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Accounting quiz

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Question;Under the direct method;of determining net cash provided by operating activities on the statement of;cash flows, the net income figure is adjusted for changes in current assets and;liabilities.;True;False;Bennett;Company reported sales on its income statement last year of $420,000. On the;company's statement of cash flows, sales adjusted to a cash basis were;$412,000. (The company uses the direct method to determine the net cash;provided by operating activities.) Bennett Company reported the following;account balances on its comparative balance sheet;Ending;Balance;Beginning;Balance;Accounts receivable;$45,000;?;Prepaid expenses;$38,000;$35,000;Inventory;$45,000;$50,000;Based on this;information, the beginning accounts receivable balance was;$37,000;$42,000;$53,000;$39,000;Last year;Lawsby Company reported sales of $330,000 on its income statement. During the;year, accounts receivable increased by $34,000 and accounts payable increased;by $39,000. The company uses the direct method to determine the net cash;provided by operating activities on the statement of cash flows. The sales;revenue adjusted to a cash basis for the year would be;$325,000;$335,000;$296,000;$291,000;If accounts receivable;increase during a period, then the amount of cash collected from customers will;be greater than the amount of sales reported on the income statement for the;period.;True;False;Under the direct method;of determining the net cash provided by operating activities on the statement;of cash flows, an increase in income taxes payable would be subtracted from;income tax expense to convert income tax expense to a cash basis.;True;False;Kelln Corporation's most recent;comparative balance sheet and income statement appear below;Kelln;Corporation;Comparative Balance Sheet;Ending;Balance;Beginning;Balance;Assets;Cash and cash equivalents;$37;$35;Accounts receivable;85;75;Inventory;64;77;Property, plant and equipment;898;760;Less accumulated depreciation;331;285;Total assets;$753;$662;Liabilities and stockholders' equity;Accounts payable;$84;$50;Bonds payable;463;500;Common stock;30;10;Retained earnings;176;102;Total liabilities and stockholders' equity;$753;$662;Income Statement;Sales;$750;Cost of goods sold;450;Gross margin;300;Selling and;administrative expense;161;Net operating income;139;Income taxes;49;Net income;$90;The company paid a cash dividend and;it did not dispose of any property, plant, and equipment. The company did not;issue any bonds payable or repurchase any of its own common stock. The;company uses the direct method to determine the net cash provided by;operating activities.;The net cash provided;by (used in) operating activities for the year was;$83;$173;$7;$139;Free cash flow is net;cash provided by operating activities less dividends.;True;False;Under the direct method;of determining the net cash provided by operating activities on the statement;of cash flows, an increase in accounts payable would be added to cost of goods;sold to convert cost of goods sold to a cash basis.;True;False;Last year;Burford Company's cash account decreased by $29,000. Net cash used in;investing activities was $8,400. Net cash provided by financing activities;was $26,500. On the statement of cash flows, the net cash flow provided by;(used in) operating activities was;$(47,100);$(29,000);$(10,900);$18,100;The change in the cash;balance must equal the changes in all other balance sheet accounts besides;cash.;True;False;A newly formed company;with enormous growth prospects would be expected to have negative free cash;flow during its start-up phase.;True;False;A company can increase;its net cash flow by increasing the depreciation expense it records during the;period.;True;False;Negative free cash flow;suggests that the company did not generate enough cash flow from its operating;activities to fund its capital expenditures and dividend payments.;True;False;A gain on the sale of;equipment would be included as part of a company's financing activities on the;statement of cash flows.;True;False;Last year;Cumber Company reported a cost of goods sold of $74,000. Inventories;decreased by $16,000 during the year, and accounts payable increased by;$14,000. The company uses the direct method to determine the net cash;provided by operating activities on the statement of cash flows. The cost of;goods sold adjusted to a cash basis would be;$60,000;$104,000;$44,000;$58,000;The changes in Tener Company's;balance sheet account balances for last year appear below;Increases;(Decreases);Asset and;Contra-Asset Accounts;Cash;$(8,000);Accounts receivable;$(5,000);Inventory;$0;Prepaid expenses;$12,000;Long-term investments;$42,000;Property, plant and;equipment;$17,000;Accumulated;depreciation;$57,000;Liability and Equity;Accounts;Accounts