Cash flows related to obtaining capital for the company
Match each statement to the item listed below.
a. Cash flows from financing activities
b. Cash flows from investing activities
c. Cash flows from operating activities
When using the indirect method to determine operating cash flows, how is the purchase
of equipment for cash shown on the Statement of Cash Flows?
a. operating activity
b. investing activity
c. financing activity
d. noncash investing and financing activity
e. not reported on the statement of cash flows
Situation where an asset is lost or destroyed through theft, acts of nature, or by accident
Match these terms with their correct definition.
a. Book value e. Depreciation
b. Cost f. Impairment
c. Depletion g. Involuntary disposal
d. Depreciable cost h. Residual value
Which of the following is not an operating activity?
a. Cash collections from credit customers.
b. Cash payments for operating expenses.
c. Cash receipts for interest earned.
d. Cash payments for dividends to stockholders.
A treasurer preparing the October bank reconciliation identified the following items:
What is the company’s adjusted cash balance at October 31?
a. $34,600
b. $34,900
c. $32,500
d. $32,800
The inventory turnover ratio is represented by which of the following formulas?
a. net credit sales / average inventory
b. average inventory / net credit sales
c. cost of goods sold / average inventory
d. average inventory / cost of goods sold
What happens to the accounting equation when the adjustment for depreciation expense
for the accounting period is recorded?
a. assets decrease and stockholders’ equity decreases
b. assets increase and stockholders’ equity increases
c. assets decrease and liabilities decrease
d. liabilities increase and stockholders’ equity decreases
A company forgot to record four adjustments during 2013. Which one of the following
omissions of adjustments will understate net income?
a. Sales made during the last week of the period are not recorded.
b. Interest on monies borrowed has not yet been recorded.
c. Prepaid insurance is not reduced for the portion of the policy that has expired during
the period.
d. Income taxes owed but not yet paid are ignored.
Which of the following is false regarding stock warrants?
a. They are frequently considered “equity kickers.”
b. They are typically a means of providing existing stockholders a means of maintaining
their relative level of ownership.
c. They provide an option to purchase shares of stock at a stated price and within a
stated period of time.
d. They are typically provided as a form of compensation for services performed.
Paid cash dividends.
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. (Choices may be used more than once.)
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
It does not make good business sense to spend $100 to save $75.
Match the following terms with their correct definition.
a. Account f. Debit
b. Accounting cycle g. Event
c. Chart of accounts h. General ledger
d. Cost vs. benefit i. Journal
e. Credit j. Trial balance
Situation where the investor owns less than 20% of the common stock of another
company and therefore is not attempting to exert influence over the operating and
financial policies of the investee
Match the following terms to their correct definition:
a. equity security j. held-to-maturity securities
b. debt security k. amortized cost method
c. passive l. fair value method
d. significant influence m. unrealized gains and losses
e. control n. equity method
f. parent o. consolidation worksheet
g. subsidiary p. minority interest
h. trading securities q. business combination
i. available-for-sale securities r. Goodwill
Which one of the following adjustments will increase assets?
a. Interest incurred on money borrowed during the period but not yet paid to the bank is
accrued.
b. Rent revenue is recorded for amounts owed by a tenant but not yet paid.
c. The use of supplies is recorded.
d. Depreciation for the period is recorded.
The ____________________ order is necessary for the buyer to be obligated to accept
and pay for the ordered goods.
____________________ securities, such as bonds, exist when another entity owes the
security holder some combination of principal and interest.
What is meant by “generally accepted accounting principles”?
Common size financial statements exclude the dollar amount as a relevant variable in
the analysis, which makes comparison of one period with the next more meaningful.
Refer to the partial balance sheet presented above for Glass Doctor. Compute the total
current liabilities for December 31, 2014, and December 31, 201
Glass Doctor Selected information from the firm’s consolidated balance sheet is
provided below. Assume that all of the account balances on the balance sheet are
normal balances.
Refer to Recovery Solutions, Inc. Perform DuPont analysis for 2015 and 2014, showing
all three components. Assume that total assets and total stockholders’ equity at June 30,
2013, were $1,250,000 and 969,000, respectively. Recovery Solutions, Inc.
Comparative financial statements are provided below:
The term used to refer to an asset’s original cost is book value.
Refer to Kids R Kids Company. The interest coverage (accrual basis) ratio at December
31, 2013, is:
Kids R Kids Company
Selected data from the comparative financial statements are provided below:
The number of shares sold to stockholders are ____________________ shares.
On January 1, 2012, Parent, Inc., purchased 80% of the outstanding common stock of
Sub Corporation for $750,000. Since Parent has control over Sub, a consolidated
balance sheet must be prepared from the individual balance sheets of both companies.
Complete the following worksheet to prepare the consolidated balance sheet on January
1, 2012.
