Cash Flow-Definition
The Statement of Cash Flows is not a financial statement:True or False
What is False?
Operating Activities include:
What is paying wages, buying inventory, paying other expenses, sale products, provide services.
Horizontal analysis of comparative financial statements cannot be used under GAAP
What is false
Determine amount of quick assets and quick ratio
AP $50,000
AR $72,000
Accrued liabilities $7,000
Cash $60,000
Intangible assets $40,000
Inventory $72,000
Long-term investments $110,000
Notes payable (short-term) $30,000
Prepaid expenses $2,000
Temporary investments $45,000
a. $217,000
b. $177,000
c. $132,000
d. None of the above
What is B (quick assets-QA) and 2.03 (Quick Ratio)
QA = AR $72,000+Cash $60,000 + TINV $45,000 = $177,000
$177,000/$87,000 ($50,000 AP + $7,000 Accrued liab+ $30,000 short term notes payable) = 2.03
In horizontal analysis, each items is expressed as a percentage of the base year figure.
True
False
What is True?
Financial Activities include all of the following except:
a. cash paid for dividends
b. cash paid for the interest on bonds payable
c. cash received from the sale of bonds payable
d. cash paid for the purchase of treasury stock
What is cash paid for the interest on bonds payable - b
Name two financing activities:
What are purchasing treasury stock, paying bond loans, paying dividends, repaying long term liabilities, issuing stock, issuing long term liabilities
The percentage analysis of increases and decreases in individual items on comparative financial statements is called.
a. Horizontal Analysis
b. Vertical Analysis
c. Common Size Statements
d. None of the above
What is horizontal analysis (a)
What is the inventory turnover for Net Solutions?
Sales $2,300,000
Cost of Merchandise sold 600,000
Beg Merch Inventory 90,000
Ending Merch Inventory 65,000
What is 7.74
COMS/Average Merchandise Inventory = $600,000/$77,500 (90,000 +65,000/2) =7.74
Name a basic analytical method
What is horizontal, vertical or common-size statements
Which of the following does not represent an outflow of cash:
a. Purchase of noncurrent assets
b. Payment of cash dividends
c. Discarding an asset that had been fully depreciated
d. Purchase of Treasury Stock
What is discarding an asset that had been fully depreciated (c)
Investing activities include
a. purchasing land
b. depreciation
c. issuing common stock
d. none of the above
a. What is purchasing land?
Comparative FS that are expressed as a percentage of the base amount are called:
a. Percentage comparative statements
b. Sales comparative statements
c. Asset comparative statements
d. Common-size comparative statements
What are common-size comparative statements
How to determine the working capital ratio
What is Current assets-Current liabilities
Times interest earned is referred to as the coverage ratio-True or False
What is True
The three sections of the statement of cash flows
What are Operating Activities, Financing Activities and Investing Activities
Cash paid to employees would go under which section of the Cash Flow Statement
What is Operating Activities?
A common measure of liquidity is:
a. Ratio of net sales to assets
b. Dividends per share of common stock
c. Receivable turnover
d. Profit margin
What is receivable turnover (c)?
A company reports the following: COMS 510,000 and Average MI 70,000 -The inventory turnover is _______and the number of days' sales in inventory __________
What is 7.29 (510,000/70,000) and 50.11: 70,000/1397 (510,000/365)
Net income $91,000, Preferred Dividends $9,000, Common stock outstanding 50,000, Earnings Per share is
What is 1.64($91,000-$9,000 = 82,000/50,000 shares of CS outstanding =1.64)
Preferred stock issued by company X would be reported in what section of the Statement of Cash Flows.
What is financial activities
The current period statement of cash flows includes the following:
Cash balance at the beg of the period $400,000
Net cash flows from operating activities $205,000
Net cash flows used for investing activities ($63,000)
Net cash flows used for financing activities ($100,000)
The cash balance at the end of the period is _____ __________________
What is $442,000?
Which of the following is not on the Independent auditor's report?
a. Description of which FS are covered by the audit
b. The auditor's opinion regarding the fairness of the FS
c. Summary of the scope of the audit
d. The auditor's opinion regarding the truthfulness of the FS
What is the auditor's opinion regarding the truthfulness of the FS
Computer the Current Ratio using the info below:
Cash $154,000, Temporary invest $350,000, AR $210,000, INV $240,000, Prepaid EXP $15,000, PP and E $375,000, Rental income $100,000, Commissions from Sale $50,000, AP $245,000, Mortgage Payable $30,000, Income Tax Payable $5,000 and Long term note $25,000.
What is 3.87 rounded 3.9? Cash $154,000 + Temp Inv. $350,000 + AR 210,000, INV $240,000 +Prepaid Exp. $15,000 = $969,000/$250,000 (AP $245,000 + Income Tax Payable of $5,000 = 3.87 rounded to 3.9
Andrew’s Corporation’s accumulated depreciation increased by $16,000, while patents decreased by $3,000 between consecutive balance sheet dates. In addition, the income statement showed a gain of $5,000 from sale of land. The company earned a net income of $70,000-- no changes in noncash current assets and liabilities, determine the net cash flows from operating activities under the indirect method.
What is $84,000? NI $70,000+$16,000 Accum dep+$3,000 patents - $5,000 for gain on sale.