P1 – Sec A – ESP 22

The financial statements included in the annual report to the shareholders are least useful to which one of the following?

 

When a fixed asset is sold for less than book value, which one of the following will decrease?

On July 15, a company entered into a three-month agreement to rent a machine the company needed
to complete a special order. The machine would be delivered on August 1, and rental payments are
due on the first day of each rental month. The effect this event would have on the company’s July 31
financial statements would be to

All of the following are limitations to the information provided on the statement of financial position
except the

A statement of financial position provides a basis for all of the following except

An income statement could be used by an external investor for all of the following purposes except
to

The financial statement that provides a summary of the firm’s operations for a period of time is the

Bertram Company had a balance of $100,000 in Retained Earnings at the beginning of the year and
$125,000 at the end of the year. Net income for this time period was $40,000. Bertram’s Statement
of Financial Position indicated that Dividends Payable had decreased by $5,000 throughout the year,
despite the fact that both cash dividends and a stock dividend were declared. The amount of the
stock dividend was $8,000. When preparing its Statement of Cash Flows for the year, Bertram
should show Cash Paid for Dividends as

All of the following are elements of an income statement except

The statement of shareholders’ equity shows a

Which one of the following items could be identified on the cash flow statement prepared using the
indirect method?

Consider the following financial data for a company that is preparing its cash flow statement.

Amortization expense = $150,000
Cash dividends paid to common shareholders = $75,000
Net income = $1,500,000
Work-in-process inventory increase over the prior year = $300,000
Gain on sale of equipment = $50,000
Using the indirect method, cash flow from operating activities would be

Dividends paid to company shareholders would be shown on the statement of cash flows as

All of the following are classifications on the statement of cash flows except

The purchase of fixed assets should be accounted for on the statement of cash flows as a(n)

A statement of cash flows prepared using the indirect method would have cash activities listed in
which one of the following orders?

Kelli Company acquired land by assuming a mortgage for the full acquisition cost. This transaction
should be disclosed on Kelli’s Statement of Cash Flows as a(n)

Which one of the following should be classified as an operating activity on the statement of cash
flows?

When using the statement of cash flows to evaluate a company’s continuing solvency, the most
important factor to consider is the cash

The most commonly used method for calculating and reporting a company’s net cash flow from
operating activities on its statement of cash flows is the

The presentation of the major classes of operating cash receipts (such as receipts from customers)
less the major classes of operating cash disbursements (such as cash paid for merchandise) is best
described as the

Which one of the following would result in a decrease to cash flow in the indirect method of
preparing a statement of cash flows?

The information reported in the statement of cash flows should help investors, creditors, and others to assess all of the following except the

Larry Mitchell, Bailey Company’s controller, is gathering data for the Statement of Cash Flows for the most recent year end. Mitchell is planning to use the indirect method to prepare this statement, and has made the following list of cash inflows for the period.
• Net income of $100,000.
• Securities purchased for investment purposes with an original cost of $100,000 sold for $125,000.
• Proceeds from the issuance of additional company stock totaling $10,000.
The correct amount to be shown as net cash provided by operating activities is

During the year, Deltech Inc. acquired a long-term productive asset for $5,000, and also borrowed $10,000 from a local bank. These transactions should be reported on Deltech’s Statement of Cash Flows as

Atwater Company has recorded the following payments for the current period.
Purchase Trillium stock $300,000
Dividends paid to Atwater shareholders $200,000
Repurchase of Atwater Company stock $400,000
The amount to be shown in the Investing Activities Section of Atwater’s Cash Flow Statement should be

Carlson Company has the following payments recorded for the current period.
Dividends paid to Carlson shareholders $150,000
Interest paid on bank loan $250,000
Purchase of equipment $350,000
The total amount of the above items to be shown in the Operating Activities Section of Carlson’s Cash Flow Statement should be

Barber Company has recorded the following payments for the current period.
Interest paid on bank loan $300,000
Dividends paid to Barber shareholders $200,000
Repurchase of Barber Company stock $400,000
The amount to be shown in the Financing Activities Section of Barber’s Cash Flow Statement should be

Selected financial information for Kristina Company for the year just ended is shown below.
Net income $2,000,000
Increase in accounts receivable $300,000
Decrease in inventory $100,000
Increase in accounts payable $200,000
Depreciation expense $400,000
Cash received from the issue of common stock $800,000
Cash paid for dividends $80,000
Cash paid for the acquisition of land $1,500,000
Kristina’s cash flow from financing activities for the year is

