Acct 335 Chapter 6 Practice Questions

All of the following activities are classified as financial activities on a statement of cash flows EXCEPT _________. A. distribution of dividends in the form of stock B. issuance of serial bonds C. payment of mortgage D. sale of treasury stock

A

Which of the following is NOT a cash flow measure? A. profitability B. solvency C. liquidity D. financial flexibility

A

Which of the following is classified as an investing activity on a statement of cash flows? A. purchase of land B. issuance of serial bonds C. purchase of insurance policy D. purchase of treasury stock

A

Which of the following is considered an investing activity when preparing the statement of cash flows? A. a purchase of equipment B. a payment on an equipment note C. sale of common stock D. payment of interest on a bond issue

A

Which of the following is a current asset? A. treasury bill maturing in 2 months B. land held for investment C. equipment D. goodwill

A. (Less than 12 months)

Hendricksons Corporations trial balance for July 31st, the end of its fiscal year, included the following accounts: A/R 25,000 Inventory 60,000 Copyright 20,000 Investments 45,000 Prepaid Insurance 9,000 (250/mo. x 12 mo.) Note Receivable, due in two years 75,000 Cash in Bank 5,500 Investments are treasury bills that were purchased in May and mature on August 15. Prepaid insurance is a 3 year policy that was purchased on July 31st. The amount that should be classified as current assets in the July 31st balance sheet is ___________ A. 144,500 B. 138,500 C. 93,500 D. 213,500

B

Moore Corporation reported net income of $210,000 for the current year ended June 30. Accounts receivable had a beginning balance of 35,000 and an ending balance of 39,000. Accounts payable had a beginning balance of 29,000 and an ending balance of 32,000. Assuming that this is all of the relevant information, Moore's cash flows from operating activities are ___________________. A. 203,000 B. 209,000 C. 211,000 D. 217,000

B

When preparing a the operating section of the statement of cash flows using the INDIRECT method, which of the following items are SUBTRACTED from net income? A. depreciation expense B. gain on sale of long-term assets C. decrease in prepaid expenses D. increase in income taxes

B

Which of the following is NOT a cash equivalent? A. commercial paper maturing in 75 days B. bond sinking fund C. money market funds D. treasury bill maturing in 30 days

B

Which of the following is a NOT a component of shareholder's equity? A. common stock B. Other comprehensive income C. additional paid in capital D. treasury stock

B

Glover Corporation's trial balance for December 31, the end of its fiscal year, included the following: A/P 35,000 Dividends 20,000 Bond payable, maturing in 9 years 36,000 Salaries Payable 8,000 Note Payable, due in 1 year 30,000 Note payable, due in 5 years 60,000 The amount that should be classified as current liabilities on Glover's December 31 balance sheet is __________ A. 63,000 B. 73,000 C. 93,000 D. 153,000

C

The statement of cash flows enables financial statement users to do all of the following EXCEPT _____________. A. assess an entity's ability to pay liabilities and dividends B. determine the extent to which an entity will require external financing C. assess the collectibility of existing accounts receivable D. reconcile differences between net income and the associated cash receipts and payments

C

When preparing a the operating section of the statement of cash flows using the INDIRECT method, which of the following items are ADDED to net income? A. decrease in accrued expenses B. gain on sale of long-term assets C. bad debt expense D. increase in accounts receivable

C

Which of the following is classified as a financing activity on a statement of cash flows A. purchase of a vendor's common stock B. sale of equipment at a gain C. payment of dividends to shareholders D. redemption of a sinking fund

C

All of the following activities are classified as investing activities on a statement of cash flows EXCEPT _____. A. purchase of land B. sale of long-term investments C. purchase of copyright D. gain on sale of securities

D

All of the following activities are classified as operating activities on a statement of cash flows EXCEPT ____________. A. purchase inventory B. sale of treasury bills with a 60-day maturity date C. payments from customers D. purchase of Certificate of Deposit

D

If an entity can borrow funds to meet an unexpected financial crisis, it exhibits high _______________. A. liquidity B. solvency C. stability D. financial flexibility

D

When preparing the operating section using the DIRECT method, which of the following statements is true? A. a decrease in accounts payable is added to expenses B. a decrease in accounts receivable is added to sales C. depreciation expense is deducted from cash flows D. gains on sales of long-term assets are omitted from cash flows

D

Which of the following is NOT considered a financing activity when preparing the statement of cash flows? A. issuance of common stock B. redemption of bonds payable C. payments of dividends D. payments on notes receivable

D