1. A/ An _______ is added back to net income in the operating section of an indirect cash flow statement.
A. increase in inventory
C. decrease in accounts payable
D. increase in accounts receivable
2. The following information is available for Allsport Company:
Cost of goods sold $545,000
Merchandise inventory, 12/31/13 $105,000
Merchandise inventory, 12/31/14 $112,000
Accounts payable, 12/31/13 $98,500
Accounts payable, 12/31/14 $101,300
What amount was paid for merchandise during 2014?
3. Knutson Company reacquired 5,000 shares of its $15-par common stock for $13/share. The debit to Treasury Stock is
4. A company sold an asset with a book value of $56,000 for $35,000 cash. Which of the following is a true statement?
A. Loss on sale equals $35,000 and Cash inflow equals $21,000.
B. Loss on sale equals $56,000 and Cash inflow equals $56,000.
C. Loss on sale equals $35,000 and Cash inflow equals $35,000.
D. Loss on sale equals $21,000 and Cash inflow equals $35,000.
5. On the income statement, extraordinary items are reported
A. immediately after the continuing operations section.
B. before the operating income section.
C. net of income tax or net of income tax savings.
D. immediately before the discontinued operations section.
6. For the years 2012, 2013, and 2014, the sales of Red Line, Inc. are $40,000, $60,000 and $80,000, respectively. If 2012 is the base year, the trend percentage for 2013 was
7. The formula for computing additional paid-in capital in excess of par is shares of stock times
A. selling price per share minus par value per share.
B. par value per share of stock.
C. selling price per share of stock.
D. selling price per share plus par value per share.
8. The following information applied to Advanced Industries, Inc. for 2014:
Market price per share of common stock $52
Number of shares of common stock outstanding 52,000
Net income $48,000
What is the dividend yield for Advanced Industries, Inc. (to the nearest tenth of a percent)?
9. A journal entry for the sale of $10 par-common stock for $18 per share would include a
A. credit to Cash.
B. credit to Paid-In Capital in Excess of Par–Common Stock.
C. debit to Common Stock.
D. debit to Paid-In Capital in Excess of Par–Common Stock.
10. On the _______ of a cash dividend, no journal entry is required.
A. declaration date
B. payment date
C. preferred date
D. date of record
11. Which of the following is not a part of financing activities?
A. Issuing stock
B. Buying land
C. Paying off loans
D. Paying dividends
12. When a company sells off part of its business, this transaction is reported in a/ the
A. retrospective application.
B. continuing operations section.
C. discontinued operations section.
D. extraordinary items section.
13. The 2013 and 2014 balance sheets for Newport Industrial showed Cash of $8,000 and $9,500, respectively; Accounts Receivable of $14, 000 and $16,000, respectively; Inventory of $11,000 and $8,000, respectively; and Accounts Payable of $5,000 and $7,000, respectively. Its 2014 income statement showed Net Sales of $108,000, Cost of Goods Sold of $62,000, and Net Income of $27,000. The cash conversion cycle for 2014 (round calculations to two decimal places) is _______ days.
14. A purchase of new equipment on a note payable under the direct method is reported
A. as a separate disclosure as a non-cash transaction.
B. in the operating section of the cash flow statement.
C. in the financing section of the cash flow statement.
D. in the investing section of the cash flow statement.
15. Choose the correct formula to determine a trend percentage.
A. An item from any year divided by the same item from a base year, multiplied by 100.
B. Net profit of the current year divided by net profit of a base year.
C. An item from the base year multiplied by the same item from the current year.
D. The total income of the current year, minus the total income from a base year.
16. Which is a value placed on a certificate for a share of the company's stock?
A. Stated value
B. Market value
C. Additional paid-in capital
D. Paid-in capital
17. Of the following, which is not classified as an investing activity on the statement of cash flows?
A. Collecting the principal on loans
B. Sale of equipment for cash
C. Purchasing land
D. Selling goods and services
18. R&R Heating, Inc. has 350,000 shares of $3-par common stock outstanding. They have declared a 5% stock dividend. The current market price of the common stock is $7.50 per share. The amount that will be credited to common stock on the date of declaration is
19. Other than depreciation, a company's operating expenses for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method are
20. Haskins, Inc. sells 1,000 shares of $12 par common stock for $20 per share. The journal entry is
A. debit Cash $20,000; credit Common Stock $12,000; credit Paid-In Capital in Excess of Par-Common Stock $8,000.
B. debit Cash $12,000; credit Common Stock $12,000.
C. debit Cash $12,000; debit Paid-In Capital in Excess of Par–Common $8,000; credit Common Stock $20,000.
D. debit Cash $20,000; credit Common Stock $20,000.
21. Which of the following causes the par value of a company's stock to decrease?
A. Stock dividend
B. Stock split
C. Cash dividend
D. Sale of additional stock
22. Which is not included in paid-in capital?
B. Common Stock
C. Preferred Stock
D. Additional Paid-in Capital
23. Cherry Corporation's outstanding stock is 100 shares of $100 par, 11% cumulative preferred stock, and 2,000 shares of $12 par common stock. Cherry paid $1,600 in cash dividends during the year. No dividends are in arrears. Common stockholders received