chapter 11 and 12 acct

Beginning accounts receivable were $20,000 and ending accounts receivable were $25,000. If sales were $150,000, cash receipts equal $

145000

Which of the following items would not be adjusted to net income when computing cash flows from operating activities, using the indirect method?

Cash received from sale of building

Identify which of the following is not generally a right of common stockholders.

Manage operations

Which of the following is not a reason that a corporation would issue preferred stock?

To obtain a tax advantage over corporations with no preferred stock

Corporations purchase and hold their own stock, known as treasury stock, for several reasons. Identify which of the following is not a reason that a corporation would buy treasury stock.

To reduce the market value of the common shares outstanding

The statement of cash flows explains the difference between beginning and ending balances of cash and cash equivalents. A cash equivalent must exhibit all of the following criteria, except:

be held at a local institution.

A company repaid a long-term debt during the year. They will report this as an (increase/decrease) ___ in the ___ activities section on the statement of cash flows.

decrease; finance

___ stock typically includes preference for receiving dividends and for the distribution of corporate assets during a liquidation.

preferred

The board of directors of Visor, Inc. authorize a _________, a distribution of additional shares of the corporation's own stock, to existing shareholders.

stock dividend

A corporation is created by obtaining a charter from:

the state government

Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit) ___ to Common Stock, $1 par for $ ___.

credit 100

___ stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.

Authorized

Identify the disadvantages of the corporate form of business. (Check all that apply.)

Corporate taxation Government regulation

Accountants can use a three-step process to determine cash provided (or used) by investing activities. Which of the following steps is not part of this process?

Identify adjustments to net income.

Long, Inc. purchased 50 shares of its own $10 par value common stock for $50 per share. The journal entry to record this transaction would include a debit to the ___ Stock acount in the amount of $ ___

trasury; 2500

True or false: Stockholders do not have the power to bind the corporation to contracts. This is referred to as lack of mutual agency.

true

True or false: The direct method of reporting operating cash flows begins with revenue and adjusts for changes in related balance sheet accounts.

true

_________ stock is the number of shares that a corporation's charter allows it to sell.

Authorized

Net cash provided by operating activities was $12,000. Net cash provided by investing activities was $2,000. Net cash used in financing activities was $7,000. The cash balance at the beginning of the year was $4,000. The cash balance at the end of the year is:

$11,000

The equipment account had a $36,000 balance at the beginning of the year, and a $30,000 balance at the end of the year. The accumulated depreciation account had a balance of $22,000 at the beginning of the year, and a $17,000 balance at the end of the year. The income statement reported depreciation expense of $4,000 for the year. Equipment costing $10,000 was sold for its book value. Cash received from the sale to be reported in the Investing Activities section is $

1000

The statement of cash flows explains the difference between beginning and ending balances of cash and cash equivalents. A cash equivalent must satisfy which of the following criteria? (Check all that apply.)

Be readily convertible to a known amount of cash Be close to maturity

Gomez Inc.'s charter authorizes 1,000 shares of stock at a par value of $1 per share. Gomez sells 200 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include which of the following entries? (Check all that apply.)

Debit to Cash for $200. Credit to Common Stock, $1 par for $200.

Ivers, Inc. purchased 100 shares of its own $10 par value common stock for $20 per share. The journal entry to record this transaction would include which of the following entries?

Debit to Treasury Stock; credit to Cash.

Which of the following questions could not be answered from the statement of cash flows?

What are the earnings-per-share of common stock?

A _________ is the distribution of cash to its owners. This is determined by the board of directors.

cash dividend

A(n) _______ occurs when the receipts in a category exceed the payments.

net cash inflow

The three-step analysis to determine cash provided or used by financing activities includes:

reporting the cash flow effects identifying changes in financing-related accounts explaining the changes using T-accounts and reconstructed entries

The account that consists of a company's cumulative net income less any losses and dividends declared since its inception is called _________.

retained earnings

If all sales are for cash, the amount received from customers will equal the ___ reported on the income statement.

sales

There are five important steps to preparing a statement of cash flows. Rank the steps in order from first to last.

1) compute the net increase 2) compute and report the net cash... operating activites 3)comput... investing acti 4)compute... financing ac 5)compute the net cash

Beginning accounts receivable were $20,000 and ending accounts receivable were $25,000. If sales were $150,000, cash receipts equal $___

145000

Net cash used in operating activities was $10,000. Net cash provided by investing activities was $2,000. Net cash provided by financing activities was $5,000. The cash balance at the end of the year was $12,000. The cash balance at the beginning of the year was $

15000

Zinc, Inc. has 10,000 shares of $5 par, 5% preferred stock, and 5,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $15,000 dividend, the payments to preferred shareholders will total _________.

