When preparing the statement of cash flows, the amount of net cash flow from
operating activities differs between the direct and indirect methods.
The collection of time records is an accounting information system activity that is
classified as a business transaction involving the sale of merchandise inventory.
The perpetual inventory system keeps a running record of inventory and cost of goods
sold.
Financial analysts perform reviews of companies to ensure compliance to rules and
regulations.
A business keeps cash in a bank account because banks have established practices for
safeguarding the business’s money.
Realized gains or losses occur when a company adjusts an asset to fair value but has not
yet disposed of the asset.
The entry to close Sales Discounts will include a debit to Income Summary.
An account that is not closed at the end of the period is called a(n) ________.
A) expense account
B) temporary account
C) permanent account
D) revenue account
Which of the following sections from the statement of cash flows includes the cash paid
for the purchase of Treasury Stock?
A) the financing activities section
B) the operating activities section
C) the investing activities section
D) the non-cash investing and financing section
A business purchases equipment for $8,000 cash. Which of the following accounts is
credited?
A) Cash
B) Accounts Payable
C) Common Stock
D) Equipment
Unrealized gains or losses on available-for-sale investments occur when a company
adjusts the investment to ________.
A) fair value but has not yet disposed of the asset
B) fair value when an asset is disposed
C) average value but has not yet disposed of the asset
D) average value when an asset is disposed
Certified Auto Parts Company uses the indirect method to prepare its statement of cash
flows. Refer to the following information for 2017:Net cash provided by operating
activities: $109,000
Net cash used for investing activities: $(114,500)
Net cash provided by financing activities: $16,000If the cash balance at the beginning
of the year was $13,200, what is the ending cash balance?
A) $23,700
B) $10,500
C) $13,200
D) $5,500
On January 1, 2017, Finch Company issued $74,000 of five-year, 8% bonds when the
market interest rate was 12%. The issue price of the bonds was $62,000. Finch uses the
effective-interest method of amortization for bond discount. Semiannual interest
payments are made on June 30 and December 31 of each year. How much interest
expense will be recorded when the first interest payment is made? (Round your answer
to the nearest dollar number.)
A) $2,480
B) $3,720
C) $2,960
D) $4,440
After initially recording a transaction, the data is then transferred to the ________.
A) chart of accounts
B) ledger
C) trial balance
D) journal
Which of the following is true of goodwill?
A) Goodwill must be capitalized when acquired and amortized over seven years or less.
B) Both created and acquired goodwill must be recorded in the books.
C) Goodwill must be expensed when acquired.
D) Goodwill is not amortized.
An entity that buys goods and sells them to customers at a markup is a ________.
A) merchandiser
B) service provider
C) manufacturer
D) producer
Which of the following may pay dividends?
A) futures contracts
B) real estate securities
C) debt securities
D) equity securities
Which of the following can be an effect of a transaction that increased an asset of a
corporation for the accounting equation to balance?
A) there is an equal decrease in another asset
B) there is an equal decrease in equity
C) there is an equal decrease in a liability account
D) both liabilities and equity decrease