Which of the following statements is true of the direct and indirect methods of
preparing the statement of cash flows?
A) The indirect method and the direct method will produce the same amount of net cash
flow from operating activities.
B) The investing activities section is the only section that differs between the direct and
indirect methods.
C) The indirect method shows three types of cash flows, but the direct method does not.
D) There is no difference in the way the operating activities section is presented.
O’Reilly Corp. purchased a mine on January 1, 2016, for $530,000. The mine is
estimated to contain 39,000 tons of iron ore. There is no residual value. The business
extracted and sold 9,500 tons of ore in 2016 and 13,800 tons of ore in 2017. What is the
book value of the mine at the end of 2017? (Round any intermediate calculations to two
decimal places, and your final answer to the nearest dollar.)
A) $452,000
B) $213,353
C) $371,000
D) $530,000
An oil well cost $1,832,500 and is calculated to hold 160,000 barrels of oil. There is no
residual value. Which journal entry is needed to record the expense for the extraction of
37,000 barrels of oil during the year? All 37,000 barrels were sold ding the year.
(Round any intermediate calculations to the nearest cent, and your final answer to the
nearest dollar.)A)
B)
C)
D)
The following details are provided by Blue Bell Merchandisers. The company uses the
periodic inventory system.
Calculate the amount of net purchases.
A) $153,000
B) $88,500
C) $90,000
D) $107,000
A listing of all accounts in numerical order is called a(n) ________.
A) Ledger
B) Journal
C) Income statement
D) Chart of accounts
Which of the following transactions would be shown in the non-cash investing and
financing activities section of the statement of cash flows?
A) sold equipment with book value of $15,000 in exchange for $15,000 cash
B) retired company bonds before the maturity date by paying a negotiated amount
C) issued 50,000 shares of stock at $2 per share
D) purchased land by signing a 10-year note for $500,000
A business repays the amount borrowed on a note with cash. Which of the following
accounts is credited?
A) Accounts Payable
B) Cash
C) Notes Payable
D) Notes Receivable
Which of the following is true of the comparison between equity securities and debt
securities?
A) Debt securities represent stock ownership in a company whereas equity securities
represent a credit relationship with the company.
B) Equity securities earn dividend revenue whereas debt securities earn interest
revenue.
C) Neither debt securities nor equity securities mature at a stated date.
D) Both debt securities and equity securities pay interest.
The economic resources of a business such as furniture, building, and land are its
________.
A) liabilities
B) revenues
C) assets
D) dividends
Which of the following is a liability account?
A) Accounts Receivable
B) Cash
C) Building
D) Notes Payable
The entry to record depreciation includes a debit to the ________.
A) Equipment account
B) Cash account
C) Accumulated Depreciation account
D) Depreciation Expense account