Quiz 1 Ch 13 14 15 16- Your Name ____________________ (also include your name in the file name)
Q1Will the income statement include the profits or losses from the purchase and sale of treasury stock? Yes or No?
Q2Explain the effect on Cash Received by the borrower and Interest Calculations when payments are made and interest expense recognized each period if
Bonds are issued at Face Value
Bonds are issued at a discount
Bonds are issued at a premium
(Hint: your answer for each independent situation [A, B, and C] should include the phrases "Credit to Bonds Payable" and "Contract Interest Rate")
Q3Explain how the balance sheet general ledger accounts and the income statement of an investing company are affected in each of the following independent situations when the investment is accounted for using the equity method:
The company they invested in earns a profit for the year
The company they invested in has a net loss for the year
The company they invested in pays a cash dividend
Q4Explain the relationship between the balance sheet, the income statement, and the statement of cash flows using the indirect method. That is, how do you prepare a statement of cash flows using the indirect method? Don't use numbers but explain the mathematical calculations and line items on the statement of cash flows using the indirect method.
Q5What issues and opportunities would a company consider when deciding to raise funds by issuing long term debt or shares of common stock? ** Use a list presentation to answer this question.
Q6Preparing a statement of cash flows using the indirect method:
See Next Page for information for Question 6
OL3 Company's comparative balance sheets are presented below.
Additional information:
Required: Prepare a statement of cash flows for the year ended December 31, 2015 using the indirect method. (Hint: for any accounts where the balance changed, create a T account or record other analysis for your review. You might make a column of changes, so you can see if a balance increased or decreased and by how much. You do not need to turn this in but you can. You may wish to use Excel for this problem. The balance should copy and paste into Excel). If you use Excel you can submit a separate file for the statement of cash flow problem.