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Accounting
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
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, land purchased for 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:
When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the book value of the asset. 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, common stock issued for cash would be classified. a.operating activities section b.investing activities section c.financing activities section d.does not represent a cash flow
Q:
A gain can be realized when a fixed asset is discarded. a. True b. False
Q:
Costs associated with normal research and development activities should be treated as intangible assets. 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, income taxes paid 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 one of the following items is not necessary in preparing a statement of cash flows? a.determine the change in cash b.determine the cash provided by operations c.determine cash from financing and investing activities d.determine the cash in each of the bank accounts
Q:
The method used to compute the depletion of a natural resource is the straight-line method. a. True b. False
Q:
the information in the following table is from the statement of cash flows for a company at four different points in time (period 1, period 2, period 3, and period 4). negative values are presented in parentheses. based on this information, which of the following answers most likely corresponds with the introductory phase, growth phase, maturity phase, or decline phase? a.period 2, period 1, period 3, period 4 b.period 1, period 4, period 3, period 2 c.period 3, period 4, period 1, period 2 d.period 4, period 3, period 2, period 1
Q:
Though a piece of equipment is still being used, the equipment should be removed from the accounts if it has been fully depreciated. a. True b. False
Q:
the information to prepare the statement of cash flows comes from all of the following sources except a.comparative balance sheets b.additional transaction data about cash provided or used during the period c.adjusted trial balance d.current income statement
Q:
All property, plant, and equipment assets are depreciated over time. a. True b. False
Q:
The journal entry for the disposal of fixed assets will include a credit to Accumulated Depreciation. a. True b. False
Q:
which of the following would not create a cash flow? a.sale of equipment at book value b.depreciation of a delivery truck c.payment of a cash dividend d.the company converts bonds into common stock
Q:
which of the following is not typically a characteristic experienced by a company during the growth phase of the corporate life cycle? a.cash from operations on the statements of cash flows will be less than net income on the income statement b.collections on accounts receivable will lag behind sales c.cash from investing is positive d.cash from financing is positive
Q:
A tangible asset is one that lacks physical existence. a. True b. False
Q:
The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years is amortized over 10 years. a. True b. False
Q:
which of the following is not typically a characteristic experienced by a company during the introductory phase of the corporate life cycle? a.cash used in operations will exceed cash generated by operations b.considerable cash will be used to purchase productive assets c.cash from investing is positive d.cash from financing is positive
Q:
The depreciable cost of a building is the same as its acquisition cost. a. True b. False
Q:
cash from operations and net income are approximately the same during the a.introductory phase b.growth phase c.maturity phase d.decline phase
Q:
When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use, this amount is known as boot. a. True b. False
Q:
the phase in the product life cycle when a company is purchasing fixed assets and beginning to produce and sell is the a.introductory phase b.growth phase c.maturity phase d.decline phase
Q:
The double-declining-balance method is an accelerated depreciation method. a. True b. False
Q:
a company would be expected to generate small amounts of cash from operations during the a.introductory phase b.growth phase c.maturity phase d.decline phase
Q:
The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in usefulness is called amortization. a. True b. False
Q:
collections on accounts receivable will lag behind sales, and accrual sales during a period will exceed cash collections during the a.introductory phase b.growth phase c.maturity phase d.decline phase
Q:
cash generated from operations exceeds investing needs, and the company can begin retiring debt during the a.introductory phase b.growth phase c.maturity phase d.decline phase
Q:
Revising depreciation estimates affects the amounts of depreciation expense recorded in past periods. a. True b. False
Q:
cash from investing becomes positive and cash from financing becomes more negative during the a.introductory phase b.growth phase c.maturity phase d.decline phase
