KC Questions - Chapter 4-5

Blossom Company has the following items: common stock, $1583000; treasury stock, $216000; deferred income taxes, $241000 and retained earnings, $790000. What total amount should Blossom Company report as stockholders' equity? A. $2157000. B. $2398000. C. $2589000. D. $1367000.

A

Carla Vista Co.'s trial balance reflected the following account balances at December 31, 2017: Accounts receivable (net) $36000 Trading securities 11500 Acc. depr. on equipment & furniture 31500 Cash 30500 Inventory 61000 Equipment 51000 Patent 7300 Prepaid expenses 3800 Land held for future business site 35500 In Carla Vista's December 31, 2017 balance sheet, the current assets total is A. $142800. B. $217300. C. $232600. D. $206000.

A

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from A. financing activities. B. investing activities. C. lending activities. D. operating activities.

A

One of the benefits of the statement of cash flows is that it helps users evaluate financial flexibility. Which of the following explanations is a description of financial flexibility? A. The firm's ability to respond and adapt to financial adversity and unexpected needs and opportunities. B. The nearness to cash of assets and liabilities. C. The firm's ability to pay its debts as they mature. D. The firm's ability to invest in a number of projects with different objectives and costs.

A

Watts Corporation made a very large arithmetical error in the preparation of its year-end financial statements by improper placement of a decimal point in the calculation of depreciation. The error caused the net income to be reported at almost double the proper amount. Correction of the error when discovered in the next year should be treated as A. a prior period adjustment. B. an increase in depreciation expense for the year in which the error is discovered. C. a component of income for the year in which the error is discovered, but separately listed on the income statement and fully explained in a note to the financial statements. D. a change in accounting principle for the year in which the error was made.

A

A limitation of the balance sheet that is not also a limitation of the income statement is A. the use of judgments and estimates. B. valuation of items at historical cost. C. the numbers are affected by the accounting methods employed. D. omitted items.

B

Carla Vista Co. reports the following information: Net income $391000 Depreciation expense 61000 Increase in accounts receivable 25000 Carla Vista should report cash provided by operating activities of A. $477000. B. $427000. C. $305000. D. $355000

B

For the year ended December 31, 2017, Blossom Company reported the following: Net income $291000 Preferred dividends declared 48800 Common dividend declared 10500 Unrealized holding loss, net of tax 4500 Retained earnings, beginning balance 392000 Common stock 198400 AOCI, Beginning Balance 25100 What would Blossom report as the ending balance of Retained Earnings? A. $649200 B. $623700 C. $619200 D. $678500

B

Presented below are data for Blossom Company 2017 2018 Assets, January 1 $4190 $5000 Liabilities, January 1 2500 ? S. Equity, Jan. 1 ? ? Dividends 830 620 Common Stock 750 660 S. Equity, Dec. 31 ? ? Net Income 820 655 Stockholders' Equity at January 1, 2017 is A. $1147. B. $1690. C. $2440. D. $1063.

B

Presented below are data for Cullumber Company 2017 2018 Assets, January 1 $6849 ? Liabilities, January 1 ? $4109 S. Equity, Jan. 1 ? $4131 Dividends 858 974 Common Stock 913 968 S. Equity, Dec. 31 ? 3404 Net Income 1018 ? Net income for 2018 is A. $727 income. B. $192 income. C. $727 loss. D. $247 loss.

B

The balance sheet contributes to financial reporting by providing a basis for all of the following except A. computing rates of return. B. determining the increase in cash due to operations. C. assessing the liquidity and financial flexibility of the enterprise. D. evaluating the capital structure of the enterprise.

B

The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in A. receivables back into cash, or 12 months, whichever is longer. B. inventory back into cash, or 12 months, whichever is longer. C. tangible fixed assets back into cash, or 12 months, whichever is longer. D. inventory back into cash, or 12 months, whichever is shorter

B

The following information was extracted from the accounts of Crane Company at December 31, 2017: CR(DR) Total reported income since incorporation $4700000 Total cash dividends paid (2490000) Unrealized holding loss on AFS securities (365000) Total stock dividends distributed (598000) Prior period adjustment, recorded 1.1.17 223000 What should be the balance of retained earnings at December 31, 2017? A. $1470000. B. $1835000. C. $1892000. D. $3057600.

B

Which of the following is an example of managing earnings up? A. Decreasing estimated salvage value of equipment. B. Underestimating warranty claims. C. Writing off obsolete inventory. D. Accruing a contingent liability for an ongoing lawsuit.

B

Crane Company has the following items: common stock, $954000 treasury stock, $106000 deferred income taxes, $124000 retained earnings, $455000 What total amount should Crane Company report as stockholders' equity? A. $1551000. B. $1179000. C. $1303000. D. $1427000.

C

Cullumber Company reports the following information: Net income $530000 Depreciation expense 133000 Increase in accounts receivable 58000 Cullumber should report cash provided by operating activities of A. $339000. B. $455000. C. $605000. D. $721000.

