Q&A Hero

Q: the current cash debt coverage ratio is computed by dividing net cash provided by operations by average total liabilities.

Q: The ratio measuring the number of sales dollars earned per dollar of fixed assets is the a. fixed asset turnover ratio b. days' in assets ratio c. current asset turnover ratio d. intangible asset ratio

Q: in preparing a statement of cash flows, an increase in the common stock and treasury stock accounts during a period would be an investing activity.

Q: On December 31, Strike Company sold one of its batting cages for $55,000. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction? a. loss of $55,000 b. loss of $5,000 c. gain of $5,000 d. gain of $55,000

Q: using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.

Q: a major disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net income is not emphasized.

Q: The journal entry for recording payment for the short-term lease of a fixed asset would a. be a memo entry only b. debit the fixed asset and credit Cash c. debit Rent Expense and credit Cash d. debit a liability and credit Cash

Q: which one of the following items is not generally used in preparing a statement of cash flows? a.adjusted trial balance b.comparative balance sheets c.current income statement d.additional information

Q: the statement of cash flows a.must be prepared on a daily basis b.summarizes the operating, financing, and investing activities of an entity c.is another name for the income statement d.is a special section of the income statement

Q: using the direct method, major classes of investing and financing activities are listed in the operating activities section.

Q: Land acquired so it can be resold in the future is listed on the balance sheet as a(n) a. fixed asset b. current asset c. investment d. intangible asset

Q: Residual value is also known as all of the following except a. scrap value b. trade-in value c. salvage value d. net book value

Q: free cash flow is measured in terms of a percentage.

Q: as an adjustment to operating expenses per the income statement, an increase in accrued liabilities would be deducted from operating expenses to determine cash payments for operating expenses.

Q: Factors contributing to a decline in the usefulness of a fixed asset may be divided into which of the following two categories? a. salvage and functional b. physical and functional c. residual and salvage d. functional and residual

Q: if a company reports a net loss, it a.may still have a net increase in cash b.will not be able to pay cash dividends c.will not be able to get a loan d.will not be able to make capital expenditures

Q: Which of the following should be included in the acquisition cost of a piece of equipment? a. transportation costs b. installation costs c. testing costs prior to placing the equipment into production d. All of these choices

Q: the primary purpose of the statement of cash flows is to a.provide information about the investing and financing activities during a period b.prove that revenues exceed expenses if there is a net income c.provide information about the cash receipts and cash payments during a period d.facilitate banking relationships

Q: On June 1, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours, which ends on December 31. Using straight-line depreciation, compute depreciation expense for the final (partial) year of service. a. $17,500 b. $30,000 c. $12,500 d. $40,000

Q: investing activities include a.collecting cash on loans made b.obtaining cash from creditors c.obtaining capital from owners d.repaying money previously borrowed

Q: A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on the sale of the fixed asset? a. $2,000 loss b. $1,500 loss c. $3,500 gain d. $2,000 gain

Q: financing activities involve a.lending money b.acquiring investments c.issuing debt d.acquiring long-lived assets

Q: Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours? a. $19,000 b. $21,000 c. $22,000 d. $30,000

Q: the order of presentation of activities on the statement of cash flows is a.operating, investing, and financing b.operating, financing, and investing c.financing, operating, and investing d.financing, investing, and operating

Q: On December 31, Strike Company traded in one of its batting cages for another one that has a cost of $500,000. Strike receives a trade-in allowance of $11,000. The old equipment had an initial cost of $215,000 and has accumulated depreciation of $185,000. Depreciation has been recorded up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction? a. loss of $11,000 b. gain of $11,000 c. loss of $19,000 d. no loss or gain

Q: the acquisition of land by issuing common stock is a.a noncash transaction that is not reported in the body of a statement of cash flows b.a cash transaction and would be reported in the body of a statement of cash flows c.a noncash transaction and would be reported in the body of a statement of cash flows d.only reported if the statement of cash flows is prepared using the direct method

Q: Newport Company has sales of $2,025,000 for the current year. The book value of its fixed assets at the beginning of the year was $550,000 and at the end of the year was $800,000. The fixed asset turnover ratio for Newport is a. 3.0 b. 3.6 c. 3.7 d. 2.5

Q: all of the following statements are true regarding cash flow presentations except a.the balance sheet provides only limited information about a company's cash flows b.the balance sheet provides information about how property, plant, and equipment were financed c.the income statement does not show how much cash was generated by operating activities d.if cash from operations is compared to net income, information about the quality of reported net income is revealed

Q: the statement of cash flows will not report the a.amount of checks outstanding at the end of the period b.sources of cash in the current period c.uses of cash in the current period d.change in the cash balance for the current period

Q: A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $75,000. The cost of the building to be reported on the balance sheet is a. $154,000 b. $172,000 c. $160,000 d. $120,000

Q: A fixed asset's estimated value at the time it is to be retired from service is called a. book value b. residual value c. market value d. carrying value

