For each of the following items, indicate whether it would appear on a statement of
cash flows prepared using the Direct method (a) or the Indirect method (b).
a.Direct
b.Indirect
Gain on early retirement of bonds
For the following items Questions 220-227, indicate whether each should be (a)
included or (b) excluded from the line item titled Cash and cash equivalents on the
balance sheet.
a.Included
b.Excluded
Savings account
Supplementary disclosures required by GAAP that help explain detail behind the
accounting treatment of certain items in the financial statements is most likely found in
which of the following sections of a corporate annual report?
a.Report of the Independent Accountants
b.Notes to the Financial Statements
c.Management’s Discussion and Analysis
d.Balance Sheet
Match the following choices to the listed situation.
a.a deferred expense
b.a deferred revenue
c.an accrued liability
d.an accrued asset
Rent is owed by a tenant but not yet collected
Show the effect of each of the transactions below on total liabilities and the
debt-to-equity ratio by using one of the following symbols in each box to complete the
table. If the numerator and denominator of a ratio both increase or both decrease by the
same amount, the effect of the event on the ratio is “insufficient data.”
All intangible assets should be amortized.
a.True
b.False
From the following list, identify whether the change in the account balance during the
year would be reported as an operating (O), an investing (I), or a financing (F) activity
or not separately reported on the statement of cash flows (N). Assume that the indirect
method is used to determine the cash flows from operating activities.
a.O – Operating
b.I – Investing
c.F – Financing
d.N – Not separately reported on the Statement of Cash Flows
Current maturities of long-term debt
Match the following choices to the listed situation.
a.a deferred expense
b.a deferred revenue
c.an accrued liability
d.an accrued asset
Cash was collected from customers for rental of tents for next year
What was the book value of the ship for Paulson Transport at the end of the useful life?
a. $-0-
b. $50,000
c. $214,400
d. Need more information to determine this answer.
From the following choices, select the answer that describes the effect on working
capital as a result of the transaction.
a.Working capital will increase
b.Working capital will decrease
c.Working capital will not change
Borrowed cash using a six-month note
Match each of the following terms pertaining to liabilities to their definitions.
a.Current liability
b.Accounts payable
c.Notes payable
d.Discount on notes payable
e.Current maturities of long-term liabilities
f.Accrued liabilities
g.Contingent liability
h.Estimated liability
A liability that has been incurred but has not been paid as of the balance sheet date.
If the current ratio is 2.5 to 1, net income is $6,000, and current liabilities are $18,000,
how much is working capital? a. $6,000
b. $24,000
c. $27,000
d. $45,000
The accountant for Rogan Corp. was preparing a bank reconciliation as of February 28,
2014. The following items were identified:
What amount will Rogan report as its adjusted cash balance at February 28, 2014?
a. $12,385
b. $12,500
c. $14,885
d. $17,385
The following items were reported on the balance sheets and income statement for
Centerton Inc., a service company:
What amount would be reported in the operating activities section of the statement of
cash flows for payments for operating expenses under the direct method?
a. $186,000
b. $154,000
c. $180,000
d. $170,000
On July 1, 2014, Falcon Company received a $20,000 promissory note for services
from Jordyn Company. The annual interest rate is 5%. Principal and interest are paid in
cash at the maturity date of June 30, 2013.
The effect on Falcon’s financial statements on July 1, 2014 is as follows
a.Assets increase¾ owners’ equity increases
b.Assets decrease and owners’ equity decreases
c.Assets decrease
d.No net change in assets