C

During 2017 the Sandhill Co. had a net income of $84800. In addition, selected accounts showed the following changes: Accounts Receivable $3200 increase Accounts Payable 1000 increase Buildings 4200 decrease Depreciation Expense 1300 increase Bonds Payable 8300 increase What was the amount of cash provided by operating activities? A. $94400. B. $86100. C. $83900. D. $84800.

C

For Blossom Company, the following information is available: Capitalized leases $550000 Copyrights 230000 Long-term receivables 200000 In Blossom's balance sheet, intangible assets should be reported at A. $200000. B. $780000. C. $230000. D. $750000.

C

For the year ended December 31, 2017, Wildhorse Co. reported the following: Net income $309000 Preferred dividends declared 48200 Common dividend declared 9200 Unrealized holding loss, net of tax 4600 Retained earnings 391000 Common stock 210000 AOCI, Beginning Balance 24400 What would Wildhorse report as its ending balance of Accumulated Other Comprehensive Income? A. $29000 B. $24400 C. $19800 D. $4600

C

If common stock was issued to acquire an $8,000 machine, how would the transaction appear on the statement of cash flows? A. It would be a negative $8,000 in the financing section and a positive $8,000 in the investing section. B. It would be a positive $8,000 in the financing section and a negative $8,000 in the investing section. C. It would not appear on the statement of cash flows but rather on a schedule of noncash investing and financing activities. D. It would depend on whether you are using the direct or the indirect method.

C

In preparing a statement of cash flows, which of the following transactions would be considered an investing activity? A. Issuance of bonds payable at a discount B. Sale of merchandise on credit C. Sale of equipment at book value D. Declaration of a cash dividend

C

Making and collecting loans and disposing of property, plant, and equipment are A. operating activities. B. financing activities. C. investing activities. D. liquidity activities.

C

The occurrence that most likely would have no effect on 2017 net income is the A. sale in 2017 of an office building contributed by a stockholder in 1964. B. collection in 2017 of a dividend from an investment. C. correction of an error in the financial statements of a prior period discovered subsequent to their issuance. D. stock purchased in 1999 deemed worthless in 2017.

C

Which one of the following types of losses is excluded from the determination of net income in income statements? D. Material losses resulting from the write-off of intangibles. B. Material losses resulting from unusual sales of assets not acquired for resale. C. Material losses resulting from correction of errors related to prior periods. D. Material losses resulting from transactions in the company's investments account.

C

Blossom Company's trial balance of income statement accounts for the year ended December 31, 2017 included the following: Debit Credit Sales revenue $283000 Cost of goods sold $179000 Admin expenses 41000 Loss on sale of equipment 18800 Commissions to salespersons 16500 Interest revenue 10200 Freight-out 6000 Loss from discontinued ops 24500 Bad debt expense 5900 Totals $291700 $293200 Other information: Blossom's income tax rate is 30%. Finished goods inventory: January 1, 2017 $158800 December 31, 2017 $140200 On Blossom's multiple-step income statement for 2017, The discontinued operations loss is A. $24500. B. $30310. C. $43300. D. $17150.

D

For Crane, the following information is available: Capitalized leases $567000 Trademarks 269000 Long-term receivables 223000 In Crane's balance sheet, intangible assets should be reported at A. $492000. B. $790000. C. $836000. D. $269000.

D

For the year ended December 31, 2017, Carla Vista Co. reported the following: Net income $287500 Preferred dividends declared 48900 Common dividend declared 9900 Unrealized holding loss, net of tax 4200 Retained earnings, beginning balance 407500 Common stock 198400 AOCI, Beginning Balance 25400 What would Carla Vista report as total stockholders' equity? A. $636200 B. $605900 C. $834600 D. $855800

D

In a statement of cash flows, payments to acquire debt instruments of other entities (other than cash equivalents) should be classified as cash outflows for A. financing activities. B. operating activities. C. lending activities. D. investing activities.

D

In a statement of cash flows, receipts from sales of property, plant, and equipment and other productive assets should generally be classified as cash inflows from A. operating activities. B. financing activities. C. selling activities. D. investing activities.

D

Presented below are data for Cullumber Company 2017 2018 Assets, January 1 $8851 $9725 Liabilities, January 1 4860 ? S. Equity, Jan. 1 ? ? Dividends 1619 1225 Common Stock 1458 1289 S. Equity, Dec. 31 ? ? Net Income 1928 1302 Stockholders' Equity at January 1, 2018 is A. $5758. B. $5919. C. $3991. D. $4300.

D

Which of the following events will appear in the cash flows from financing activities section of the statement of cash flows? A. Cash purchases of bonds issued by another company. B. Cash purchases of equipment. C. Cash received as repayment for funds loaned. D. Cash purchase of treasury stock

D

Which of the following is an example of managing earnings down? A. Not writing off obsolete inventory. B. Changing estimated bad debts from 3 percent to 2.5 percent of sales. C. Reducing research and development expenditures. D. Revising the estimated life of equipment from 10 years to 8 years.

D