Which of the following operating activities results in a cash outflow?
a. Paying creditors for merchandise
b. Collecting accounts receivable
c. Making cash sales
d. Receiving deposits recorded as unearned revenue
An outstanding check is a check that:
a. Has been presented to the bank for payment but has not been reported on the bank
statement
b. Has been written by the account holder but has not been presented to the bank for
payment
c. Is guaranteed for payment by the bank
d. Has been written for an amount that is greater than the balance in the account holder’s
bank account
Select the term below most properly satisfies each statement.
a. total assets
b. horizontal analysis
c. vertical analysis
d. net sales
A comparison of financial statement items over a period of time
Cash flows from issuing and repurchasing stock or issuing and repaying (retiring) debt
are classified as
a. operating activities.
b. investing activities.
c. financing activities.
d. borrowing activities.
The following items were reported on the balance sheets and income statement for
Carlton Co.:
What amount would be reported in the operating activities section of the statement of
cash flows for collections from customers under the direct method assuming that all
sales are on credit?
a. $850,000
b. $857,000
c. $843,000
d. Cannot be determined without further information.
Which one of the following statements is true?
a. The audit committee provides contact between the board of directors and the key
officers of the company.
b. The audit committee has become less involved in the financial accounting system as
a result of the Foreign Corrupt Practices Act.
c. The audit committee is a board of directors subset that acts as a direct contact
between the stockholders and the independent accounting firm.
d. The board of directors consists of the company’s external auditors.
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.
An example of design and use of business documents control.
Explain the meaning or significance of the following ratios: A. Average life of property,
plant, and equipment B. Average age of property, plant, and equipment
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
Cost of insurance during transit to acquire inventory items
The notification accompanying a check that indicates the specific invoice being paid is
called a
a. remittance advice
b. voucher
c. debit memo
d. credit memo
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. Kingston
inherited $140,000 from an aunt. If Kingston decides not to spend his inheritance but to
leave the money in his savings account until he retires in 15 years, how much money
will he have assuming an annual interest rate of 8%, compounded semiannually?
a. $ 308,000
b. $ 509,880
c. $ 454,020
d. $7,851,900
For each item listed below, identify how it will be reported on the Statement of Cash
Flows under the indirect method.
a. Operating activity
b. Investing activity
c. Financing activity
d. Not reported separately on the cash flow statement Increase in short-term notes
receivable
Select the term below most properly satisfies each statement.
a. total assets
b. horizontal analysis
c. vertical analysis
d. net sales
When using vertical analysis, accounts on the balance sheet should be stated as a
percentage of this amount
Which method of preparing the operating activities section of a statement of cash flows
reports major classes of gross cash receipts and cash payments for revenues and
expenses?
a. The direct method
b. The indirect method
c. Both the direct method and the indirect method
d. Neither the direct method nor the indirect method
Indicate the type of each ratio listed below.
a. liquidity ratio
b. solvency ratio
c. profitability ratio
Times interest earned ratio
The equity method of accounting is used if the investor owns at least 20% of the
investee and the investor is able to secure influence over the investee.
a. True
b. False