An accountant with Nasbo Enterprises Inc. has gathered the following information in order to prepare the Statement of Cash Flows for the current year. Net income of $456,900 includes a deduction of $45,600 for depreciation expense. The company issued $300,000 of dividends this year and purchased one new building for $275,000. The balance sheets from the current period and prior period included the following balances.
Details – Prior Year – Current Year

Accounts receivable, net	$56,860	$45,300
Accounts payable	$12,900	$10,745
Inventory	$186,700	$194,320

Using the indirect method, what is the amount of cash provided by operating activities?

For the fiscal year just ended, Doran Electronics had the following results.
Net income $920,000
Depreciation expense $110,000
Increase in accounts payable $45,000
Increase in accounts receivable $73,000
Increase in deferred income tax liability $16,000
Doran’s net cash flow from operating activities is

Three years ago, James Company purchased stock in Zebra Inc. at a cost of $100,000. This stock was sold for $150,000 during the current fiscal year. The result of this transaction should be shown in the Investing Activities Section of James’ Statement of Cash Flows as

Madden Corporation’s controller has gathered the following information as a basis for preparing the
Statement of Cash Flows. Net income for the current year was $82,000. During the year, old
equipment with a cost of $60,000 and a net carrying value of $53,000 was sold for cash at a gain of
$10,000. New equipment was purchased for $100,000. Shown below are selected closing balances
for last year and the current year.

Madden’s cash inflow from operating activities for the current year is

Details	Last Year	Current Year
Cash	$39,000	$85,000
Accounts receivable net	$43,000	$37,000
Inventories	$93,000	$105,000
Equipment	$360,000	$400,000
Accumulated depreciation – equipment	$70,000	$83,000
Accounts payable	$22,000	$19,000
Notes payable	$100,000	$100,000
Common stock	$250,000	$250,000
Retained earnings	$93,000	$175,000

A leading manufacturer of electric vehicles has accumulated customer driving interaction data through its unique pilot driver-assist program. This data will be used to further develop more advanced autonomous features that the company plans to implement in the near future on its most popular model. In integrated reporting, the system used to accumulate and analyze the driving data is best categorized as

Which one of the following statements regarding an integrated report is correct?

A change in the estimate for bad debts should be

Finer Foods Inc., a chain of supermarkets specializing in gourmet food, has been using the average cost method to value its inventory. During the current year, the company changed to the first-in, first-out method of inventory valuation. The president of the company reasoned that this change was appropriate since it would more closely match the flow of physical goods. This change should be reported on the financial statements as a

Best Billiard Company owns 40% of Supreme Table Company’s stock at a historical cost of $300,000. Supreme Table recently reported their earnings for the prior year. Best Billiard’s proportional share of Supreme Table’s prior year net income was $10,000. Best Billiard also received $15,000 in dividends from Supreme Table in the prior year. Best Billiard uses the equity method as the accounting treatment for this investment. Based on the information presented, the proper presentation of this investment would result in Best Billiard reporting

Under U.S. GAAP, which one of the following statements best describes the effects on the financial statements resulting from a change in the accounting classification for a security from available-for-sale to held-to-maturity?

A company has $100 million of debt that is due in March Year 3. In December Year 2, the company entered into a non-cancelable agreement with its lender to refinance the debt with the same interest rate, and the full principal is due in December Year 5. How should the debt be classified on the December Year 2 balance sheet of the company?

Which one of the following transactions would affect retained earnings but not additional paid-in capital?

During the month of October, a company purchased 1,000 units of inventory for $500 per unit and sold 900 of these units which represented 10% of the company’s annual sales budget in units. The company also incurred administrative costs of $300,000 during October. By applying the matching principle, the total amount of the company’s expenses on its October income statement is

A company is preparing its financial statements in accordance with U.S. GAAP. Listed below are select financial data for the company. Net income = $950,000 Depreciation = $40,000 Investment by owners = $60,000 Unrealized gain on available-for-sale securities = $90,000 Foreign currency translation loss = $20,000 What is the amount that would be reported as comprehensive income?

A fundamental difference between U.S. GAAP and IFRS is that