2500

At the beginning of the period, a company reported $100,000 of common stock, $10 par; and $50,000 paid-in capital in excess of par. At the end of the period, this company reported $110,000 of common stock, $10 par; and $90,000 paid-in capital in excess of par. Cash received from the sale of common stock during the year is $

50000

Information about cash flows can influence decision makers in important ways. Which of the following questions could be answered by the statement of cash flows? (Check all that apply.)

Can the company pay its debts? How does a company spend its cash? Does the company have the resources to pursue opportunities?

Which of the following is not one of the five important steps to preparing a statement of cash flows?

Compute the net income

Which of the following items would be adjusted to net income when computing cash flows from operating activities, using the indirect method? (Check all that apply.)

Gain on sale of building Loss on sale of investment Depreciation expense

To compute cash flows from financing activities, accountants normally analyze changes in all of the following accounts except:

Interest Payable

It is important to analyze the sources and uses of cash because (select all that apply):

Investors use this information to decide if they will purchase their stock. Creditors use this information to assist them in deciding whether to loan funds to them.

Which of the following statements about the statement of cash flows are correct? (Check all that apply.)

It is a detailed disclosure of cash flows. The purpose is to report cash receipts and cash payments during a period.

Jose Garcia agrees to contribute land with a fair market value of $10,000 in exchange for 200 shares of Damian Inc.'s common stock with a par value of $10 per share. The journal entry to record this transaction in the books of Damian, Inc., will include a credit to _________ in the amount of _______.

Paid-in Capital, in Excess of Par; $8,000

_________ has/have special rights that give it priority over other types of stock in one or more areas.

Preferred stock

Identify which of the following items is not a noncash investing and financing activity that must be reported in a note to the statement of cash flows. (Check all that apply.)

Purchase of a plant asset with cash Repayment of a note with cash

Which of the following items are classified as noncash investing and financing activities? (Check all that apply.)

Retirement of debt by issuing stock Purchase of a building with a note Issuance of common stock in exchange for land

Which of the following items would be correct adjustments to net income to arrive at cash flows from operating activities, using the indirect method? (Correct all that apply.)

Subtract increase in inventory Add increase in accounts payable

Which of the following items would not be a correct adjustment to net income to arrive at cash flows from operating activities, using the indirect method?

Subtract increase in taxes payable

The statement of cash flows reports noncash investing and financing transactions in

a note or separate schedule

A loss from the sale of an investment would be (added/subtracted) ___ to (from) net income when computing cash flows from operations, using the indirect method.

added

Depreciation expense is (added/subtracted) ___ to (from) net income, when computing cash flows from operations, using the indirect method.

added

Red Co.'s beginning Common Stock balance was $110,000 and their ending Common Stock balance was $125,000. This will be reported as _____ in the statement of cash flows.

an increase of $15,000 in the financing activities section

Starfish Shells had a beginning balance in Notes Payable of $35,000 and an ending balance of $40,000. This will be reported as _____ on the statement of cash flows.

an increase of $5,000 in the cash flows from financing activities section

Blue Co. sold plant assets costing $15,000 with accumulated depreciation of $10,000 for $7,000. As a result, Blue Co will report _____ on the statement of cash flows in the cash flows from investing activities section.

an increase of $7,000 in the investing activities section

Investors assess cash flows before

buying and selling stock

A ___________ is an entity created by law that is separate from its owners. Owners are called stockholders or shareholders. These entities can be privately or publicly held.

corporation

On August 20, Max, Inc. issues 100 shares of $1 par value preferred stock for $3,000 cash. The entry to record this transaction would include a (debit/credit) ___ to the preferred stock account in the amount of $ ___ .

credit 100

On May 25, Tyler, Inc. issues 100 shares of $10 par value preferred stock for $5,000 cash. The entry to record this transaction would include a (debit/credit) ________ to the preferred stock account in the amount of _______.

credit 1000

Cameron, Inc. held 1,000 shares of its own $10 par value common stock purchased for $20 per share. In March, Cameron sold 10 shares at $20 per share. The journal entry to record the sale of treasury stock would include a (debit/credit) ________ to Treasury Stock in the amount of ________.

credit 200

Bing Inc.'s charter authorizes 500 shares of stock with no par value. Bing Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) _______ to Common Stock for ______.

credit; $500

Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit) ___ to Common Stock, $1 par for $___

credit; 100

Avery, Inc. held 100 shares of its own $10 par value common stock purchased for $15 per share. On December 1, Avery sold 10 shares at $15 per share. The journal entry to record the sale of treasury stock would include a (debit/credit) ___ to Treasury Stock in the amount of $ ___ .

credit; 150

Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a (debit/credit) ___ to Common Stock, $1 par for $ ___

credit;100

Josie Inc.'s charter authorizes 1,000 shares of stock with no par value. Josie Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) ___ to Common Stock, for $ ___.

credit;500

Dane, Inc. purchased 10 shares of its own $5 par value common stock for $20 per share. The journal entry to record this transaction would include a (debit/credit) ___ to the Treasury Stock account in the amount of $ ____.

debit 200

A cash ___ must satisfy two criteria: (1) be readily convertible to a known amount of cash and (2) be sufficiently close to maturity so its market value is unaffected by interest rate changes.

equivalent

True or false: Preferred stock can be issued to raise money with voting rights.

false

The format of a statement of cash flows includes reporting cash flows from three activities including:

financing investing operating

The three-stage process to determine cash provided or used by financing activities includes all of the following steps except:

identify an increase or decrease in cash.

