FIN 129 Midterm 1 | Course Paper

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Use the following codes to indicate how the cash flow effect, if any, of each transaction

or event would be reported on a statement of cash flows if the operating activities

section is prepared using the indirect method.

a.Operating activity-add to net income

b.Operating activity-deduct from net income

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

Issued stock to retire bonds.

All of the following are considered to be long-term liabilities for Parsons Company

except:

a.Bonds issued this year (due in 10 years).

b.The third year payments for a three-year lease signed this year.

c.The current year portion of Deferred taxes.

d.The principal of a note payable signed this year, but due in five years.

Choose from the following list of account titles the one that most accurately fits the

description of that account or is an example of that account. An account title may be

used more than once or not at all.

a.Cash

b.Prepaid Asset

c.Investments

d.Taxes Payable

e.Preferred Stock

f.Accounts Receivable

g.Land

h.Accounts Payable

i.Retained Earnings

j.Notes Receivable

k.Buildings

l.Notes Payable

m.Common Stock

A checking account at a bank

Which of the following accounts is not classified as a current liability?

a.Accounts payable

b.Note payable, due in three (3) years

c.Taxes payable

d.Salaries payable

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 long-term note

Choose from the following list of account titles the one that most accurately fits the

description of that account or is an example of that account. An account title may be

used more than once or not at all.

a.Cash

b.Prepaid Asset

c.Investments

d.Taxes Payable

e.Preferred Stock

f.Accounts Receivable

g.Land

h.Accounts Payable

i.Retained Earnings

j.Notes Receivable

k.Buildings

l.Notes Payable

m.Common Stock

An amount owed by a customer

Use the following codes to indicate how the cash flow effect, if any, of each transaction

or event would be reported on a statement of cash flows if the operating activities

section is prepared using the indirect method.

a.Operating activity-add to net income

b.Operating activity-deduct from net income

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

Purchased store equipment for cash.

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

Salaries and wages payable

The payment of accounts payable results in a(n)

a.decrease in liabilities and a decrease in assets.

b.decrease in liabilities and an increase in owners’ equity.

c.decrease in liabilities and an increase in assets.

d.increase in liabilities and a decrease in owners’ equity.

Identify where each of the following accounts would be reported on CocaCola’s

financial statements

a.Balance Sheet – Property, Plant, and Equipment

b.Balance Sheet – Intangible Assets

c.Balance Sheet – Current Assets

d.Balance Sheet – Other Assets

e.Income Statement – Operating Section

f.Income Statement – Other Revenue and Expense Section

g.Statement of Cash Flows

Land improvements

Match the following terms with the best definitions for questions 212 through 219.

a.Purchase requisition.

b.Receiving Report.

c.Vendor Invoice.

d.Check.

e.Control procedures.

f.Inventory count.

g.Segregation of duties.

h.Source document control.

The practice of not combining physical custody of assets with the function of

accounting for those assets.

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

Utilities Expense

Select the account that would be increased to show each of the following costs.

a.Land

b.Land Improvements

c.Buildings

d.Machinery and Equipment

e.An Expense Account

The sales taxes paid related to a machine purchased.

Match the following bond and long-term liability related terms to the appropriate

definition.

a.Long-term liability

b.Face value

c.Debenture bonds

d.Serial bonds

e.Callable bonds

f.Face rate of interest

g.Market rate of interest

h.Bond issue price

i.Premium

j.Discount

k.Effective interest method of amortization

l.Carrying value

m.Gain or loss on redemption

Bonds that do not all have the same due date. A portion of the bonds comes due each

time period.

Foxrun, Inc. purchased a truck at the beginning of 2015 for $32,500. Foxrun decided to

depreciate the truck over an 8-year period using the straight-line method, and estimated

its residual value to be $4,500. At the beginning of 2016, Foxrun determined that a

5-year life should have been used to depreciate the truck. The estimated residual value

was not affected by the revision in the asset’s life.

A.Determine the amounts to be recorded as depreciation expense for 2015 and 2016.

B.What factors may have influenced Foxrun to change the useful life?

If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March 3

and pays April 2, then the amount paid to the seller would be

a. $3,150

b. $3,136

c. $3,200

d. $3,168

Indicate the type of each ratio listed below.

a.Liquidity ratio

b.Solvency ratio

c.Profitability ratio

Return on assets ratio

For each of the following sentences 133-140, select the word or group of words that

best completes the statement.

A(n)results when cash is received before the related amount is reported on the income

statement.

On August 16, 2015, Blenim Corp. purchases 6,000 shares of common stock in

Mountain Inc. at a market price of

$17 per share. In addition, Blenim pays brokerage fees of $2,000. On October 21, 2015,

Blenim sells the Mountain stock for $12 per share.

REQUIRED:

Identify the effects on the accounting equation in connection with Blenim’s investment

beginning with

the purchase of the common stock on August 16, 2015, and the sale on October 21,

2015.

For each of the following sentences 133-140, select the word or group of words that

best completes the statement.

The success of accounting as a form of communication depends on two concepts,and

____________________.

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 LIFO method is used, how much is cost of goods sold for May?

are those investments that are readily convertible into known amounts of cash and that

have an original maturity to the investor of three months or less.

Grenada Corporation

Use the note on Disclosure of Leases for the Grenada Corporation to answer the

questions that follow.

The Corporation leases office, warehouse and showroom space, retail stores and office

equipment under operating leases, which expire no later than 2029. The Corporation

normalizes fixed escalations in rental expense under its operating leases. Minimum

annual rentals under non-cancelable operating leases, excluding operating cost

escalations and contingent rental amounts based upon retail sales, are payable as

follows:

Rent expense was $12,551,000; $8,911,000; and $5,768,000 for the years ended March

31, 2014, 2013,and 2012 respectively.

Review the information for Grenada Corporation.

REQUIRED:

(1) What are the two types of leases that a company can have? Describe each briefly.

(2) Does the note disclosure show evidence of the two types of leases?

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.

Require:

1>If the FIFO method is used, how much is ending inventory on May 30?

2>How does this differ from the amount calculated using a periodic system and FIFO?