Cullen FAR 3.1
During 20X1, Teb, Inc. had the following activities related to its financial operations: Payment for the early retirement of long-term bonds payable (carrying value $740,000) $750,000 Distribution in 20X1 of cash dividends declared in 20X0 to preferred shareholders 62,000 Carrying value of convertible preferred stock in Teb, converted into common shares 120,000 Proceeds from the sale of treasury stock (carrying value at cost, $86,000) 95,000 In Teb's 20X1 Statement of Cash Flows, net cash used in financing activities should be
-717,000
During the year, Granite Co. sold a building for $100,000 resulting in a gain of $20,000. The building has a net book value of $80,000 at the time of the sale. Granite uses the indirect method when preparing its statement of cash flows. What is the amount that would be included in Granite's financing activities section because of the building sale?
0
Quoted market prices on a stock exchange for an identical asset are level ___ inputs
1
A partial listing of a company's accounts is presented below: Revenues $80,000 Operating expenses 50,000 Foreign currency translation adjustment gain, net of tax 4,000 Income tax expense 10,000 What amount should the company report as net income?
20,000
Which of the following is not disclosed on the Statement of Cash Flows, either on the face of the statement or in a separate schedule, when prepared under the direct method?
A reconciliation of ending retained earnings to net cash flow from operations
Which of the following would be reported as an investing activity in a company's statement of cash flows? Collection of proceeds from a note payable. Collection of a note receivable from a related party. Collection of an overdue account receivable from a customer. Collection of a tax refund from the government.
Collection of a note receivable from a related party.
A company's year-end comparative statement of financial position reflects the following changes from the prior year: cash increased by $40,000, total liabilities increased by $32,000, and all other assets decreased by $65,000. Which of the following statements is correct regarding the current-year change in the company's stockholders' equity?
Decreased by $57,000
______ is total assets less total liabilities.
Equity
_______________ cash flows are those between the firm and the parties providing it with debt and equity financing.
Financing
Quoted market prices should _____ be adjusted for a "blockage factor" when a firm holds a sizable portion of the asset being valued
NOT
Operating activities formula
Net income − increase in inventory − decrease in accounts payable
The Statement of Changes in Equity:
Reconciles all of the beginning and ending balances in the equity accounts.
Reconciles all of the beginning and ending balances in the equity accounts.
The Statement of Changes in Equity
Notes payable Treasury stock Advertising expense Retained earnings Which of the following appear on the Statement of Owner's Equity
Treasury stock and retained earnings
Cash effects of transactions obtaining resources from owners and providing them with a return on their investment are ____________ cash flows
financing
Dividend payments us a ____________ cash outflow
financing
Payments to retire mortgage notes is a __________ cash outflow
financing
The payment of a cash dividend to shareholders is included in the ____________ section of the statement of cash flows.
financing
The receipt of cash from the sale of stock to shareholders is included in the _____________ section of the statement of cash flows.
financing
The sale of a building is not a ____________ activity, so zero would be included in the financing section.
financing
All _________ payments are defined as operating cash flows, in part, because they affect income.
interest
In its cash flow statement for the current year, Ness Co. reported cash paid for interest of $70,000. Ness did not capitalize any interest during the current year. Changes occurred in several balance sheet accounts as follows: Accrued interest payable $17,000 decrease Prepaid interest 23,000 decrease What gets debited?
interest expense and accrued interest payable
Cash effects of acquiring and disposing of investments and property, plant, and equipment are ________________ cash flows
investing
Cash effects of transactions involving making and collecting loans are _____________ cash flows
investing
Collection on a note receivable from a related party is an _________________ activity.
investing
The cash received on the sale of PPE is included in the ______________ section of the statement of cash flows.
investing
payments to acquire shares of Marks Co. stock are ____________ activities.
investing
Internally generated cash flow projections for a related asset or liability. Is this an observable input?
no
Inputs used in determining fair value do not have to be _______________ inputs.
observable
All interest payments are defined as ________________ cash flows, in part, because they affect income.
operating
Cash effects of transactions that enter into the determination of net income are ___________ cash flows
operating
Gain on sale of plant asset is an _____________ cash flow
operating
Payne Co. prepares its Statement of Cash Flows using the indirect method. Payne's unamortized bond discount account decreased by $25,000 during the year. Which cash flow does this effect?
operating
The payment of interest on bonds is an _________ activity
operating
How should a gain from the sale of used equipment for cash be reported in a Statement of Cash Flows using the indirect method?
operating activities as a deduction of income
How should the amortization of a bond discount on long-term debt be reported in a Statement of Cash Flows prepared using the indirect method? As a financing activities inflow As a financing activities outflow In operating activities as a deduction from income In operating activities as an addition to income
operating activities as an addition to income
What is the effect of the failure to accrue sales salaries on working capital and cash flows from operating activities in Deal's 20X1 financial statements? Working capital is ___________
overstated
Purchases discounts would be netted against _____________, not sales.
purchases
Which of the following characteristics of accounting information primarily allows users of financial statements to generate predictions about an organization? Reliability. Timeliness. Neutrality. Relevance.
relevance
Which of the following defines equity as it relates to a business entity?
total assets less total liabilities
equity formula
total assets less total liabilities
_______________________ is specifically prohibited from being disclosed unless it is based on contractual amounts.
Cash flow per share
Baker Co. began its operations during the current year. The following is Baker's Balance Sheet at December 31: Baker Co. Balance SheetAssetsCash $192,000 Accounts receivable 82,000 Total Assets $274,000 Liabilities and stockholders' equity Accounts payable $ 24,000 Common stock 200,000 Retained earnings 50,000 Total liabilities and stockholders' equity $274,000 Baker's net income for the current year was $78,000, and dividends of $28,000 were declared and paid. Common stock was issued for $200,000. What amount should Baker report as cash provided by operating activities in its Statement of Cash Flows for the current year?
