States test 3

Current Ratio

Current assets divided by current liabilities; measures the availability of current assets to pay current liabilities

Issued bonds

Financing activity

Issued common stock

Financing activity

Issued preferred stock

Financing activity

Paid cash dividends:

Financing activity

Purchased treasury stock

Financing activity

Redeemed bonds

Financing activity

Sold equipment

Investing activity

Sold long-term investments

Investing activity

Which of the following can be found on the statement of cash flows?

cash flows from (used for) operating activities

On the statement of cash flows, the operating activities section would include

cash receipts from sales of merchandise

On the statement of cash flows, the "Cash flows from (used for) financing activities" section would include

cash received from issuing common stock

On the statement of cash flows, the investing activities section would include

cash received from the sale of equipment

The statement of cash flows is not useful for

determining the net worth of a company

Cash paid for preferred stock dividends should be shown on the statement of cash flows as a(n)

financing activity

Cash received from the issuance of a mortgage note payable would be classified as a(n)

financing activity

Ratio Fixed assets to long-term liability

fixed assets(net)/ Long-liab; measures the margin of safety available to long-term creditors

The operating cash flow available for a company to use after purchasing the fixed assets that are necessary to maintain current operations is called the

free cash flow

Purchased buildings

investing activity

Purchased patents

investing activity

Free cash flow is net cash flows from operating activities less cash used for

investments in PP&E needed to maintain current operations

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

issuance of long-term debt

Net income

operating activity

The order of presentation of activities on the statement of cash flows is

operating, investing, and financing

Damages are labeled as

other

Which of the following should be shown on a statement of cash flows in the financing activities section?

payment of cash to retire a long-term note

Which of the following would not be classified as an operating activity?

payment of dividends

Which of the following transactions would be reported as an investing activity on the statement of cash flows?

purchased long-term assets

Accounting Receivable turnover

sales/ Average account receivable; measures the company efficiency in collecting receivable and in the management of credit

working capital

the difference between current assets and current liabilities-> Measures the company's ability to pay current lib

Cash dividends paid on common stock would be reported on the statement of cash flows in

the financing activities section

Question Content Area Cash paid for equipment would be reported on the statement of cash flows in

the investing activities section

Cash paid to purchase long-term investments would be reported in

the investing activities section of the statement of cash flows

Ratio of liability to stockholder equity

total liability/ total stockholders' equity; Measure how much of the company is finance by debt and equity

When using the spreadsheet (work sheet) in preparing the statement of cash flows by the indirect method, the Balance columns should total to

zero

Quick ration

(Current Assets - Inventory) / Current Liabilities; measures the company instant debt-paying ability

times interest earned

(Net Income + Interest Expense + Income Tax Expense) / Interest Expense

The statement of cash flows is not one of the basic financial statements.

F

double declining balance method

A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life. Depreciation Expense = (Book Value at Beginning of Year) × (2 / Useful Life)

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows as a(n)

Cash flow per share is

Units-of-activity method equation

Depreciation Expense = (Cost of Asset - Salvage Value) / Total Units of Activity( use the hr they give) * Units of Activity during the Period

Straight-Line Method equation

Depreciation Expense=Cost of Asset−Salvage Value/Useful Life

Which of the following increases cash?

borrowing money by issuing a 6-month note

Which of the following should be added to net income in determining the net cash flows from operating activities using the indirect method?

a decrease in accounts receivable

Days Sales in Recivables

average accounts receivable/ Average daily sales; measures the company efficiency in collecting receivable and in the management of credit