Question 39
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. $77,000
C. $50,000
D. $65,000
2 points
Question 40
The Washington Company had the following results in 2012:
Account Balances
End of
Beginning of
Year
Year
Property, plant, and equipment $358,000
$347,000
Accumulated depreciation (256,000)
(220,000)
Net Property, plant, and equipment $102,000
$127,000
During the year the company sold an asset which had an originalcost of $55,000 and accumulated depreciation of $31,000. How muchdepreciation expense for 2012 will be reported on the statement ofcash flows?
A. $67,000
B. Not enough information is provided.
C. $36,000
D. $5,000
Question 43
Cinema Theatre had a current ratio of 2.5 to 1 on December 31 ofthe current year. On that date, the company's assets were asfollows:
Cash $ 100,000
Accounts receivable (net) 600,000
Inventory 960,000
Prepaid expenses 25,000
Equipment (net) 2,200,000
Total assets 3,885,000
What impact would collecting $55,000 due from customers have on itsinventory turnover ratio?
A. Decrease.
B. Not enough information is given.
C. Increase.
D. Stay the same.
2 points
Question 45
Axilrode Company reported earnings per share of common stock $12in 2012 and paid dividends of $3 per share. The current marketprice per share is $102 and the book value per share is $54. Howmuch is the company's price-earnings ratio?
A. $11.80
B. $11.30
C. $1.90
D. $8.50
2 points
Question 46
Which is the most stringent test of a company's ability to meetits current obligations?
A. Times interest earned.
B. Debt-equity ratio.
C. Current ratio.
D. Quick ratio.
2 points
Question 47
Cost of goods sold in 2011 for the Cego Tire Company totaled$4,670,000. If gross profit was 64%, how much would sales be?
A. $2,988,800
B. $8,302,080
C. $12,972,222
D. $1,681,200
2 points
Question 48
Blackstone Company has total assets of $550,000 and owners'equity of $220,000, of which $65,000 of the equity is common stock.To which of the following is the company's debt-to-equity ratioclosest?
A. 0.60
B. 1.50
C. 5.08
D. 0.67
2 points
Question 49
Inventory turnover is
A. sales divided by inventory.
B. sales divided by accounts receivable.
C. sales divided by cost of goods sold.
D. cost of goods sold divided by inventory.
2 points
Question 50
Selling an old piece of machinery is a(n)
A. financing activity.
B. operating activity.
C. investing activity.
D. general activity.
Question 39
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. | $77,000 | |
| C. | $50,000 | |
| D. | $65,000 |
2 points
Question 40
The Washington Company had the following results in 2012:
Account Balances |
End of | Beginning of | |
Year | Year |
| Property, plant, and equipment | $358,000 | $347,000 |
| Accumulated depreciation | (256,000) | (220,000) |
| Net Property, plant, and equipment | $102,000 | $127,000 |
During the year the company sold an asset which had an originalcost of $55,000 and accumulated depreciation of $31,000. How muchdepreciation expense for 2012 will be reported on the statement ofcash flows?
| A. | $67,000 | |
| B. | Not enough information is provided. | |
| C. | $36,000 | |
| D. | $5,000 |
Question 43
Cinema Theatre had a current ratio of 2.5 to 1 on December 31 ofthe current year. On that date, the company's assets were asfollows:
| Cash | $ 100,000 |
| Accounts receivable (net) | 600,000 |
| Inventory | 960,000 |
| Prepaid expenses | 25,000 |
| Equipment (net) | 2,200,000 |
| Total assets | 3,885,000 |
What impact would collecting $55,000 due from customers have on itsinventory turnover ratio?
| A. | Decrease. | |
| B. | Not enough information is given. | |
| C. | Increase. | |
| D. | Stay the same. |
2 points
Question 45
Axilrode Company reported earnings per share of common stock $12in 2012 and paid dividends of $3 per share. The current marketprice per share is $102 and the book value per share is $54. Howmuch is the company's price-earnings ratio?
| A. | $11.80 | |
| B. | $11.30 | |
| C. | $1.90 | |
| D. | $8.50 |
2 points
Question 46
Which is the most stringent test of a company's ability to meetits current obligations?
| A. | Times interest earned. | |
| B. | Debt-equity ratio. | |
| C. | Current ratio. | |
| D. | Quick ratio. |
2 points
Question 47
Cost of goods sold in 2011 for the Cego Tire Company totaled$4,670,000. If gross profit was 64%, how much would sales be?
| A. | $2,988,800 | |
| B. | $8,302,080 | |
| C. | $12,972,222 | |
| D. | $1,681,200 |
2 points
Question 48
Blackstone Company has total assets of $550,000 and owners'equity of $220,000, of which $65,000 of the equity is common stock.To which of the following is the company's debt-to-equity ratioclosest?
| A. | 0.60 | |
| B. | 1.50 | |
| C. | 5.08 | |
| D. | 0.67 |
2 points
Question 49
Inventory turnover is
| A. | sales divided by inventory. | |
| B. | sales divided by accounts receivable. | |
| C. | sales divided by cost of goods sold. | |
| D. | cost of goods sold divided by inventory. |
2 points
Question 50
Selling an old piece of machinery is a(n)
| A. | financing activity. | |
| B. | operating activity. | |
| C. | investing activity. | |
| D. | general activity. |
Related questions
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