20,000
New England Co. had net cash provided by operating activities of $351,000; net cash used by investing activities of $420,000; and cash provided by financing activities of $250,000.
208,000
A company is preparing its year-end cash flow statement using the indirect method. During the year, the following transactions occurred: Dividends paid $300 Proceeds from the issuance of common stock $250 Borrowings under a line of credit $200 Proceeds from the issuance of convertible bonds $100 Proceeds from the sale of a building $150 What is the company's increase in cash flows provided by financing activities for the year?
250
In Dart Co.'s year two single-step Income Statement, as prepared by Dart's controller, the section titled "Revenues" consisted of the following: Sales $250,000 Purchase discounts 3,000 Recovery of accounts written off 10,000 Total revenues $263,000
250,000
The following information pertains to Ash Co., which prepares its statement of cash flows using the indirect method: Interest payable at beginning of year: $15,000 Interest expense during the year: $20,000 Interest payable at end of year: $5,000 What amount of interest should Ash report as a supplemental disclosure of cash flow information?
30,000
Abbott Co. is preparing its Statement of Cash Flows for the year. Abbott's cash disbursements during the year included the following: Payment of interest on bonds payable $500,000 Payment of dividends to stockholders 300,000 Payment to acquire 1,000 shares of Marks Co. common stock 100,000 What should Abbott report as total cash outflows for financing activities in its Statement of Cash Flows?
300,000
In preparing its cash flow statement for the year ended December 31, 20X4, Reve Co. collected the following data: Gain on the sale of equipment$ (6,000) Proceeds from the sale of equipment 10,000 Purchase of A.S., Inc. bonds (par value $200,000)(180,000) Amortization of bond discounts 2,000 Dividends declared(45,000) Dividends paid(38,000) Proceeds from the sale of treasury stock (carrying amount $65,000) 75,000 In its December 31, 20X4, Statement of Cash Flows, what amount should Reve report as net cash provided by financing activities?
37,000
The treasury stock sale of $75,000 less the dividends paid of $38,000 result in a net financing cash inflow of
37,000
The differences in Beal Inc.'s Balance Sheet accounts at December 31, 20X4 and 20X3, are presented below: AssetsIncrease (Decrease)Cash and cash equivalents$ 120,000 Short-term investments 300,000 Account receivable, net-Inventory 80,000 Long-term investments(100,000) Plant assets 700,000 Accumulated depreciation -$1,100,000 Liabilities and Stockholders' EquityAccounts payable and accrued liabilities$ (5,000) Dividends payable 160,000 Short-term bank debt 325,000 Long-term debt 110,000 Common Stock, $10 par100,000 Additional paid-in capital120,000 Retained Earnings 290,000 $1,100,000 The following additional information relates to 20X4: Net income was $790,000. Cash dividends of $500,000 were declared. Building costing $600,000, with a carrying amount of $350,000, was sold for $350,000. Equipment costing $110,000 was acquired through issuance of long-term debt. A long-term investment was sold for $135,000. There were no other transactions affecting long-term investments. These investments are categorized as available for sale. 10,000 shares of common stock were issued for $22 a share. The short-term investments are classified as trading securities. In Beal's 20X4 Statement of Cash Flows, net cash provided by operating activities was
620,000
In its cash flow statement for the current year, Ness Co. reported cash paid for interest of $70,000. Ness did not capitalize any interest during the current year. Changes occurred in several balance sheet accounts as follows: Accrued interest payable $17,000 decrease Prepaid interest 23,000 decrease What amount of interest expense for the current year will Ness report in its income statement?
76,000
Payne Co. prepares its Statement of Cash Flows using the indirect method. Payne's unamortized bond discount account decreased by $25,000 during the year. How should Payne report the change in the unamortized bond discount in its Statement of Cash Flows?
addition to net income
An entity's ___________________ may be used as inputs in determining fair value.
assumptions
Additionally, quoted market prices in markets that are not active because there are few relevant transactions ____ be used in determining fair value
can
In its cash flow statement for the current year, Ness Co. reported cash paid for interest of $70,000. Ness did not capitalize any interest during the current year. Changes occurred in several balance sheet accounts as follows: Accrued interest payable $17,000 decrease Prepaid interest 23,000 decrease What gets credited?
cash and prepaid interest
The three-month bill meets the definition of a _________ ______________.
cash equivalent
A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance. In a statement of cash flows, what amount is included in investing activities for the above transaction?
cash payment
A partial listing of a company's accounts is presented below: Revenues $80,000 Operating expenses 50,000 Foreign currency translation adjustment gain, net of tax 4,000 Income tax expense 10,000 The foreign currency translation adjustment is part of __________________ _________________
comprehensive income
The ________________________ is an example of a transaction that would appear in the supplemental noncash disclosure schedule.
conversion of debt to equity
How should unearned rent that has already been paid by tenants for the next eight months of occupancy be reported in a landlord's financial statements?
current liability