Q: in addition to the three basic financial statements, which of the following is also a required financial statement? a.the cash budget b.statement of cash flows c.statement of cash inflows and outflows d.the cash reconciliation

Q: The formula for depreciable cost is a. Initial Cost + Residual Value b. Initial Cost – Residual Value c. Initial Cost – Accumulated Depreciation d. Depreciable Cost = Initial Cost

Q: harden corporation engaged in the following transaction. assume that the harden corporation uses the indirect method to depict cash flows. indicate where, if at all, accounts receivable collected would be classified on the statement of cash flows. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow

Q: harden corporation engaged in the following transaction. assume that the harden corporation uses the indirect method to depict cash flows. indicate where, if at all, a stock dividend declared and issued would be classified on the statement of cash flows. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow

Q: cash receipts from interest and dividends are classified as a.financing activities b.investing activities c.operating activities d.either financing or investing activities

Q: The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the a. units-of-production method b. double-declining-balance method c. straight-line method d. time-valuation method

Q: the category that is generally considered to be the best measure of a company's ability to continue as a going concern is a.cash flows from operating activities b.cash flows from investing activities c.cash flows from financing activities d.usually different from year to year

Q: generally, the most important category on the statement of cash flows is cash flows from a.operating activities b.investing activities c.financing activities d.significant noncash activities

Q: The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called a. depletion b. deferral c. amortization d. depreciation

Q: harden corporation engaged in the following transaction. assume that the harden corporation uses the indirect method to depict cash flows. indicate where, if at all, dividends received on securities held would be classified on the statement of cash flows. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow

Q: Which of the following is included in the cost of constructing a building? a. insurance costs during construction b. cost of paving the parking lot c. cost of repairing vandalism damage during construction d. cost of removing the demolished building existing on the land when it was purchased

Q: All of the following are needed for the computation of straight-line depreciation except a. cost b. residual value c. estimated life d. units produced

Q: harden corporation engaged in the following transaction. assume that the harden corporation uses the indirect method to depict cash flows. indicate where, if at all, stock issued for equipment would be classified on the statement of cash flows. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow

Q: harden corporation engaged in the following transaction. assume that the harden corporation uses the indirect method to depict cash flows. indicate where, if at all, interest paid on note would be classified on the statement of cash flows. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow

Q: When a company discards machinery that is fully depreciated, this transaction would be journalized as a a. debit to Accumulated Depreciation and a credit to Machinery b. debit to Machinery and a credit to Accumulated Depreciation c. debit to Cash and a credit to Accumulated Depreciation d. debit to Depreciation Expense and a credit Accumulated Depreciation

Q: The formula for annual depreciation using the units-of-activity method is a. (Initial Cost ÷ Estimated Output) × Actual Yearly Output b. (Depreciable Cost ÷ Yearly Output) × Estimated Output c. Depreciable Cost ÷ Yearly Output d. (Depreciable Cost ÷ Estimated Output) × Actual Yearly Output

Q: harden corporation engaged in the following transaction. assume that the harden corporation uses the indirect method to depict cash flows. indicate where, if at all, long-term debt retired with cash would be classified on the statement of cash flows. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow

Q: harden corporation engaged in the following transaction. assume that the harden corporation uses the indirect method to depict cash flows. indicate where, if at all, inventory purchased with cash would be classified on the statement of cash flows. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow

Q: Expected useful life is a. computed when the asset is sold b. estimated at the time that the asset is placed in service c. determined each year that the depreciation computation is made d. of no bearing on the depreciation computation

Q: norris company issued 15,000 shares of $1 par common stock for $25 per share during 2012. the company paid dividends of $36,000 and issued long-term notes payable of $330,000 during the year. what amount of cash flows from financing activities will be reported on the statement of cash flows? a.$9,000 net cash inflow b.$339,000 net cash inflow c.$705,000 net cash outflow d.$669,000 net cash inflow

Q: A capital expenditure results in a debit to a(n) a. expense account b. capital account c. liability account d. asset account

Q: Wilma’s Vegetable Market had the following transactions during 2012:1. Issued $25,000 of par value common stock for cash.2. Recorded and paid wages expense of $10,000. 3. Acquired land by issuing common stock of par value $50,000.4. Declared and paid a cash dividend of $1,000. 5. Sold a long-term investment (cost $3,000) for cash of $3,000. 6. Recorded cash sales of $20,000.7. Bought inventory for cash of $2,000.8. Acquired an investment in IBM stock for cash of $6,000.9. Converted bonds payable to common stock in the amount of $10,000.10. Repaid a 6 year note payable in the amount of $11,000.What is the net cash provided by investing activities?a.$6,000b.$16,000c.($3,000)d.$3,000

Q: Which intangible assets are amortized over their useful life? a. trademarks b. goodwill c. patents d. All of these choices

