exam 1 - accounting quizes
Neal Company reported net income of $140,000. For 2020, depreciation was $30,000, and the company reported a $10,000 loss on the sale of $100,000 long-term investment. Accounts receivable increased $25,000 and accounts payable decreased $20,000. Neal Company will report a net cash provided by operating activities of
$135,000
McLaughlin Company issued common stock for $372,000 and paid dividends of $66,000. The company also paid down $54,000 in bonds. The financing section of the statement of cash flows will report net cash inflows of
$252,000
Ace Co. needs a new machine for its manufacturing facility. The machine Ace is considering will cost $85,000. Employees will also have to be trained on the machine before they can use it. Initial training costs will be $5,000. Ace expects the new machine to increase net operating cash flows by $18,000, but it will cost $7,500 to overhaul at the end of the fourth year. The estimated useful life of the machine is eight years. Ace estimates it will be able to sell the machine for $5,000 at the end of its useful life. Ace requires a 10% rate of return on all investments. The net present value of this project is:
$3,242
the following selected information was obtained from Jayhawk Company's Statement of Cash Flows: Cash Provided by Operating Activities $70,000 Cash Used by Investing Activities $25,000 Cash Used by Financing Activities $12,000 The TOTAL change to Jayhawk's cash account for the year was a
$33,000 increase
Disadvantages of the annual rate of return method include all of the following exceptthat
**** do not know correct answer but IS NOT ... -it relies on the accrual accounting numbers instead of actual cash flows - ignores the time value of money
The income statement for Dibble Company for the year ended December 31, 2020 appears below. Sales $625,000 Cost of goods sold 385,000 Gross profit 240,000 Expenses 190,000 Net income $ 50,000 Additional information:• The weighted average shares of common stock outstanding on December 31, 2020 was 40,000. • The market price of Dibble's stock was $120 at the end of 2020.• Beginning Stockholder's Equity was $700,000 and ending Stockholder's Equity was $730,000. Dibble's Return on Common Stockholder's Equity ratio is __________.
0.07
The income statement for Dibble Company for the year ended December 31, 2020 appears below. Sales $625,000 Cost of goods sold 385,000 Gross profit 240,000 Expenses 190,000 Net income $ 50,000 Dibble's profit margin is _____________.
0.08
Select data for Steiner Corporation appears below. 2020 2019Net sales $400,000 $320,000 Cost of goods sold 210,000 180,000Operating expenses 112,000 100,000Net income 78,000 40,000 Using horizontal analysis, the percentage of change in Net Sales from 2019 to 2020 is ___________.
0.25
The income statement for Dibble Company for the year ended December 31, 2020 appears below. Sales $625,000 Cost of goods sold 385,000 Gross profit 240,000 Expenses 190,000 Net income $ 50,000 Additional information:• The weighted average shares of common stock outstanding on December 31, 2020 was 40,000. • The market price of Dibble's stock was $120 at the end of 2020. Dibble's Earnings Per Share ratio is __________.
1.25
Selected financial statement data for Morton Company are presented below. 12/31/20 12/31/19Cash $ 40,000 $ 30,000Short-term investments 25,000 18,000Receivables (net) 100,000 80,000Inventories 85,000 65,000Land 200,000 200,000Total current liabilities 125,000 90,000Bonds Payable 400,000 400,000Credit Sales Revenue 900,000 850,000 Morton's receivable turnover ratio at 12/31/20 is__________.
10
The following selected information was obtained from KP Company's Statement of Cash Flows: Cash Provided by Operating Activities $50,000 Ending Cash $95,000 Cash Used by Investing Activities $10,000 Cash Provided by Financing Activities $40,000 What was KP's beginning cash balance?
15,000
Selected financial statement data for Morton Company are presented below. 12/31/20 Cash $ 40,000Short-term investments 25,000Receivables (net) 100,000Inventories 85,000Land 200,000Total current liabilities 125,000 Bonds Payable 400,000 Sales Revenue 900,000 Morton's current ratio at 12/31/20 is__________.
2
Which of the following changes in retained earnings would be appear in the Operating Activities section of the Statement of Cash Flows: 1 Payment of a cash dividend 2 Net Income
2 - net income
Izzy Corp. is considering an equipment purchase for $20,000. Projected net annual cash flows over the project's life are: Year Net Annual Cash Flow 1 3,000 2 8,000 3 15,000 4 9,000 The cash payback period is
2.6 years
Grey Company is considering a capital investment proposal. Estimates are provided below: Project XInitial investment $600,000 Annual net income 46,000 Estimated useful life 6 years Salvage value -0- The company requires a 10% rate of return on all new investments and uses Straight-line depreciation.The net present value for Project X is
35,830
Select data for Steiner Corporation appears below. 2020 2019Net sales $400,000 $320,000 Cost of goods sold 210,000 180,000Operating expenses 112,000 100,000Net income 78,000 40,000 Using vertical analysis, Cost of Goods Sold as a percentage of 2020 Sales would be ___________.
52.5%
Sloan company has a minimum required rate of return of 8%. It is considering investing in a project that costs $91,116 and is expected to generate cash inflows of $36,000 each year for three years. The approximate internal rate of return on this project is
9%
The income statement for Dibble Company for the year ended December 31, 2020 appears below. Sales $625,000 Cost of goods sold 385,000 Gross profit 240,000 Expenses 190,000 Net income $ 50,000 Additional information:• The weighted average shares of common stock outstanding on December 31, 2020 was 40,000. • The market price of Dibble's stock was $120 at the end of 2020. Dibble's Price-Earnings ratio is __________.
96
Each of the following is added to net income in computing net cash provided by operating activities except
a gain on sale of equipment
Performing a post-audit is important because
all of these
in Shannon Company, there was an increase in the land account during the year of $48,000. Analysis reveals that the change resulted from a cash sale of land at a cost $110,000, and a cash purchase of land for $158,000. In the statement of cash flows, the change in the land account should be reported in the investment section:
as a purchase of land $158,000 and a sale of land $110,000
Selma Inc. is comparing several alternative capital budgeting projects as shown below: Projects A B C Initial investment $80,000 $120,000 $160,000 Present value of net cash flows 90,000 110,000 200,000 Using the profitability index, the projects rank as
c a b
The category that is generally considered to be the best measure of a company's ability to continue as a going concern is
cash flows from operating activities
If a payback period for a project is greater than its expected useful life, the
entire initial investment will not be recovered.
The statement of cash flows should help investors and creditors assess each of the following except the
entity's ability to generate future income.
If a project has a zero net present value, then the internal rate of return will be
equal to the discount rate
If a company's required rate of return is 7%, and in using the profitability index method, a project's index is greater than 1, this indicates that the project's rate of return is
greater than 7%
A general rule to use in assessing the average collection period of accounts receivable is that
it should not greatly exceed the credit term period
in Sierra Company, there was an increase in the equipment account during the year of $60,000. Analysis reveals the following:Equipment with a cost of $50,000 was sold for $5,000 cash. Equipment was purchased at a cash cost of $110,000. The following would be reported as the total of the Investing Activities section of the Statement of Cash Flows:
net cash used by investing activities 105,000
Long-term creditors are usually most interested in evaluating
profitability and solvency
