Which of the following statement is incorrectregarding the investing activities section of the statement of cashflows?
Investing activities deal with long-term liabilities (debt) andequity accounts.
Increases in long-term asset balances suggest cash outflows topurchase assets.
Decreases in long term asset balances suggest cash inflows fromselling assets.
Investing activities involve cash purchases and cash disposalsof long-term assets.
Which of the following statements iscorrect?
Investors need to understand that the value of a company'searnings per share is affected by its choices of accountingprinciples and assumptions.
Earnings per share is calculated for a company's preferredstock.
The most widely quoted measure of a company's earningsperformance is return on equity.
The book value per share measures the market value of acorporation's stock.
Which of the following statements is incorrectregarding preparing a statement of cash flows using the directmethod?
The direct method shows adjustments to net income.
The direct method shows the specific sources and uses of cashthat are associated with operating activities.
Noncash expenses, gains, and losses are not used in thedetermination of net cash flow from operating activities.
A majority of companies use the indirect method rather than thedirect method.
Which of the following statements regarding a process costsystem is false?
Use of a process cost system would be appropriate for a companythat manufactures luxury yachts.
Unit costs are computed for each department.
The number of equivalent whole units for a period takes intoaccount the stage of completion of ending work in processinventory.
Unit cost is determined for a designated period of time.
Which of the following statement is incorrectregarding the investing activities section of the statement of cashflows?
Investing activities deal with long-term liabilities (debt) andequity accounts. | ||
Increases in long-term asset balances suggest cash outflows topurchase assets. | ||
Decreases in long term asset balances suggest cash inflows fromselling assets. | ||
Investing activities involve cash purchases and cash disposalsof long-term assets. |
Which of the following statements iscorrect?
Investors need to understand that the value of a company'searnings per share is affected by its choices of accountingprinciples and assumptions. | ||
Earnings per share is calculated for a company's preferredstock. | ||
The most widely quoted measure of a company's earningsperformance is return on equity. | ||
The book value per share measures the market value of acorporation's stock. |
Which of the following statements is incorrectregarding preparing a statement of cash flows using the directmethod?
The direct method shows adjustments to net income. | ||
The direct method shows the specific sources and uses of cashthat are associated with operating activities. | ||
Noncash expenses, gains, and losses are not used in thedetermination of net cash flow from operating activities. | ||
A majority of companies use the indirect method rather than thedirect method. |
Which of the following statements regarding a process costsystem is false?
Use of a process cost system would be appropriate for a companythat manufactures luxury yachts. | ||
Unit costs are computed for each department. | ||
The number of equivalent whole units for a period takes intoaccount the stage of completion of ending work in processinventory. | ||
Unit cost is determined for a designated period of time. |
Related questions
Which method is used by majority of US companies to report cashflows from operating activities?
Accrual method | ||
Direct method | ||
Indirect method | ||
Computational method |
Which of the following is incorrect regardingthe financing activities section of a statement of cash flows?
Increases in contributed capital suggest cash inflows occurredfrom issuing equity instruments. | ||
Decreases in long-term debt balances suggest cash outflowsoccurred for payment of debt. | ||
Increases in short-term notes payable suggest cash outflowsoccurred from issuing notes or bonds. | ||
Decreases in retained earnings suggest cash outflows occurred topay dividends. |
Use the balance sheet and income statement below: |
| VALIUMâS MEDICAL SUPPLY CORPORATION Balance Sheet as of December 31, 2015 and 2014 (in thousands of dollars) | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| Assets | Liabilitiesand Equity | |||||||||||||
| Current assets: | Currentliabilities: | |||||||||||||
| Cash and marketablesecurities | $ | 84 | $ | 83 | Accrued wages and taxes | $ | 65 | $ | 53 | |||||
| Accounts receivable | 198 | 193 | Accounts payable | 164 | 153 | |||||||||
| Inventory | 326 | 303 | Notes payable | 143 | 143 | |||||||||
| Total | $ | 608 | $ | 579 | Total | $ | 372 | $ | 349 | |||||
| Fixed assets: | Long-term debt: | $ | 617 | $ | 580 | |||||||||
