Reference no: EM132598705

Question 1: Companies that show a profit on their income statement for the period will always show a positive cash flow from operating activities on its Cash Flow Statement for that period.

True

False

Question 2: When prices a company pays for its merchandise are decreasing:

a. LIFO will result in lower net income and higher inventory valuation than FIFO.

b. LIFO will result in higher net income and a lower inventory valuation than FIFO.

c. FIFO will result in lower net income and a lower inventory valuation than LIFO.

d. FIFO will result in higher net income and a higher inventory valuation than LIFO.

e. None of the other answers is correct.

Question 3: Jones Corporation had a beginning inventory of 300 units which it bought for $5 each. Jones bought 500 more units at $4 each on February 1st and 200 units more for $6 each on February 5th. On February 8th Jones sold 150 units. What is the value of Jones' remaining inventory on February 8th after making the sale if it uses the FIFO inventory costing method?

a. $3,950

b. $750

c. $3,800

d. None of the other answers is correct.

Question 4: An asset which costs $25,000 and has accumulated depreciation of $6,000 is sold for $11,000. What amount of gain or loss will be recognized when the asset is sold?

a. A gain of $14,000

b. A loss of $14,000

c. A gain of $8,000

d. A loss of $8,000

Question 5: All of the following may be considered intangible assets except:

a. Patents

b. Supplies

c. Goodwill

d. Franchises

Question 6: Which of the following is NOT an amount that is needed to calculate straight-line depreciation?

a. The cost of the asset.

b. An estimate of the asset's useful economic life to the company.

c. The estimated amount that the company will get when it disposes of the asset.

d. The cost the company will be required to incur to replace the asset.