The three-step analysis to determine cash provided or used by investing activities includes:

identifying changes in investing-related accounts explaining the changes using T-accounts and reconstructed entries reporting the cash flow effects

Carol Co. prepares a statement of cash flows starting with net income and then adjusting for items necessary to obtain net cash provided or used by operating activities. Carol Co. must be using the (direct/indirect) ___ method of reporting the statements of cash flows

indirect

The _______ method of reporting the statement of cash flows reports net income and then adjusts it for items necessary to obtain net cash provided or used by operating activities.

indirect

A net cash (inflow/outflow) ___ occurs when the receipts in a category exceed the payments.

inflow

The indirect method of computing and reporting net cash flows from operating activities involves adjusting ___ ___ to obtain the net cash provided or used by operating activities

net income

Corporations can be separated into two types. A ___ held corporation does not offer its stock for public sale and usually has few stockholders. A ___ held corporation offers its stock for public sale and can have thousands of stockholders.

private;public

A charter application usually must be signed by the prospective stockholders called incorporaters or ___. . Then, it is filed with the appropriate state official.

promoters

___ ___ is an account that consists of a company's cumulative net income less any losses and dividends declared since its inception.

retained earnings

A statement of stockholders' equity lists balances of: Check all that apply.

retained earnings common stock shares net income cash dividends

A stock __________ is the distribution of additional shares to stockholders according to their percent ownership. When this occurs, the corporation "calls in" its outstanding shares and issues more than one new share in exchange for each old share.

split

Mario, Inc. declares a 2-for-1 stock ___. This means that Mario will "call in" its outstanding shares and issue two shares in exchange for each old share of stock.

split

A(n) ___ , also called a worksheet, can help organize the information needed to prepare a statement of cash flows.

spreadsheet

The _____ lists the beginning and ending balances of key equity accounts and describes the changes that occur during the period.

statement of stockholders' equity

A _______ dividend, declared by a corporation's directors, is a distribution of additional shares of the corporation's own stock.

stock

A gain from the sale of a building would be (added/subtracted) ___ to (from) net income when computing cash flows from operations, using the indirect method.

subtracted

In preparing a cash flows from operating activities using the indirect method, an increase in accounts receivable would be (added/subtracted) ___ to (from) net income.

subtracted

Two of the biggest disadvantages of the corporate form of business are government regulation and corporate

taxation

Keys, Inc. purchased 100 shares of its own common stock for $10 per share. The stock is now classified as ______ stock, a contra equity account, reported on the statement of stockholder's equity.

treasury

When a corporation purchases shares of its own stock, it is called ________ stock.

treasury

True or false: A spreadsheet can help a company prepare a statement of cash flows.

true

Stockholders have the right to ___ at stockholders' meetings.

vote

In the computation of basic earnings per share, a company will use the _____.

weighted-average common shares outstanding

Net cash used in operating activities was $10,000. Net cash provided by investing activities was $2,000. Net cash provided by financing activities was $5,000. The cash balance at the end of the year was $12,000. The cash balance at the beginning of the year was $ ___.

15000

Blink, Inc. has 1,000 shares of $10 par, 5% preferred stock, and 20,000 shares of $10 par common stock issued and outstanding. If the board of directors authorizes a $20,000 dividend, the payment to common shareholders will total $

19500

Which of the following would be included in the operating section when preparing the statement of cash flows using the indirect method?

Net income

Cash flows from financing activities identifies cash receipts and cash payments related to which of the following types of accounts? (Check all that apply.)

Common Stock Bonds Payable

John Kim agrees to contribute equipment with a fair market value of $5,000 in exchange for 100 shares of Rio Inc.'s common stock with a par value of $1 per share. Rio will record this transaction as a credit to which of the following accounts? (Check all that apply.)

Common Stock Paid-in Capital in Excess of Par Value

Identify the advantages of the corporate form of business. (Check all that apply.)

Ease of capital accumulation Limited liability of stockholders Continuous life

Information on the statement of cash flows helps users answer all of the following questions except:

Why did the company invest in long-term assets?

Cash flows from operating activities under the ____ method adjusts accrual-based income statement items to a cash basis.

direct

The board of directors authorizes a cash ___ or distribution of cash to its investors.

dividends

The amount of income earned per each share of a company's outstanding common stock is known as:

earning per share