States test 3
Current Ratio
Current assets divided by current liabilities; measures the availability of current assets to pay current liabilities
Issued bonds
Financing activity
Issued common stock
Financing activity
Issued preferred stock
Financing activity
Paid cash dividends:
Financing activity
Purchased treasury stock
Financing activity
Redeemed bonds
Financing activity
Sold equipment
Investing activity
Sold long-term investments
Investing activity
Which of the following can be found on the statement of cash flows?
cash flows from (used for) operating activities
On the statement of cash flows, the operating activities section would include
cash receipts from sales of merchandise
On the statement of cash flows, the "Cash flows from (used for) financing activities" section would include
cash received from issuing common stock
On the statement of cash flows, the investing activities section would include
cash received from the sale of equipment
The statement of cash flows is not useful for
determining the net worth of a company
Cash paid for preferred stock dividends should be shown on the statement of cash flows as a(n)
financing activity
Cash received from the issuance of a mortgage note payable would be classified as a(n)
financing activity
Ratio Fixed assets to long-term liability
fixed assets(net)/ Long-liab; measures the margin of safety available to long-term creditors
The operating cash flow available for a company to use after purchasing the fixed assets that are necessary to maintain current operations is called the
free cash flow
Purchased buildings
investing activity
Purchased patents
investing activity
Free cash flow is net cash flows from operating activities less cash used for
investments in PP&E needed to maintain current operations
Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?
issuance of long-term debt
Net income
operating activity
The order of presentation of activities on the statement of cash flows is
operating, investing, and financing
Damages are labeled as
other
Which of the following should be shown on a statement of cash flows in the financing activities section?
payment of cash to retire a long-term note
Which of the following would not be classified as an operating activity?
payment of dividends
Which of the following transactions would be reported as an investing activity on the statement of cash flows?
purchased long-term assets
Accounting Receivable turnover
sales/ Average account receivable; measures the company efficiency in collecting receivable and in the management of credit
working capital
the difference between current assets and current liabilities-> Measures the company's ability to pay current lib
Cash dividends paid on common stock would be reported on the statement of cash flows in
the financing activities section
Question Content Area Cash paid for equipment would be reported on the statement of cash flows in
the investing activities section
Cash paid to purchase long-term investments would be reported in
the investing activities section of the statement of cash flows
Ratio of liability to stockholder equity
total liability/ total stockholders' equity; Measure how much of the company is finance by debt and equity
When using the spreadsheet (work sheet) in preparing the statement of cash flows by the indirect method, the Balance columns should total to
zero
Quick ration
(Current Assets - Inventory) / Current Liabilities; measures the company instant debt-paying ability
times interest earned
(Net Income + Interest Expense + Income Tax Expense) / Interest Expense
The statement of cash flows is not one of the basic financial statements.
F
double declining balance method
A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life. Depreciation Expense = (Book Value at Beginning of Year) × (2 / Useful Life)
A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows as a(n)
Cash flow per share is
Units-of-activity method equation
Depreciation Expense = (Cost of Asset - Salvage Value) / Total Units of Activity( use the hr they give) * Units of Activity during the Period
Straight-Line Method equation
Depreciation Expense=Cost of Asset−Salvage Value/Useful Life
Which of the following increases cash?
borrowing money by issuing a 6-month note
Which of the following should be added to net income in determining the net cash flows from operating activities using the indirect method?
a decrease in accounts receivable
Days Sales in Recivables
average accounts receivable/ Average daily sales; measures the company efficiency in collecting receivable and in the management of credit