1. In 2014, Maxi Office Supplies sold a plant asset that had an original cost of $54,000 and accumulated depreciation of $28,000 for $15,000 in cash. Which of the following is one item to be reported on the statement of cash flows prepared using the indirect method.
A. An addition to net income in the operating activities section for $11,000
b. A subtraction from net income in the operating activities section for $11,000
C. A source of cash of $15,000 in the financing activities section
D. A use of cash in the investing activities section for $26,000
2. Limon Grill's balance in retained earnings was $87,000 at the beginning of the year and $92,000 at the end of the year. If the company declared and paid dividends of $26,000 during the year, how much was net income/loss for the year?
A. $5,000
B. $31,000
C. $21,000
D. ($5,000)
3. During 2014, Lance Chips sold equipment that had an original cost of $143,000 and accumulated depreciation of $110,000 for cash totaling $25,000. Which one of the following is one effect of this transaction on the statement of cash flows if the indirect method is used?
A. An addition to net income in the operating activities section for $25,000
B. An addition to net income of $8,000 in the operating activities section
C. A subtraction of $33,000 in the investing activities section
D. An addition of $8,000 in the investing activities section
4. First National Eatery prepares its statement of cash flows using the indirect method. The statement reported that cash provided by operating activities for the year was $7,000. If the company experienced a $14,000 decrease in accounts receivable a $13,000 decrease in accounts payable, and a $4,000 increase in inventory during the year, how much is the company's net income/loss for the year?
A. ($3,000)
B. $4,000
C. ($16,000)
D. $10,000
5. Kermit Productions purchased $44,000 worth of stock in the Enterprise Company in 2010. In 2014, the stock was sold for $87,000. Which of the following is one effect of this transaction on the statement of cash flows if the indirect method is used during 2014?
A. An addition of $43,000 in the investing activities section
B. A subtraction of $43,000 in the investing activities section
C. A subtraction from net income of $43,000 in the operating activities section
D. An addition to net income of $87,000 in the operating activities section.
6. Which is the most important item in a company's statement of cash flows?
A. Positive operating cash flows
B. Positive operating, investing, and financing cash flows
C. Positive operating and investing cash flows
D. Positive operating and financing cash flows.
7. In addition to cash flows that occurred during the period, which of the following amounts listed below appear on the statement of cash flows prepared using the direct method?
I. Beginning balance of cash and cash equivalents
II. Ending balance of cash and cash equivalents
III. Net income
8. During 2014, Thomas Windows competed the following transactions:
Purchased equipment for $41,000 cash that will be depreciated over a 10-year life
Sold equipment that had an original cost of $46,000 and accumulated depreciation of $43,000 for $7,000 cash
The January 1, 2014 balance in the accumulated depreciation account was $134,000 and the December 31,2014 balance was $145,000. How much depreciation expense will Thomas Windows report on the company's 2014 statement of cash flows if the indirect method is used?
9. Natural Market's statement of cash flows showed the following totals:
Cash for operating activities ($45,000)
Cash from financing activities 32,000
Cash from investing activities 28,000
Which statement most likely explains what occurred during the year?
A. Natural Market is using cash from operations and borrowing money from the bank to buy long-term assets.
B Natural Market is using its profits in order to sell plant assets and repay debt.
C. Natural Market is using cash from the sale of long-term assets to fund its operations and to repay debt.
D. Natural Market is selling long-term assets and borrowing cash to fund operations.
10. How is cash paid for interest on a mortgage classified on a statement of cash flows?
A. As an investing activity
B. As an operating activity
C. As a financing activity
D. As a receiving activity
11. If a company sells equipment with accumulated depreciation totaling $4,200 and an original cost of $5,100 for a loss of $400, what amount will appear in the investing activities section of the statement of cash flows?
12. How is the repurchase of a company's own stock classified on the statement of cash flows?
A. As an investing activity
B. As an operating activity
C. As a financing activity
D. As a non-cash activity
13. How is the payment of previously accrued salaries reported on the statement of cash flows?
A. As an investing activity
B. As an operating activity
C. As a financing activity
D. As a non-cash activity
14. Which of the following is not a use of cash?
A. The payment of a loan of which was borrowed in order to purchase a factory
B. The issuance of a stock dividend
C. Payments to suppliers
D. A payment to reduce long-term debt
15. Which of the following is a cash inflow reported in the operating activities section of the statement of cash flows?
A. The issuance of common stock
B. The issuance of a long-term note payable
C. The collection of accounts receivable
D. The payment for raw materials
16. Denton Limited Company reported earnings per share of common stock $2 in 2014 and paid dividends of $1.50 per share. Denton has no preferred stock issued. The current market price per share is $15 and the book value per share is $14. How much is Denton's price-earnings ratio?
A. $6.75
B. $7.50
C. $7.00
D. $30.00
17. Asset turnover is
A. Net income divided by sales
B. Net dales divided by total assets
C. net sales divided by current assets
D. earnings per share divided by the market price per share of stock
18. Asset turnover is a measure of
A. how quickly a company is replacing its old plant assets with new plant assets
B. how quickly a company is turning its sales into cash
C. the overall efficiency with which the company uses assets to generate revenues
D. how rapidly the stock market believes the company will grow
19. The higher the amount of a company's accounts receivable turnover,
A. the shorter time period it takes to collect receivable
B. the more assets a company has tied up in receivables
C. the longer it takes a company to collect its receivables
D. the more likely a company will experience cash flow problems
20. Which statement is true concerning the current ratio?
A. It is usually a larger amount than the acid-test ratio
B. It is a more stringent test of a company's ability to pay its short-term obligations.
C. It measures a company's ability to manage its assets efficiently.
D. It measures a company's ability to make interest payments on debt.
22. Redzone Corporation reported $400,000 in sales on account plus another $60,000 in cash sales last year. Cost of goods sold for the period totaled $220,000. The beginning balance in accounts receivable was $32,000 and the ending balance was $50,000. How much is the company's accounts receivable turnover?
A. 9.2 times
B. 4.8 times
C. 8.0 times
D. 12.5 times
23. Fenwick Holdings reported cash sales in 2014 of $220,000. Accounts receivable at the beginning of the year totaled $420,000, with a balance of $490,000 at the end of the year. If the company's accounts receivable turnover is 3.5 for the year, how much are its total sales for the year?
A. $2,250,000
B. $1,715,000
C. $1,495,000
D. $1,935,000
24. Real Crisp Company reported cost of goods sold of $800,000 last year. The company's beginning inventory balance was $58,000 and the ending inventory balance was $54,000. How many days will it take the company to sell its inventory as of year end?
A. 13.8 days
B. 14.8 days
C. 24.6 days
D. 26.5 days