Presented below is the operating activities section of the statement of cash flows for
Feline Friends Corp. for 2016:
Operating activities:
Which method of preparing the operating activities section has Feline used?
a.The direct method
b.The indirect method
c.Either method
d.Cannot be determined without further information
The solution to this problem requires time value of money calculations. Reference to
Tables 9-1 through 9-4 in the text is necessary to complete the calculations.
If you must calculate the present value of an amount at 8% compounded quarterly for 2
years, then the interest factor used in the calculation is
a.2% for eight periods
b.twice that for one period at 8% multiplied by 2
c.8% for two periods
d.the interest factor for 8% for two periods divided by 4
From the list of accounts below, determine whether the account would be a nominal
account or a real account.
a.nominal account
b.real account
Interest Payable
Dallas Corp. reported the following information for 2015 and 2016.
How much cash was received for interest during 2016?
a. $2,900
b. $3,200
c. $3,500
d. $3,800
Match the costs that might be included as part of the cost of inventory to the listed
accounting treatment.
a.Add to inventory cost
b.Subtract from inventory cost
c.Not an inventory cost
Freight costs incurred by the buyer to ship goods to its place of business
Given below is a list of items that may be reported on a statement of cash flows.
Identify each as one of the following using the indirect method:
a.Operating
b.Investing
c.Financing
d.Not separately reported on a statement of cash flows
Amortization of a copyright
If a company uses the direct method of reporting cash flows from operating activities,
then a reconciliation of net income and cash flow from operations is also required.
a.True
b.False
You are interested in accumulating $10,000 so that you can take a cruise in 3 years. If
you trying to solve for the amount that you need to invest each year, earning 6% interest
compounded annually, the $10,000 represents:
a.the amount to invest.
b.an annuity.
c.a future value.
d.a present value.
Mayflower Company had a machine with a cost of $123,000 and accumulated
depreciation of $87,000 that was sold at for a gain of $5,000. What amount of cash was
received from the sale?
a. $30,000.
b. $36,000.
c. $41,000.
d. $128,000.
A debit memorandum appeared on Cinco Inc.’s May bank statement. How will Cinco
treat this amount on its May
bank reconciliation?
a.Add it to the bank balance
b.Add it the book balance
c.Deduct from the bank balance
d.Deduct from the book balance
Which one of the following statements is false regarding the gross profit ratio?
a.The gross profit ratio is calculated by dividing net sales by gross profit.
b.The gross profit ratio is a measure of profitability.
c.The gross profit ratio can help investors decide whether or not to buy a company’s
stock.
d.The gross profit ratio should be compared with both a company’s prior years’ ratios
and also competitor ratios.
Complete the December 31, 2015 (first year of operation) Balance sheet for Weglein
Company using the following information:
(a) Retained earnings at December 31, 2015 was $51,000.
(b) Total stockholders’ equity at January 1, 2015 was $139,000.
(c)On December 30, 2015, additional capital stock was sold for cash, $55,000
(d)The land and building were purchased on December 30, 2015 for $150,000.
The following selected data are taken from the financial statements of Ulysses
Company:
REQUIRED:
1)Compute the following ratios for Ulysses Company:
a.Return on sales
b.Asset turnover (Assume that total assets at the beginning of the year were
$1,600,000.) Round final answers to 3 decimals.
c.Return on assets
d. Return on common stockholders’ equity (Assume that the only changes in
stockholders’ equity during the year were from the net income for the year and
dividends on the preferred stock.)
2)Comment on Ulysses’ use of leverage. Has it successfully employed leverage?
Explain.
Use the following codes to indicate how the cash flow effect, if any, of each transaction
would be reported on a statement of cash flows if the operating activities section is
prepared using the direct method.
a.Inflow from operating activity
b.Outflow from operating activity
c.Inflow from investing activity
d.Outflow from investing activity
e.Inflow from financing activity
f.Outflow from financing activity
g.Noncash investing and financing activity
h.Not reported on statement of cash flows
Recorded depreciation for the year.
Union Company purchased a delivery van at a cost of $30,000 cash on January 1, 2014.
The van has an estimated useful life of 6 years and a $6,000 estimated residual value.
A.What is the effect on the accounting equation of the purchase of the van?
B.How much depreciation expense should be reported for 2015?
C.What is the total amount of accumulated depreciation at December 31, 2015?
For each ratio listed, select whether an increase or decrease in the ratio is generally
considered to be better.
a.increase
b.decrease
Dividend yield ratio
Match the selected items from a classified balance sheet and multiple-step income
statement to the section in which they would appear on the classified balance sheet or
the income statement.
a.Current Assets (balance sheet)
b.Property, Plant, & Equipment (balance sheet)
c.Current Liabilities (balance sheet)
d.Long-term Liabilities (balance sheet)
e.Stockholders’ Equity (balance sheet)
f.Operating Revenue (income statement)
g.Operating Expenses (income statement)
h.Other Revenue & Expenses (income statement)
i.Income Taxes (income statement)
Consulting revenues
The following data is available for one of the products sold by Share, Inc., which uses a
perpetual inventory system.
Refer to the data for Share, Inc.
If the moving average method is used, how much is ending inventory on May 30?
For each of the following sentences 133-140, select the word or group of words that
best completes the statement.
is the association of the costs incurred with the associated revenue of a period.
A(n)is a list of each account and its balance at a specific point in time.
The 2015 annual report of Ski Products, Inc. reported the following amounts (in
millions of dollars):
REQUIRED:
1> Compute Ski’s accounts receivable turnover ratio for the year ended May 31, 2015.
(Assume that all sales are
on credit.)
2> What is the average collection period in days for an account receivable? Explain
your answer.
3>Ski’s main products are medium to highend skis and snow boards. Give some
examples of the types of customers you would expect Ski to have. Do you think the
average collection period for sales to these customers is reasonable? What other
information do you need to fully answer that question?
Use the selected data from the comparative financial statements for Auto Designs, Inc.
to answer the questions that follow.
Refer to the account information for Auto Designs, Inc.
Calculate the current and quick ratios for 2015 and 2014. Comment on the direction and
significance of the change in the ratios.
Accountants define the market value of inventory as its.