ACCTG 318 Ch 4 Quiz
Selected information from the 2016 accounting records of Dunn's Auto Dealers is as follows: Cost of furniture purchased for cash $ 8,000 Proceeds from bank loan 100,000 Repayment of bank loan (includes interest of $4,000) 44,000 Proceeds from sale of equipment 5,000 Cash collected from customers 320,000 Purchase of stock of another corporation as an investment 20,000 Common stock issued for cash 200,000 In its 2016 statement of cash flows, Dunn's should report net cash outflows from investing activities of:
$23,000 $5,000 (proceeds from sale of equipment) − $8,000 (cost of furniture purchased for cash) - $20,000 (purchase of stock of another corporation as an investment) = $23,000
Selected information from the 2016 accounting records of Dunn's Auto Dealers is as follows: Cost of furniture purchased for cash $ 8,000 Proceeds from bank loan 100,000 Repayment of bank loan (includes interest of $4,000) 44,000 Proceeds from sale of equipment 5,000 Cash collected from customers 320,000 Purchase of stock of another corporation as an investment 20,000 Common stock issued for cash 200,000 In its 2016 statement of cash flows, Dunn's should report net cash inflows from financing activities of:
$260,000 $100,000 (proceeds from bank loan) − $40,000 (repayment of bank loan principal) + $200,000 (common stock issued for cash) = $260,000
The following items appeared in the 2016 year-end trial balance for the Brown Coffee Company: Debits Credits Revenues $600,000 Operating expenses $420,000 Income on discontinued operations 200,000 Restructuring costs 100,000 Interest expense 20,000 Gain on sale of investments 30,000 Income tax expense has not yet been accrued. The company's income tax rate is 40%. What amount should be reported in the company's year 2016 income statement as income from continuing operations?
$54,000 [$600,000 (revenues) - $420,000 (operating expenses) - $100,000 (restructuring costs) - $20,000 (interest expense) + $30,000 (gain on sale of investments)] x [1.0 - 0.40 (income tax rate)] = $54,000
Access the FASB Accounting Standards Codification at the FASB website (asc.fasb.org). Determine the specific citation for each of the following items: Required: 1. The calculation of the weighted average number of shares for basic earnings per share purposes. 2. The alternative formats permissible for reporting comprehensive income. 3. The classifications of cash flows required in the statement of cash flows.
1. ASC 260-10-55-2 2. ASC 220-10-45-1 3. ASC 230-10-45-1
Income statement: 2018 Sales $2,500,000 Cost of goods sold $1,300,000 Net income $200,000 Balance sheets: 2018 Accounts receivable $300,000 Total assets $2,000,000 Total shareholders' equity $900,000 2017 Accounts receivable $200,000 Total assets $1,800,000 Total shareholders' equity $700,000 The asset turnover for 2018 is:
1.32 Asset turnover = sales revenue ÷ average total assets, so asset turnover = $2,500,000 ÷ ((1,800,000 + 2,000,000) ÷ 2) = 1.32.
Income statement: 2018 Sales $2,500,000 Cost of goods sold $1,300,000 Net income $200,000 Balance sheets: 2018 Accounts receivable $300,000 Total assets $2,000,000 Total shareholders' equity $900,000 2017 Accounts receivable $200,000 Total assets $1,800,000 Total shareholders' equity $700,000 The accounts receivable turnover for 2018 is:
10.0 Accounts receivable turnover = sales revenue ÷ average accounts receivable balance, so accounts receivable turnover = $2,500,000 ÷ ((300,000 + 200,000) ÷ 2) = 10.0.
The Esquire Company reported sales of $1,600,000 and cost of goods sold of $1,122,000 for the year ended December 31, 2018. Ending inventory for 2017 and 2018 was $420,000 and $460,000, respectively. Esquire's inventory turnover for 2018 is:
2.55 Inventory turnover = cost of goods sold ÷ average inventory balance, so inventory turnover =$1,122,000 ÷ ((420,000 + 460,000) ÷ 2) = 2.55
Income statement: 2018 Sales $2,500,000 Cost of goods sold $1,300,000 Net income $200,000 Balance sheets: 2018 Accounts receivable $300,000 Total assets $2,000,000 Total shareholders' equity $900,000 2017 Accounts receivable $200,000 Total assets $1,800,000 Total shareholders' equity $700,000 The return on shareholders' equity for 2018 is:
25% ROE = net income ÷ average shareholders' equity balance, so ROE = $200,000 ÷ ((900,000 +700,000) ÷ 2) = 25%
The Stibbe Construction Company switched from the completed contract method to the percentage-of-completion method of accounting for its long-term construction contracts. This is an example of:
A change in accounting principle
International Financial Reporting Standards are tested on the CPA exam along with U.S. GAAP. The following questions deal with the application of IFRS. In a statement of cash flows prepared under IFRS, interest paid
Can be classified as either an operating cash flow or a financing cash flow
For a manufacturing company, each of the following items would be considered nonoperating income for income statement purposes except:
Cost of goods sold
Which one of the following items is not included in the determination of income from continuing operations?
Discontinued operations
In a multiple-step income statement for a retail company, all of the following are included in the operating section except
Dividend revenue
Which of the following items is not considered an operating cash flow in the statement of cash flows?
Dividends paid to stockholders
In a statement of cash flows, International Financial Reporting Standards allow companies to report interest paid as:
Either an operating or a financing cash flow
Which of the following items is not considered an investing cash flow in the statement of cash flows?
Issuing common stock for cash
Earnings per share should be reported for each of the following income statement captions except:
Operating income
The application of intraperiod income taxes requires that income taxes be apportioned to each of the following items except:
Operating income
Which of the following captions would more likely be found in a multiple-step income statement?
Operating income
Which of the following items would not be included as a cash flow from operating activities in a statement of cash flows?
Purchase of equipment
An item typically included in the income from continuing operations section of the income statement is:
Restructuring costs