accounting records on the cash basisA TrueB FalseQuestion 61All cash receipts and cash payments not classified as investing or financing activities are classified asindirect activities.A TrueB FalseQuestion 62Interest paid belongs in the operating section of the statement of cash flowsA TrueB FalseQuestion 63The purchase of equipment for the manufacturing of inventory belongs in the operations section of thestatement of cash flows.A TrueB FalseQuestion 64In the long run, it is more important for a business to generate positive cash flows from investing activities than from operating activities.A TrueB FalseQuestion 65Depreciation is a non-cash expenseA TrueB FalseQuestion 66If accounts receivable decrease during the period, cash received from customers probably exceeds net salesA TrueB FalseQuestion 67The FASB permits a company to use the direct method for the statement of cash flows or the indirectmethodA TrueB FalseQuestion 68The purchase or sale of marketable securities is reported in the statement of cash flows as a financingactivityA TrueB FalseQuestion 69If accounts receivable increased during the year, deducting the increase from net sales determines theamount of cash receivedA TrueB FalseQuestion 70When applying the direct method in a statement of cash flows, the amount of depreciation is added tonet incomeA TrueB FalseQuestion 71Cash flows from investing activities include all of the following except:A Cash proceeds from selling investmentsB Cash proceeds from collections on loansC Cash proceeds from borrowingD Cash advanced to borrowersQuestion 72Which of the following is an investing activityA Purchase of equipmentB Payment of interestC Issuing common stockD Issuing long-term debtQuestion 73Which of the following is a financing activityA Payment of interestB Payment of dividendsC Making sales on accountD Paying off accounts payableQuestion 74When using the indirect method, depreciation expenseA Increases net cash flow from operationsB Decreases net cash flow from operationsC Does not affect net incomeD Does not affect net cash flow from operationsQuestion 74bDepreciation expenseA Increases net cash flow from operationsB Decreases net cash flow from operationsC Does not affect net incomeD Does not affect net cash flow from operationsQuestion 75Which statement is true as to the FASB's position on the presentation of the statement of cash flows?A The FASB recommends the use of the indirect method, but most companies use the direct method.B The FASB recommends the use of the direct method, but most companies use the indirect method.C The FASB recommends the use of the direct method, and most companies use the direct method.D The FASB recommends the use of the indirect method, and most companies use the indirect method.Question 76Hamilton Company reported an increase of $370,000 in its accounts receivable during the year 2009.The company's statement of cash flows for 2009 reported $1 million of cash received from customers.What amount of net sales must Hamilton have recorded in 2009?A $630,000B $1,370,000 (1,000,000 + 370,000 = 1,370,000)C $1,000,000D $370,000Question 77GAAP stands for which of the followingA Generally accepted accounting principleB Generally acknowledged accounting principleC Generally accepted accounting practiceD Generous accepted accounting principleQuestion 78The term classified financial statements refers A To the financial statements of all companies working on government projectsB Only to the financial statements of defense contractors working on secret projects.C To financial statements prepared for use by management, but not for distribution outside of theorganization.D To financial statements in which items with certain characteristics are placed together in a group in an effort to develop useful subtotals.

 

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