Q:
. Losses on the discarding of fixed assets are reported on the income statement. a. True b. False
Q:
in order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under a.the direct method only b.the indirect method only c.both the direct method and the indirect method d.neither the direct nor the indirect method
Q:
The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the double-declining-balance method. a. True b. False
Q:
It is not necessary for a company to use the same depreciation method for all of its fixed assets. a. True b. False
Q:
in conley company, land decreased $180,000 because of a cash sale for $180,000, the equipment account increased $60,000 as a result of a cash purchase, and bonds payable increased $195,000 from issuance for cash at face value. the net cash provided by investing activities is a.$180,000 b.$315,000 c.$120,000 d.$135,000
Q:
If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, a trade-in allowance of $15,000 is granted by the seller, and the transaction is deemed to have commercial substance, the buyer would report a gain on exchange of fixed assets of $5,000. a. True b. False
Q:
during 2012, bale company sold equipment with a book value of $90,000 for proceeds of $104,000. the company purchased new equipment for $240,000 by signing a long-term note payable. no other transactions impacted long-term asset accounts during 2012. the investing section of the statement of cash flows will report a.net cash outflows of $226,000 b.net cash outflows of $136,000 c.net cash inflows of $104,000 d.net cash inflows of $14,000
Q:
When a plant asset is traded for another similar asset, losses on the asset traded are not recognized. a. True b. False
Q:
bruce company issued common stock for proceeds of $372,000 during 2012. the company paid dividends of $66,000 and issued a long-term note payable for $90,000 in exchange for equipment during the year. the company also purchased treasury stock that had a cost of $14,000. the financing section of the statement of cash flows will report net cash inflows of a.$292,000 b.$404,000 c.$306,000 d.$358,000
Q:
The cost of repairing damage to a machine during installation is debited to a fixed asset account. a. True b. False
Q:
which of the following is the first step in preparing the statement of cash flows? a.determine the net cash provided by operating activities b.determine the net income c.determine net cash provided by investing and financing activities d.determine the net increase (decrease) in cash
Q:
weaver company purchased treasury stock with a cost of $15,000 during 2012. during the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $836,000. cash flows from financing activities for 2012 total a.$816,000 net cash inflow b.$831,000 net cash inflow c.$5,000 net cash outflow d.$801,000 net cash inflow
Q:
Minerals removed from the earth are classified as intangible assets. a. True b. False
Q:
The amount of depreciation expense for a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years or 20,000 operating hours, is $21,375 by the units-of-activity method during a period when the asset was used for 4,500 hours. a. True b. False
Q:
which of the following would be subtracted from net income using the indirect method? a.depreciation expense b.an increase in accounts receivable c.an increase in accounts payable d.a decrease in prepaid expenses
Q:
When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account. a. True b. False
Q:
in developing the cash flows from operating activities, most companies in the united states a.use the direct method b.use the indirect method c.present both the indirect and direct methods in their financial reports d.prepare the operating activities section on the accrual basis
Q:
using the indirect method, patent amortization expense for the period a.is deducted from net income b.causes cash to increase c.causes cash to decrease d.is added to net income
Q:
Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year has been determined, the amounts cannot be changed. a. True b. False
Q:
Capital expenditures are costs that improve a fixed asset or extend its useful life. a. True b. False
Q:
in calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is a.deducted from net income b.added to net income c.ignored because it does not affect income d.ignored because it does not affect expenses
Q:
The cost of computer equipment does not include the consultant's fee to supervise installation of the equipment. a. True b. False
Q:
starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the a.direct method b.indirect method c.working capital method d.cost-benefit method
Q:
The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future. a. True b. False
Q:
landis company reported a net loss of $6,000 for the year ended december 31, 2012. during the year, accounts receivable decreased $14,000, merchandise inventory increased $10,000, accounts payable increased by $20,000, and depreciation expense of $10,000 was recorded. during 2012, operating activities a.used net cash of $2,000 b.used net cash of $28,000 c.provided net cash of $28,000 d.provided net cash of $18,000