payable;$5,000;Accrued liabilities;$(15,000);Income taxes payable;$16,000;Bonds payable;$(20,000);Common stock;$13,000;Retained earnings;$13,550;The company's income statement for;the year appears below;Income Statement;Sales;$770,000;Cost of goods sold;460,000;Gross margin;310,000;Selling and;administrative expenses;263,000;Net operating income;47,000;Income taxes;16,450;Net income;$30,550;The;company declared and paid $17,000 in cash dividends during the year. It did;not dispose of any property, plant, and equipment during the year. The;company uses the direct method to determine the net cash provided by;operating activities.;On the statement of;cash flows, the cost of goods sold adjusted to a cash basis would be;$465,000;$450,000;$460,000;$455,000;Kelln Corporation's most recent;comparative balance sheet and income statement appear below;Kelln Corporation;Comparative Balance Sheet;Ending;Balance;Beginning;Balance;Assets;Cash and cash;equivalents;$41;$39;Accounts receivable;95;79;Inventory;72;81;Property, plant and;equipment;958;800;Less accumulated;depreciation;339;289;Total assets;$827;$710;Liabilities and;stockholders' equity;Accounts payable;$97;$54;Bonds payable;499;540;Common stock;69;45;Retained earnings;162;71;Total liabilities;and stockholders' equity;$827;$710;Income Statement;Sales;$790;Cost of goods sold;470;Gross margin;320;Selling and;administrative expenses;155;Net operating;income;165;Income taxes;58;Net income;$107;The company paid a cash dividend;and it did not dispose of any property, plant, and equipment. The company;did not issue any bonds payable or repurchase any of its own common stock.;The net cash;provided by (used in) investing activities for the year was;$108;$158;$(158);$(108);A company can have a;net loss and still generate a positive net cash provided by operating;activities in its statement of cash flows.;True;False;Cridman Company's selling;and administrative expenses for last year totaled $310,000. During the year;the company's prepaid expense account balance decreased by $27,000 and;accrued liabilities increased by $30,000. Depreciation for the year was;$31,000. Based on this information, selling and administrative expenses;adjusted to a cash basis under the direct method on the statement of cash;flows would be;$398,000;$336,000;$284,000;$222,000;Under the indirect;method of determining the net cash provided by operating activities on the;statement of cash flows, a decrease in accounts receivable is added to net;income.;True;False;The investing and;financing sections of the statement of cash flows record net cash flows;rather than gross cash flows.;True;False;Free cash flow;increases when a company issues common stock for cash.;True;False;Kelln Corporation's most recent;comparative balance sheet and income statement appear below;Kelln Corporation;Comparative Balance Sheet;Ending;Balance;Beginning;Balance;Assets;Cash and cash;equivalents;$41;$39;Accounts receivable;95;79;Inventory;72;81;Property, plant and;equipment;958;800;Less accumulated;depreciation;339;289;Total assets;$827;$710;Liabilities and stockholders;equity;Accounts payable;$97;$54;Bonds payable;499;540;Common stock;69;45;Retained earnings;162;71;Total liabilities;and stockholders' equity;$827;$710;Income Statement;Sales;$790;Cost of goods sold;470;Gross margin;320;Selling and;administrative expense;155;Net operating;income;165;Income taxes;58;Net income;$107;The company paid a cash dividend;and it did not dispose of any property, plant, and equipment. The company;did not issue any bonds payable or repurchase any of its own common stock.;The net cash;provided by (used in) financing activities for the year was;$(16);$(41);$(33);$24;Baldock Corporation's balance sheet;and income statement appear below;Baldock Corporation;Comparative Balance Sheet;Ending;Balance;Beginning;Balance;Asset;Cash and cash;equivalents;$43;$38;Accounts receivable;34;29;Inventory;46;57;Property, plant and;equipment;445;330;Less accumulated;depreciation;211;189;Total assets;$357;$265;Liabilities and;stockholders' equity;Accounts payable;$66;$58;Accrued liabilities;22;15;Income taxes;payable;38;33;Bonds payable;31;35;Common stock;49;40;Retained earnings;151;84;Total liabilities;and stockholders' equity;$357;$265;Income Statement;Sales;$756;Cost of goods sold;473;Gross margin;283;Selling and;administrative expenses;166;Net operating;income;117;Gain on sale of;plant and equipment;16;Income before taxes;133;Income taxes;48;Net income;$85;Cash;dividends were $18. The company sold equipment for $16 that was originally;purchased for $12 and that had accumulated depreciation of $12. The company;uses the direct method to determine the net cash provided by operating;activities. The net cash provided by (used in) operating activities for the;year was;$151;$129;$147;$117

 

Paper#42927 | Written in 18-Jul-2015

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