Question 1
On a statement of cash flows prepared by the indirect method, an increase in a prepaid expense is:
A. a part of the computation of cash flows from operating activities.
B. a part of the computation of cash flows from investing activities.
C. a part of the computation of cash flows from financing activities.
D. not used in computing cash flows.
Question 2
When the net cash provided by operating activities is determined by the indirect method, an increase in income taxes payable should:
A. be subtracted from the net cash amount after other calculations have been made.
B. be subtracted from net income in the operating activities section of the cash flow statement.
C. not be used in the calculation.
D. be added to net income in the operating activities section of the cash flow statement.
Question 3
The payment of interest is considered to be an:
A. outflow of cash that results from a financing activity.
B. outflow of cash that results from an investing activity.
C. outflow of cash that results from an operating activity.
D. activity that is not reported on the statement of cash flows.
Question 1
Chattel Company sold for $7,000 equipment that originally cost $40,000 and had depreciation in the amount of $34,000 taken. What amount is reported in the Cash Flows from Financing Activities section of the Statement of Cash Flows?
A. $6,000
B. $5,000
C. $0
D. $1,000
Question 2
Doff Manufacturing Co. sold equipment that cost $12,000 for $3,000. Depreciation of $10,000 had been taken on the equipment. How is the Cash Flows from Operating Activities affected on the statement of cash flows prepared by the indirect method?
A. The loss of $1,000 is added to Net Income
B. The gain of $ 1,000 is added to Net Income
C. The gain of $ 1,000 is deducted from Net Income
D. The loss of $1,000 is deducted from Net Income
Question 3
LOL Organization acquired land valued at $56,000 for 4,200 shares of its stock. Where on the Statement of Cash flows does this transaction activity appear?
A. Operating Activities
B. Investing Activities
C. Financing Activities
D. Separate Disclosures
Question 1
Corporations do not commonly use the direct method for the Statement of Cash Flows because:
A. they do not have easy access to the necessary information.
B. FASB prefers the indirect method.
C. the direct method does not follow GAAP.
D. there are fewer disclosures required under the indirect method.
Question 2
Best Corporation paid $15,600 on its mortgage loan. The principal portion was $5,000 and the interest was $10,600. The $5,000 constitutes what on the Statement of Cash Flows?
A. An outflow of cash under the financing activities section
B. An outflow of cash under the operating activities section
C. An outflow of cash under the investing activities section
D. A disclosure of the interest paid
Question 3
The purchase or resale of treasury stock is reported in which of the following categories on the statement of cash flows?
A. Operating Activities
B. Investing Activities
C. Financing Activities
D. Disclosures
Question 1
When the net cash provided by operating activities is determined using the indirect method for the statement of cash flows, the amortization of bond premium:
A. should be added to the net income.
B. should be subtracted from the net income.
C. should not be used in the calculation.
D. be reported in the cash flows from financing activities section.
Question 2
LOL Organization acquired land valued at $56,000 for 4,200 shares of its stock. Where on the Statement of Cash flows does this transaction activity appear?
A. Operating Activities
B. Investing Activities
C. Financing Activities
D. Separate Disclosures
Question 3
The method used by most corporations to prepare the statement of cash flows is the __________ method.
A. accrual
B. direct
C. deferral
D. indirect
1. suppose your credit card issuer states that it charges a 15.0% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate?
2. Connor Corporation sells products for $25.00 each that have variable cost of $13 per unit. Connors annual fixed cost is $264,000 Determine the break-even point in units and dollars?
3. Suppose a product must go through an assembly line made up of five sequential operations. The time it takes to complete each operation is normally distributed with a mean of 180 seconds and standard deviation of 5 seconds. Let X denote the cycle time for the line, so that after X seconds, each operation is supposed to be finished and ready to pass the product to the next operation in the assembly line.
a. If the cycle time X = 180 seconds, what is the probability that all five operations will be
completed?
b. What cycle time will ensure that all operations are finished 98% of the time?
4. Why is internal alignment an important policy in a strategic perspective of compensation?
5. When would it be appropriate for a firm to use distribution centers? When would it be appropriate for a firm to use direct store delivery?
6. Assume that Tiffany’s parents rent a store for $7,500 per month. Different types of toys use different amounts of store space. For example, displaying a bicycle requires more store space than displaying a deck of cards. Also, some toys remain on the shelf longer than others. Fad toys sell rapidly, but traditional toys sell more slowly. Under these circumstances, how would you determine the amount of rental cost required to display each type of toy? Identify two other costs incurred by a toy store that may be difficult to allocate to individual toys.