Q:
During construction of a building, the cost of interest on a construction loan should be charged to an expense account. a. True b. False
Q:
foster company reported a net loss of $10,000 for the year ended december 31, 2012. during the year, accounts receivable decreased $5,000, merchandise inventory increased $8,000, accounts payable increased by $10,000, and depreciation expense of $5,000 was recorded. during 2012, operating activities a.used net cash of $2,000 b.used net cash of $8,000 c.provided net cash of $2,000 d.provided net cash of $8,000
Q:
Both the initial cost of the asset and the accumulated depreciation will be taken off the books with the disposal of the asset. a. True b. False
Q:
milton company reported net income of $80,000 for the year. during the year, accounts receivable increased by $14,000, accounts payable decreased by $6,000 and depreciation expense of $10,000 was recorded. net cash provided by operating activities for the year is a.$60,000 b.$90,000 c.$78,000 d.$70,000
Q:
Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are called capital expenditures. a. True b. False
Q:
hilton company reported net income of $90,000 for the year. during the year, accounts receivable increased by $21,000, accounts payable decreased by $9,000 and depreciation expense of $15,000 was recorded. net cash provided by operating activities for the year is a.$75,000 b.$135,000 c.$87,000 d.$90,000
Q:
Long-lived assets held for sale are classified as fixed assets. a. True b. False
Q:
in calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is a.added to net income b.deducted from net income c.ignored because it does not affect cash d.not reported on a statement of cash flows
Q:
It is necessary for a company to use the same depreciation method for all of its depreciable assets. a. True b. False
Q:
in calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is a.added to net income b.deducted from net income c.ignored because it does not affect cash d.not reported on a statement of cash flows
Q:
The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use. a. True b. False
Q:
which one of the following affects cash during a period? a.recording depreciation expense b.declaration of a cash dividend c.write-off of an uncollectible account receivable d.payment of an accounts payable
Q:
Standby equipment held for use in the event of a breakdown of regular equipment is reported as property, plant, and equipment on the balance sheet. a. True b. False
Q:
if accounts payable have increased during a period a.revenues on an accrual basis are less than revenues on a cash basis b.expenses on an accrual basis are less than expenses on a cash basis c.expenses on an accrual basis are greater than expenses on a cash basis d.expenses on an accrual basis are the same as expenses on a cash basis
Q:
When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements. a. True b. False
Q:
accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. income reported on the income statement for the year was $220,000. exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is a.$220,000 b.$210,000 c.$230,000 d.$300,000
Q:
Patents are exclusive rights to produce and sell goods with one or more unique features. a. True b. False
Q:
accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. income reported on the income statement for the year was $120,000. exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is a.$120,000 b.$125,000 c.$155,000 d.$115,000
Q:
When exchanging equipment, if the trade-in allowance is greater than the book value, a loss results. a. True b. False
Q:
accounts receivable arising from sales to customers amounted to $120,000 and $105,000 at the beginning and end of the year, respectively. income reported on the income statement for the year was $360,000. exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is a.$360,000 b.$375,000 c.$465,000 d.$345,000
Q:
if accounts receivable have increased during the period a.revenues on an accrual basis are less than revenues on a cash basis b.revenues on an accrual basis are greater than revenues on a cash basis c.revenues on an accrual basis are the same as revenues on a cash basis d.expenses on an accrual basis are greater than expenses on a cash basis
Q:
The normal balance of the accumulated depreciation account is a debit. a. True b. False
Q:
a company had net income of $940,000. depreciation expense is $104,000. during the year, accounts receivable and inventory increased $60,000 and $160,000, respectively. prepaid expenses and accounts payable decreased $8,000 and $16,000, respectively. there was also a loss on the sale of equipment of $12,000. how much cash was provided by operating activities? a.$804,000 b.$828,000 c.$1,124,000 d.$1,172,000
Q:
An estimate of the amount for which an asset can be sold at the end of its useful life is called residual value. a. True b. False
Q:
An asset leased under an operating lease will appear on the balance sheet as a long-term asset. a. True b. False