ACC 210 Lecture Notes - Lecture 1: Net Income, Interest Expense, Common Stock
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Question 11
The Kerchin Company purchased $60,000 worth of stock in theXeronics company in 2006. In 2012 the stock was sold for $78,000.On the statement of cash flows prepared using the indirect methodthe company will report:
A. | a subtraction of $60,000 in the investing section. | |
B. | an addition to net income of $18,000 in the operatingsection. | |
C. | a subtraction from net income of $18,000 in the operatingsection. | |
D. | an addition of $18,000 in the investing section. |
2 points
Question 12
When preparing the operating section of a statement of cashflows using the indirect method, various adjustments are needed.Which of the following adjustments is incorrectly stated?
A. | Add gains on sale of equipment. | |
B. | Add to net income any increases in current liabilities. | |
C. | Add to net income depreciation and amortization expense. | |
D. | Deduct any increases in inventories from net income. |
2 points
Question 13
In 2011 Armstrong Company sold for $76,000 cash, an asset whichhad an original cost of $204,000 and accumulated depreciation of$98,000. On the statement of cash flows prepared using the indirectmethod the company should report:
A. | an addition to net income in the operating section of$30,000. | |
B. | a subtraction from net income of $30,000 in the operatingsection. | |
C. | a subtraction of $106,000 in the investing section. | |
D. | an addition of $76,000 in the investing section. | |
E. | Both A and D are correct. |
2 points
Question 14
In 2011 Covington Company sold an asset which had an originalcost of $54,000 and accumulated depreciation of $28,000 for $15,000in cash. On the statement of cash flows prepared using the indirectmethod the company should report:
A. | an addition to net income in the operating section of$11,000. | |
B. | a subtraction from net income in the operating section of$11,000. | |
C. | a source of cash of $15,000 in the investing section. | |
D. | a use of cash in the investing section of $39,000. | |
E. | Both a and c are correct. |
2 points
Question 15
Henry Company's statement of cash flows indicated a $52,000decrease in cash during the year. The statement also indicated that$63,000 was provided by operating activities and $71,000 was usedby investing activities. How much are net cash used by financingactivities?
A. | $86,000 | |
B. | ($44,000) | |
C. | $42,000 | |
D. | $40,000 |
2 points
Question 16
Which of the following would be an example of a cashequivalent?
A. | Notes receivable. | |
B. | Accounts receivable. | |
C. | Money market funds. | |
D. | Investment in GMC stock. |
2 points
Question 17
Carte Company reported cost of goods sold for $100,000 anddepreciation expense totaling $7,000. On January 1, Carte hadinventory and accounts payable of $21,000 and $24,000,respectively. On December 31, inventory and accounts payable were$28,000 and $20,000, respectively. Net income is $60,000. Beginningaccounts receivable was $13,000 and ending was $12,000. How muchare the cash flows from operating activities using the indirectmethod?
A. | $57,000 | |
B. | $50,000 | |
C. | $65,000 | |
D. | $77,000 |
2 points
Question 18
The statement of cash flows is typically used to determine if acompany can:
A. | generate enough cash to pay cash dividends to stockholders. | |
B. | generate enough cash to pay an increase in employees wages. | |
C. | generate enough cash to acquire another company. | |
D. | generate enough cash to buy equipment. |
2 points
Question 19
Cash flows related to buying and selling long-term assets areclassified as:
A. | financing activities. | |
B. | investing activities. | |
C. | non-cash activities. | |
D. | operating activities. |
2 points
Question 20
Given the following information, what amount of cash wascollected from customers during 2012? All sales are on account.
2011 | 2012 | |
Accounts receivable | $ 800,000 | $ 580,000 |
Sales | 3,100,000 | 3,250,000 |
A. | $2,880,000 | |
B. | $3,620,000 | |
C. | $2,670,000 | |
D. | $3,470,000 |
2 points