What is the effect on working capital and the current ratio

Assignment Help Financial Accounting
Reference no: EM133010350

Question 1: The most important reason for preparing a statement of cash flows is to compute the change in cash.

True

False

Question 2: Paid cash for office supplies, $9,000. What is the effect on working capital, the current ratio, and the acid-test ratio? Assume the current ratio is 1:1 before this transaction occurred.

Option 1: Increase working capital and current ratio, decrease acid-test ratio.

Option 2: No effect on all three items.

Option 3: No effect on working capital and current ratio, decrease acid-test ratio.

Option 4: Decrease all three items.

Question 3: Depreciation provides cash for replacing plant assets; and this is the reason depreciation is shown as an inflow of cash on the statement of cash flows.

True

False

Question 4: The indirect method of computing cash flows from operating activities adjusts net income rather than each income statement item to a cash basis.

True

False

Reference no: EM133010350

Questions Cloud

Calculate the ending balance in the owner capital account : JYN Consulting reported net income of P25,000. Calculate the ending balance in the Owner's Capital account to be reported on the Statement of Owner's Equity.
Compute a weighted average forecast : Compute a weighted average forecast using a weight of 0.4 for the most recent period, 0.3 for the next most recent, 0.2 for the next, and 0.1 for the next
What the balance remaining in prepaid rent on december be : What the balance remaining in Prepaid Rent on December 1 should be? If a company reporting on calendar year basis, paid P180,000 cash on January 1 for one year.
Which transactions would result in increase in current ratio : Which transactions would result in an increase in the current ratio assuming that the ratio presently is 2:1? Customer paid her accounts receivable.
What is the effect on working capital and the current ratio : Paid cash for office supplies, $9,000. What is the effect on working capital, the current ratio, and the acid-test ratio? Assume the current ratio is 1:1
Which statements is true about the calculations : Which of the following statements is true about the calculations you should perform when comparing the NPV's of the current and proposed policies
How much salary expense should be recorded two days : The calendar year accounting period ends on Wednesday, December 31. How much salary expense should be recorded two days later on January 2?
Experience the same frustrations that you experienced : If you were the leader in a flat organization, do you think you could find ways to make sure that the employees didn't experience the same frustrations that you
What month-end adjusting entry to record salaries earned : Magic Shop pays each of its two office employees each Friday. What the month-end adjusting entry to record the salaries earned but unpaid is?

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the impact of implementing a lean system

What is the impact of implementing a lean system on the relationship between managers and employees? Does the lean systems have a positive or a negative impact on the relationships between managers and workers?

  Fund for the retirement of long-term debt

Cash of $38,000 has been placed in a fund for the retirement of long-term debt. The cash and long-term debt have been offset and are not reflected in the financial statements.

  Prepare journal entries to record depreciation

Andy sells this equipment for $11,500 at the end of the current year. Prepare journal entries to record both the current year's depreciation

  Purpose of the effective interest method of amortization

How does the the purpose of the Effective Interest Method of Amortization relate to the amortization of bond premiums and discounts?

  Find what present value of a perpetual stream of cash flows

Find What is the present value of a perpetual stream of cash flows that pays ?$6,500 at the end of year one and annual cash flow grow at a rate of 3?% per year?

  Distinguish between operating leases and finance leases

Distinguish between operating leases and finance leases. Would you be more likely to find an operating lease employed for a fleet of trucks

  Calculate the number of production runs

Calculate the number of production runs, production time, consumption time and cycle time. A company makes refrigerators and stoves.

  What amount must be remitted to the state for october sale

company doesn't ring up sales taxes separately on cash register total receipts for october amounted to $18900. if sales tax rate is 5%, what amount must be remitted to the state for October's sales tax?

  Bond interest expense is recorded on the next interest date

Detail, please. Wendy Company issued $600,000 of 8%, 5-year bonds at 105. Assuming straight-line amortization and annual interest payments, how much bond interest expense is recorded on the next interest date?

  Calculate the cost of the stock with flotation

The current price of the stock is Rs.110.00 with the flotation costs of 5% of the market price per share. Calculate the cost of the stock with flotation?

  What was the amount of cash payments for income tax

If sales for the current year were $475,000 and accounts receivable increased by $39,000 during the year, what was the amount of cash received from customers? If income tax for the current year was $39,000 and income tax payable decreased by $11,000 ..

  How much money anastasia has in investment portfolio now

Explain the key different between a bond and an ordinary share? how much money Anastasia has in her investment portfolio now?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd