Reference no: EM132448661

Questions -

Q1. Cash purchases of long-term assets are reported in the _______ activities section of the statement of cash flows.

A. Operating

B. Investing

C. Financing

D. Non-cash investing and financing

Q2. Cash payment of dividends is reported in the ______ activities section of the statement of cash flows.

A. Investing

B. Financing

C. Operating

D. Dividends are not reported on the statement of cash flows.

Q3. When using the indirect method, what should be subtracted from net income in determining net cash flow provided by operating activities?

A. Loss on sale of long-term assets

B. Increase in accounts payable

C. Depreciation expense

D. Increase in inventory

Q4. Which of the following does not have an effect on cash?

A. borrowing on a long-term note payable.

B. issuance of common stock.

C. purchase of supplies.

D. recording depletion expense.

Q5. The Hope Corporation purchased a large machine 7 years ago at a total cost of $250,000. The accumulated depreciation on this machine is $180,000. The corporation sold the machine at a $6,000 loss. What amount would be reported as cash proceeds from this sale?

A. $64,000

B. $76,000

C. $6,000

D. $70,000

Q6. The Liu Company had $600,000 of sales revenue. During the same accounting period the beginning and ending accounts receivable balances were $27,000 and $29,000, respectively. What amount of cash was collected from the customers during this period?

A. $600,000

B. $602,000

C. $598,000

D. $2,000

Q7. Garcia Manufacturing Company had the following data:

December 20X2 20X1

Building (net) $950,000 $640,000

Proceeds from sale of building $450,000

Gain on sale of building $60,000

Cost of building purchased during the year $790,000

What is the amount of depreciation expense recorded for the year ended December 31, 20X2?

A. $310,000

B. $450,000

C. $90,000

D. $390,000

Q8. Which of the following items are not included in determining the cash payments (outflows) from financing activities?

A. Acquisition of plant assets

B. Purchasing treasury stock

C. Retiring bonds payable

D. Repaying a long-term note payable

Q9. Which of the following would be reported as a cash receipt from investing activities?

A. Loaning money to another business

B. Proceeds from the sale of long-term investments

C. Purchase of plant assets

D. Proceeds from the sale of treasury stock

Q10. Ferguson Corporation reports cost of goods sold of $176,000 and a decrease in inventory during the year of $10,000. All accounts payable relate to inventory purchases; accounts payable decreased by $4,800 during the year. How much cash did Ferguson pay for inventory during the year?

A. $190,800

B. $161,200

C. $181,200

D. $170,800

Q11. Which of the following is a component of earnings quality?

A. Proper revenue and expense recognition

B. Decreasing gross profit/sales ratio

C. Decreasing operating earnings/sales ratio

D. Increasing deferred income taxes

Q12. Which of the following is NOT used in determining the income from continuing operations?

A. Costs of goods sold

B. Net foreign currency transaction gain

C. Current sales revenue

D. Operating expenses

Q13. The accountant of the Office Supplies Plus realized that the estimated life of a copy machine was 2 years instead of 5 years. This is considered to be a:

A. change in accounting principle.

B. prior period adjustment.

C. change in accounting estimate.

D. weakness in internal controls.

Q14. Which of the following items is included on the statement of comprehensive income?

A. prior-period adjustment.

B. dividends per share for income from continuing operations.

C. issuance of common stock above par.

D. unrealized gains/losses on available-for-sale investments.

Q15. The Beckett Company reports $700,000 of net income. The company also had the following account balances:

$5 Preferred stock, $100 par, 10,000 shares issued and outstanding ...$1,000,000

Common stock, $10 par, 125,000 shares issued and outstanding......... 1,250,000

There were no changes in the stock accounts during the year. EPS for the year is:

A. $5.60

B. $5.20

C. $0.56

D. $5.19

Q16. The Elysian Company reported the following financial information:

Cost of goods sold $ 500,000

Sales revenue 1,300,000

Operating expenses 150,000

Other losses 4,000

Income tax expense 226,000

Shares of common stock outstanding 80,000

Common stock market price per share $100

What is the amount of income from continuing operations, net of income taxes?

A. $424,000

B. $646,000

C. $650,000

D. $420,000

Q17. Refer to Question 6. What is the current market value of the company?

A. $42 million

B. $33.6 million

C. $8 million

D. Cannot be determined.

Q18. Crayton Corporation has taxable income of $1,500,000 and pretax accounting income of $1,350,000 in the current accounting period. What tax liability appears on the balance sheet for this year, assuming a 35% tax rate?

A. $472,500

B. $525,000

C. $150,000

D. $52,500

Q19. A(n) _____________ opinion is given if, after doing a thorough audit, the auditors decide that the financial statements contain no material misstatements and the company's internal controls are effective.

A. unqualified (clean)

B. disclaimer

C. open

D. independent

Q20. In accordance with the Sarbanes-Oxley Act of 2002, who declares responsibility for the internal controls over financial reporting?

A. the bookkeeper

B. the auditor

C. management

D. shareholders