| E.None of the answer choices is correct. 2. The following information is from the noncurrent asset portion of Randle Companys balance sheet. December 31 2013 2012 Property, plant, and equipment $140,000 $125,000 Accumulated depreciation (69,500) (57,000) Long-term investments 27,000 15,000 The following activities occurred during 2013: Sold equipment with an original cost of $8,000 and a book value of $2,500 for $2,000 cash. Depreciation expense for the year totaled $18,000. Purchased property for $23,000 cash. Purchased long-term investments for $12,000 cash. What is the amount of cash used by investing activities? | A.$27,000 | | | B.$51,000 | | | C.$33,000 | | | D.$14,500 | | | E.None of the answer choices is correct. 3. During Benson Companys most recent fiscal year, beginning plant assets, net of deprecia-tion, totaled $150,000, and ending plant assets totaled $187,500. Depreciation expense of $10,500 and a loss on sale of equipment of $1,125 was reported on the income statement. The company purchased plant assets for $60,050 during the year. How much will be reported as cash received from the sale of equipment in the investing activities section of the statement of cash flows? | A.$22,550 | | | B.$10,925 | | | C.$21,425 | | | D.$36,375 | | | E.None of the answer choices is correct. 4. How will the change in inventory be reported in the operating activities section of the state-ment of cash flows? Myers Inc. uses the indirect method to prepare the statement of cash flows. The following amounts are shown in its December 31, 2013, financial statements. December 31, 2013 December 31, 2012 Accounts receivable $442,000 $502,000 Cost of goods sold $1,200,000 Sales revenue $1,600,000 Accounts payable $ 170,000 $210,000 Inventory $ 180,000 $ 130,000 Salaries payable $ 30,000 $ 38,000 Salaries expense $ 110,000 $ 96,000 | A.The increase of $50,000 will be added to cost of goods sold. | | | B.The increase of $50,000 will be added to net income. | | | C.The increase of $50,000 will be subtracted from net income. | | | D.The increase of $50,000 will be subtracted from cost of goods sold. | | | E.None of the answer choices is correct. 5. Which of these would be deducted from net income as part of the operating activities sec-tion, when using the indirect method of preparing the statement of cash flows? Stalwart Inc. accounting records show the following changes during the companys most recent fiscal year. (1.) Gain on sale of (2.) Loss on sale of long-term investments (3.) Decrease in prepaid expenses (4.) Increase in accounts receivable (5.) Decrease in merchandise inventory (6.) Decrease in wages payable (7.) Increase in accounts payable (8.) Payment of cash dividends (9.) Purchase of machinery (10.) Payments of principal on bonds payable (11.) Proceeds from sale of long-term investments | A.2, 3, 5, 7, 8, & 10 | | | B.1, 4, & 6 | | | C.2, 3, 5, & 7 | | | D.3, 4, 5, 6, & 7 | | | E.None of the answer choices is correct. 6. Which of these would be added as part of the cash flows from investing activities when pre-paring the statement of cash flows? Stalwart Inc. accounting records show the following changes during the companys most recent fiscal year. (1.) Gain on sale of (2.) Loss on sale of long-term investments (3.) Decrease in prepaid expenses (4.) Increase in accounts receivable (5.) Decrease in merchandise inventory (6.) Decrease in wages payable (7.) Increase in accounts payable (8.) Payment of cash dividends (9.) Purchase of machinery (10.) Payments of principal on bonds payable (11.) Proceeds from sale of long-term investments | A.11, | | | B.1, 9 & 11 | | | C.9 & 11 | | | D.1, 2, 9 & 11 | | | E.None of the answer choices is correct. 7. Nickels Inc. prepares its statement of cash flows using the direct method. If Nickels sells equipment for a gain of $35,000 when the book value is $100,000, what amount will be reported on the statement of cash flows operating activities section related to this gain? | A.$0 | | | B.($35,000) | | | C.($65,000) | | | D.$65,000 | | | E.None of the answer choices is correct. 8. If a company purchases land with its common stock, and no cash changes hands, where would this activity be presented on the statement of cash flows? | A.The financing section of the statement of cash flows. | | | B.The investing section of the statement of cash flows. | | | C.The operating section of the statement of cash flows. | | | D.A note below the statement of cash flows. | | | E.None of the answer choices is correct. 9. Where would cash payments for insurance appear in the statement of cash flows? | A.Operating activities section. | | | B.Financing activities section. | | | C.Investing activities section. | | | D.Capital activities section. | | | E.None of the answer choices is correct. 10. Which of these items would appear in the financing activities section of the statement of cash flows? Carr Company has the following cash flows to account for: (1) Cash receipts for the sale of common stock. (2) Cash payments for the purchases of merchandise. (3) Cash receipts from the collection of accounts receivable. (4) Cash receipts from the collection of principal on loans made to others. (5) Cash payments to shareholders for dividends. (6) Cash payments for the purchase of machinery. | A.1 & 6 | | | B.2 & 3 | | | C.1 & 5 | | | D.4 & 6 | | | E.None of the answer choices is correct. 11. Significant noncash financing and investing activities are reported in: | A.a note below the statement of cash flows. | | | B.the investing activities section of the statement of cash flows. | | | C.the financing activities section of the statement of cash flows. | | | D.the operating activities section of the statement of cash flows. | | | E.None of the answer choices is correct. 12. Which of these items would appear in the investing activities section of the statement of cash flows? Ellie Inc. has the following cash flows to account for: (1) Cash receipts from the sale of long-term bonds. (2) Cash receipts from the sale of equipment. (3) Cash payments for income taxes. (4) Cash receipts from the sale of stock. (5) Cash payments for the purchase of a factory building. | A.1 & 4 | | | B.2 & 5 | | | C.3 | | | D.2, 4, & 5 | | | E.None of the answer choices is correct. 13. The capital expenditure ratio is calculated as: | A.Cash provided by operating activities divided by capital expenditures. | | | B.Cash provided by operating activities plus capital expenditures. | | | C.Cash provided by operating activities divided by current liabilities. | | | D.Capital expenditures divided by cash provided by operating activities. | | | E.None of the answer choices is correct. 14. The operating cash flow ratio measures: | A.the company's ability to generate enough cash from daily operations to cover capital expenditures. | | | B.the company's ability to generate enough cash from daily operations to cover long-term liabilities. | | | C.the company's ability to generate enough cash from daily operations to cover current liabili-ties. | | | D.the company's ability to generate enough cash from financing operations to cover current liabilities. | | | E.None of the answer choices is correct. | | | | | | | | | | | | | |
