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Typical contractual situations that are disclosed in the notes to the
 
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Typical contractual situations that are disclosed in the notes to the balance sheet include all of the following except

 
debt covenants.
 
lease obligations.
 
advertising contracts.
 
pension obligations.

During 2012 the DLD Company had a net income of $55,000. In addition, selected accounts showed the following changes:
Accounts Receivable         $    3,000 increase
Accounts Payable              1,000 increase
Building              4,000 decrease
Depreciation Expense              1,500 increase
Bonds Payable              8,000 increase
What was the amount of cash provided by operating activities?

 
$56,500
 
$64,500
 
$55,000
 
$54,500

The statement of cash flows provides answers to all of the following questions except

 
what was the cash used for during the period?
 
what was the change in the cash balance during the period?
 
where did the cash come from during the period?
 
what is the impact of inflation on the cash balance at the end of the year?

In a statement of cash flows, receipts from sales of property, plant, and equipment and other productive assets should generally be classified as cash inflows from

 
selling activities.
 
financing activities.
 
operating activities.
 
investing activities.

Net cash provided by operating activities divided by average total liabilities equals the

 
current ratio.
 
cash debt coverage ratio.
 
current cash debt coverage ratio.
 
free cash flow.

It is mandatory that the essential provisions of which of the following be clearly stated in the notes to the financial statements?

 
Stock option plans
 
Pension obligations
 
Lease contracts
 
All of these.

Harding Corporation reports the following information:
Net income         $    450,000
Depreciation expense              140,000
Increase in accounts receivable              60,000
Harding should report cash provided by operating activities of

 
$250,000
 
$650,000
 
$530,000
 
$370,000

Preparing the statement of cash flows involves all of the following except determining the

 
change in cash during the period.
 
cash provided by operations.
 
cash collections from customers during the period.
 
cash provided by or used in investing and financing activities.

Which of the following is not a method of disclosing pertinent information?

 
Supporting schedules
 
Parenthetical explanations
 
Cross reference and contra items
 
All of these are methods of disclosing pertinent information.

Significant accounting policies may not be

 
omitted from financial-statement disclosure.
 
selected from existing acceptable alternatives.
 
unusual or innovative in application.
 
selected on the basis of judgment.

A general description of the depreciation methods applicable to major classes of depreci-able assets

 
is not essential to a fair presentation of financial position.
 
is needed in financial reporting when company policy differs from income tax policy.
 
should be included in corporate financial statements or notes thereto.
 
is not a current practice in financial reporting.

In preparing a statement of cash flows, which of the following transactions would be considered an investing activity?

 
Issuance of bonds payable at a discount
 
Sale of merchandise on credit
 
Sale of equipment at book value
 
Declaration of a cash dividend

In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for

 
lending activities.
 
financing activities.
 
operating activities.
 
borrowing activities.

The statement of cash flows helps meet one of the objectives of financial reporting, which is to assess all of the following except the

 
uncertainty of future cash flows.
 
source of future cash flows.
 
timing of future cash flows.
 
amount of future cash flows.

Packard Corporation reports the following information:
Net cash provided by operating activities         $    235,000
Average current liabilities              150,000
Average long-term liabilities              100,000
Dividends declared              60,000
Capital expenditures              110,000
Payments of debt              35,000
Packard’s free cash flow is

 
$50,000
 
$125,000
 
$175,000
 
$65,000

                                        

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