Problem 1: Which of the following is an operating activity?
a. Payment of a cash dividend
b. Sale of equipment
c. Making a loan to another entity
d. Payment of interest
Problem 2: Which is an example of a cash flow from an investing activity?
a. Receipt of cash from the issuance of bonds payable
b. Payment of cash to repurchase outstanding capital stock
c. Receipt of cash from the sale of equipment
d. Payment of cash to suppliers for inventory
Problem 3: Hanover, Inc. purchased land through the issuance of long-term bonds. How is this reported on the statement of cash flows?
a. Operating activity
b. Significant noncash investing and financing activity that merits disclosure
c. Financing outflow
d. Investing inflow
Problem 4: Under the indirect method of preparing the statement of cash flows, which of the following is added to net income in the operating activities section?
a. Gain on sale of equipment
b. Depreciation expense
c. Decrease in accounts payable
d. Increase in accounts receivable
Problem 5: In what section of the statement of cash flows will the issuance of bonds payable to acquire a building be reported?
a. Cash flows from operating activities
b. Cash flows from investing activities
c. Cash flows from financing activities
d. Noncash investing and financing activities
Problem 6: Which of the following items is reported in the operating activities section of a statement of cash flows prepared using the direct method?
a. Cash payments to suppliers
b. Loss on sale of building
c. Depreciation expense
d. Increase in accounts receivable
Problem 7: In horizontal analysis of a balance sheet, of what amount is each item expressed as a percentage?
a. Current year net income amount
b. Base-year amount
c. Current year stockholders' equity amount
d. Current year total assets amount
Problem 8: The following schedule is a display of what type of analysis?
|
|
Amount
|
Percent
|
|
Current assets
|
$200,000
|
25%
|
|
Property, plant, and equipment
|
600,000
|
75%
|
|
Total assets
|
$800,000
|
100%
|
a. Trend analysis
b. Vertical analysis
c. Ratio analysis
d. Horizontal analysis
Problem 9: Ceradyne, Inc. presented the following data for a company:
Current liabilities $360
Long-term debt 480
Common stock 640
Retained earnings 520
Total liabilities & stockholders' equity $2,000
How would common stock appear on a common size balance sheet using vertical analysis?
a. 32.0%
b. Cannot be determined from the data given
c. 55.1%
d. 75.0%
Problem 10: Use the following financial statement information as of the end of each year to answer this question.
|
|
2017
|
2016
|
|
Inventory
|
$54,000
|
$48,000
|
|
Current assets
|
81,000
|
106,000
|
|
Total assets
|
392,000
|
336,000
|
|
Current liabilities
|
27,000
|
36,000
|
|
Total liabilities
|
102,000
|
88,000
|
|
Total stockholders' equity
|
290,000
|
248,000
|
|
Preferred stock
|
10,000
|
10,000
|
|
Net sales
|
784,000
|
697,000
|
|
Cost of goods sold
|
306,000
|
277,000
|
|
Net income
|
34,000
|
90,000
|
|
Tax expense
|
22,000
|
18,000
|
|
Interest expense
|
12,000
|
12,000
|
|
Dividends paid to preferred stockholders
|
2,000
|
2,000
|
|
Dividends paid to common shareholders
|
1,000
|
1,000
|
Compute the profit margin for 2017.
a. 8.4%
b. 4.3%
c. 11.7%
d. 8.9%
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