| Gross plant and equipment | $ | 1,109 | $ | 906 | Stockholdersâequity: | |||||||||
| Less: Depreciation | 170 | 125 | Preferred stock (6 thousandshares) | $ | 6 | $ | 6 | |||||||
| Common stock and paid-insurplus | 120 | 120 | ||||||||||||
| Net plant and equipment | $ | 939 | $ | 781 | (100thousand shares) | |||||||||
| Other long-term assets | 158 | 158 | Retainedearnings | 590 | 463 | |||||||||
| Total | $ | 1,097 | $ | 939 | Total | $ | 716 | $ | 589 | |||||
| Total assets | $ | 1,705 | $ | 1,518 | Total liabilitiesand equity | $ | 1,705 | $ | 1,518 | |||||
| VALIUMâS MEDICAL SUPPLY CORPORATION Income Statement for Years Ending December 31, 2015 and 2014 (in thousands of dollars) | |||||||
| 2015 | 2014 | ||||||
| Net sales | $ | 916 | $ | 826 | |||
| Less: Cost of goodssold | 401 | 364 | |||||
| Gross profits | $ | 515 | $ | 462 | |||
| Less: Otheroperating expenses | 59 | 53 | |||||
| Earnings beforeinterest, taxes, depreciation, and amortization (EBITDA) | $ | 456 | $ | 409 | |||
| Less:Depreciation | 45 | 43 | |||||
| Earnings beforeinterest and taxes (EBIT) | $ | 411 | $ | 366 | |||
| Less: Interest | 60 | 54 | |||||
| Earnings beforetaxes (EBT) | $ | 351 | $ | 312 | |||
| Less: Taxes | 143 | 123 | |||||
| Net income | $ | 208 | $ | 189 | |||
| Less: Preferredstock dividends | $ | 6 | $ | 6 | |||
| Net income availableto common stockholders | $ | 202 | $ | 183 | |||
| Less: Common stockdividends | 75 | 75 | |||||
| Addition to retainedearnings | $ | 127 | $ | 108 | |||
| Per (common) sharedata: | |||||||
| Earnings per share (EPS) | $ | 2.02 | $ | 2 | |||
| Dividends per share (DPS) | $ | 0.75 | $ | 0.75 | |||
| Book value per share (BVPS) | $ | 7.10 | $ | 5.83 | |||
| Market value (price) per share(MVPS) | $ | 8.13 | $ | 6.31 | |||
Prepare a statement of cash flows for Valiumâs Medical SupplyCorporation. (Enter your answers in thousands. Amounts tobe deducted should be indicated with a minus sign. Leave no cellsblank - be certain to enter "0" wherever required.) |
| Statement of Cash Flows for Year Ending December 31, 2015 (in thousands of dollars) | |
| A. Cashflows from operating activities | |
| (Click toselect)Net lossNet income | $ |
| Additions (sourcesof cash): | |
| (Clickto select)Increase in fixed assetsIncrease in accountspayableDepreciationIncrease in other long-term assetsIncrease inaccrued wages and taxes | |
| (Clickto select)Increase in accrued wages and taxesDepreciationIncreasein fixed assetsIncrease in other long-term assetsIncrease inaccounts payable | |
| (Clickto select)DepreciationIncrease in accrued wages and taxesIncreasein other long-term assetsIncrease in fixed assetsIncrease inaccounts payable | |
| Subtractions (usesof cash): | |
| (Clickto select)Increase in accounts receivableIncrease ininventoryIncrease in common and preferred stockIncrease in notespayableIncrease in other long-term assets | |
| (Clickto select)Increase in common and preferred stockIncrease in otherlong-term assetsIncrease in inventoryIncrease in accountsreceivableIncrease in notes payable | |
| Net cash flow fromoperating activities | $ |
| B. Cashflows from investing activities | |
| Subtractions: | |
| (Clickto select)Increase in notes payableIncrease in accrued wages andtaxesIncrease in fixed assetsIncrease in other long-termassetsIncrease in long-term debt | $ |
| (Clickto select)Increase in long-term debtIncrease in notespayableIncrease in other long-term assetsIncrease in fixedassetsIncrease in accrued wages and taxes | |
| Net cash flow frominvesting activities | $ |
| C. Cashflows from financing activities | |
| Additions: | |
| (Clickto select)Increase in accounts payableIncrease in inventoryIncreasein long-term debtIncrease in notes payableIncrease in common andpreferred stock | $ |
| (Clickto select)Increase in long-term debtIncrease in inventoryIncreasein notes payableIncrease in accounts payableIncrease in common andpreferred stock | |
| (Clickto select)Increase in notes payableIncrease in long-termdebtIncrease in accounts payableIncrease in common and preferredstockIncrease in inventory | |
| Subtractions: | |
| (Clickto select)Common stock dividendsPreferred stock dividendsIncreasein other long-term assetsIncrease in accounts payableIncrease ininventory | |
| (Clickto select)Increase in accounts payableCommon stockdividendsIncrease in inventoryIncrease in other long-termassetsPreferred stock dividends | |
| Net cash flow fromfinancing activities | $ |
| D. Netchange in cash and marketable securities | $ |
| You have the following information on Elsâ Putters, Inc.: sales toworking capital is 4.7 times, profit margin is 25 percent, netincome available to common stockholders is $6.50 million, andcurrent liabilities are $6.1 million. What is the firmâs balance of current assets? (Enter your answer inmillions of dollars rounded to 2 decimal places.) | |
