Acc101 ch12

The following data are available for Orange Peels Corporation. Sale of land $100,000 Sale of equipment 50,000 Issuance of common stock 70,000 Purchase of equipment 30,000 Payment of cash dividends 60,000 Net cash provided by investing activities is: a. $120,000. b. $130,000. c. $150,000. d. $190,000.

$120,000.

The following data are available for Something Strange! Increase in accounts payable $40,000 Increase in bonds payable 100,000 Sale of investment 50,000 Issuance of common stock 60,000 Payment of cash dividends 30,000 Net cash provided by financing activities is: a. $90,000. b. $130,000. c. $160,000. d. $170,000.

$130,000.

The beginning balance in accounts receivable is $44,000, the ending balance is $42,000, and sales during the period are $129,000. What are cash receipts from customers?

$131,000.

Net income is $132,000, accounts payable increased $10,000 during the year, inventory decreased $6,000 during the year, and accounts receivable increased $12,000 during the year. Under the indirect method, what is net cash provided by operating activities?

$136,000.

The following data are available for Allen Clapp Corporation. Net income $200,000 Depreciation expense 40,000 Dividends paid 60,000 Gain on sale of land 10,000 Decrease in accounts receivable 20,000 Decrease in accounts payable 30,000 Net cash provided by operating activities is: a. $160,000. b. $220,000. c. $240,000. d. $280,000.

$220,000.

Depreciation method that produces higher depreciation expenses in the early years than in the later years

Accelerated-depreciation method

Cost incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset

Additions and improvements

The allocation of the cost of an intangible asset to expense over its useful life in a systematic and rational manner

Amortization

A measure of how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets

Asset turnover ratio

Free cash flow provides an indication of a company's ability to:

Both (b) and (c).

Expenditures that increase the company's investment in productive facilities

Capital expenditures

Which of the following items is reported on a cash flow statement prepared by the direct method?

Cash payments to suppliers.

Exclusive grant from federal government that allows the owner to reproduce and sell an artistic or published work

Copyright

Depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the useful life of asset

Declining-balance method

The allocation of the cost of a natural resource to expense in a rational and systematic manner over the resouce's useful life

Depletion

The cost of plant assets less its salvage value

Depreciable cost

The process of allocating to expense the cost of a plant asset over its useful (service) life in a rational systematic manner

Depreciation

A contractual arrangement under which the franchisor grants the franchisee the right to sell certain products specific, provided specific services, or use certain trademarks or trade names, usually within a designated geographical area

Franchise (license)

States that the company will continue in operation for the foreseeable future

Going-concern assumption

The value of all favorable attributes that relate to a business enterprise

Goodwill

Rights, privileges, and competitive advantages that result from the ownership of long lived assets that do not possess physical substance

Intangible assets

Which is an example of a cash flow from a financing activity?

Issuance of debt for cash.

Which of the following is incorrect about the statement of cash flows?

It reconciles the ending cash account balance to the balance per the bank statement.

Operating rights to use property, granted to a business enterprise by a governmental agency

Licenses

If an item would not make a difference in decision making, a company does not have to follow GAAP in reporting it

Materiality principle

Assets that consist of standing timber and underground deposits of oil, gas, or minerals

Natural resources

Expenditures to maintain the operating efficiency and productive life of the unit

Ordinary repairs

An exclusive right issued by the U.S. Patent Office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant

Patent

Which is an example of a cash flow from an operating activity?

Payment of cash to lenders for interest.

Tangible resources that are used in the operations of the business and are not intended for sale to customers

Plant assets

Which is an example of a cash flow from an investing activity?

Receipt of cash from the sale of equipment.

Expenditures that may lead to patents, copyrights, new processes, or new products

Research and development (R&D) costs

Expenditures that are immediately charged against revenues as an expense

Revenue expenditures

An estimate of an asset's value at the end of its useful life

Salvage value

Depreciation method in which periodic depreciation is the same for each year of the asset's useful life

Straight-line method

Which of the following will not be reported in the statement of cash flows?

The net change in plant assets during the year.

Which of the following is incorrect about the statement of cash flows?

The operating section is the last section of the statement.

A word, phrase, jingle, or symbol that identifies a particular enterprise or product

Trademark

Depreciation method in which useful life is expressed in terms of the total unites of production or use expected from an asset

Units-of-activoty method

An estimate of expected productive life, also called service life, of an asset

Useful life

Items that are added back to net income in determining cash provided by operating activities under the indirect method do not include:

an increase in inventory.

In a worksheet for the statement of cash flows, a worksheet entry that includes a credit to accumulated depreciation will also include a:

debit in the operating section.

The statement of cash flows should not be used to evaluate an entity's ability to:

earn net income.

Cash dividends paid to stockholders are classified on the statement of cash flows as:

financing activities.

The statement of cash flows classifies cash receipts and cash payments by these activities:

investing, financing, and operating.

In a worksheet for the statement of cash flows, a decrease in accounts receivable is entered in the reconciling columns as a credit to Accounts Receivable and a debit in the:

operating activities section.