Q: Wilma’s Vegetable Market had the following transactions during 2012:1. Issued $25,000 of par value common stock for cash.2. Recorded and paid wages expense of $10,000. 3. Acquired land by issuing common stock of par value $50,000.4. Declared and paid a cash dividend of $1,000. 5. Sold a long-term investment (cost $3,000) for cash of $3,000. 6. Recorded cash sales of $20,000.7. Bought inventory for cash of $2,000.8. Acquired an investment in IBM stock for cash of $6,000.9. Converted bonds payable to common stock in the amount of $10,000.10. Repaid a 6 year note payable in the amount of $11,000.what is the net cash provided by financing activities?a.$13,000b.$25,000c.$14,000d.$9,000

Q: Fixed assets are ordinarily presented on the balance sheet a. at current market values b. at replacement costs c. at cost less accumulated depreciation d. in a separate section along with intangible assets

Q: Wilma’s Vegetable Market had the following transactions during 2012:1. Issued $25,000 of par value common stock for cash.2. Recorded and paid wages expense of $10,000. 3. Acquired land by issuing common stock of par value $50,000.4. Declared and paid a cash dividend of $1,000. 5. Sold a long-term investment (cost $3,000) for cash of $3,000. 6. Recorded cash sales of $20,000.7. Bought inventory for cash of $2,000.8. Acquired an investment in IBM stock for cash of $6,000.9. Converted bonds payable to common stock in the amount of $10,000.10. Repaid a 6 year note payable in the amount of $11,000.what is the net cash provided by operating activities?a.$20,000b.$18,000c.$10,000d.$8,000

Q: Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700. The old machinery originally cost $9,000 and had accumulated depreciation of $5,000. In recording this transaction, Bacon Company should record a. the new machinery at $16,700 b. the new machinery at $12,700 c. a gain of $1,500 d. a loss of $1,500

Q: which of the following activities would be classified as an investing activity? a.cash received from interest revenue b.cash paid (loaned) to a borrower as a loan c.cash received from dividend revenue d.cash paid to reacquire capital stock

Q: the payment of a cash dividend would be classified as a(n) a.operating activity b.investing activity c.financing activity d.significant noncash activity

Q: Sands Company purchased mining rights for $500,000. It expects to harvest 1 million tons of ore over the next 5 years. During the current year, Sands mined 350,000 tons of ore. The journal entry for the depletion would include a a. debit to Depletion Expense for $175,000 b. credit to Depletion Expense for $350,000 c. debit to Accumulated Depletion for $175,000 d. credit to Accumulated Depletion for $350,000

Q: the issuance of debt to purchase assets would be classified as a(n) a.operating activity b.investing activity c.financing activity d.none of the above

Q: The name, term, or symbol used to identify a business and its products is called a. goodwill b. a patent c. a trademark d. a copyright

Q: cash flows from operating activities, as reported on the statement of cash flows under the indirect method, would include a.receipts from the sale of investments b.net income c.payments for dividends d.receipts from the issuance of capital stock

Q: on the statement of cash flows, the cash flows from operating activities section would include a.receipts from the issuance of capital stock b.receipts from the sale of investments c.payments for the acquisition of investments d.cash receipts from sales activities

Q: The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is a. amortization b. depletion c. depreciation d. allocation

Q: in preparing a statement of cash flows, a conversion of bonds into common stock will be reported in a.the financing section b.the "extraordinary" section c.a separate schedule or note to the financial statements d.the stockholders' equity section

Q: preferred stock issued in exchange for land would be reported in the statement of cash flows in a.the cash flows from financing activities section b.the cash flows from investing activities section c.a separate schedule or note to the financial statements d.the cash flows from operating section

Q: An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange. a. True b. False

Q: significant noncash transactions would not include a.conversion of bonds into common stock b.asset acquisition through bond issuance c.treasury stock acquisition d.exchange of plant assets

Q: The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method. a. True b. False

Q: which of the following transactions does not affect cash during a period? a.write-off of an uncollectible account b.collection of an accounts receivable c.sale of treasury stock d.redeeming bonds before maturity

Q: When old equipment is traded in for new equipment, the difference between the list price and the trade-in allowance is called boot. a. True b. False

Q: of the items below, the one that appears first on the statement of cash flows is a.noncash investing and financing activities b.net increase (decrease) in cash c.cash at the end of the period d.cash at the beginning of the period

Q: Long-lived assets that are intangible in nature, used in the operations of the business, and not held for sale in the ordinary course of business are called fixed assets. a. True b. False

Q: if a company has both an inflow and outflow of cash related to property, plant, and equipment, the ______________ in the investing activities section. a.two cash effects must be netted and presented as one item b.cash inflow and cash outflow must be reported separately c.cash outflow is only is presented d.cash inflow and cash outflow can either be reported separately or presented as one item

Q: Intangible assets differ from property, plant, and equipment assets in that they lack physical substance. a. True b. False

Q: harden corporation engaged in the following transaction. assume that the harden corporation uses the indirect method to depict cash flows. indicate where, if at all, treasury stock purchased with cash would be classified on the statement of cash flows. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow

Q: The units-of-activity depreciation method provides a good match of expenses against revenue. a. True b. False

Q: As a company records depreciation expense for a period of time, cash is accumulated to replace fixed assets as they wear out. a. True b. False