1. Which of the following statements regarding cash flows from investing activities is true? ASThe proceeds from sales of investments are reported as cash inflows from investing activities B. Cash flows from investing activities are calculated by making adjustments to net income. C. Cash paid to acquire long-lived assets is reported as a cash inflow from investing activities D. Cash received from issuing a long-term payable is reported as a cash inflow from investing activities 2. The primary purpose of the statement of cash flows is a to assure creditors that sufficient cash will be available to pay the company's debts. b. to assure financial statement readers that assets equal liabilities and equity c. to explain why the company's cash inercased or decreased over the time period. d. to explain how the company will be able to acquire needed property, plant and equipment. 3. A company acquired a tract of land for future development. In acquiring the land, the company made an initial down payment and arranged to pay the remaining amount due in ten equal arnaal installments. Which of the following statements is true regarding impact on the statement of cash flows? a. Since the remainder of the cash has not been paid, this transaction has no effect on the statement of cash flows. b. The operating section will be affected by the amount of the cash payment. c. The company must include a disclosure note to explain the non-cash portion of this transaction. d. Only the financing section will be affected by this transaction 4. Which of the following would be classified as a financing activity on the statement of cash flows? A. Interest paid to a lender. B. Dividends paid to the company's common stockholders. C. Cash paid to acquire a long-term investment. D. Cash received from a loan that was made to another company. 5. How are cash equivalents treated? a. the same as cash in the statement of cash flows b. as supplemental non-cash information that must accompany the statement of cash flows c. as investing activities in the statement of cash flows d. the treatment depends on whether the cash equivalents are receivables or payables 6. The standards of ethical conduct for management accountants include a. competence and performance. b. integrity and respect for others. c. confidentiality, confidence, performance, and integrity. competence, confidentiality, integrity, and credibility. 7. Prime costs are A. Fixed cost and direct materials B. Manufacturing overhead and variable cost C. Direct labor and factory depreciation D. Direct materials and direct labor 8. Providing accounting information for the needs of internal is known a. reporting b. financial accounting managerial accounting d. information provision Indirect labor 9. The wages of factory maintenance personnel would usually be comidered to be Manufacturing overhead A) No Yes B) Yes No Yes Yes D) No No 10. Manufacturing costs are also called a. product costs. b. period costs. c. Variable costs d. overhead costs. 11. Last month, when 10,000 units of a product were manufactured, the cost per unit was 560. At this level of activity, variable costs are $30 per unit. If 10.500 units are manufactured next month and cost behavior patterns remain unchanged the A. total variable cost will remain unchanged. B. fixed costs will increase in total. C. variable cost per unit will increase D. total cost per unit will decrease. 12. Which of the following costs is often important in decision making, but is not included in conventional accounting records? A. Indirect cost. B. Sunk cost. C. Opportunity cost. D. Fixed cost. 13. Which of the following is true with regard to the traditional vs the contribution income statement? a. Traditional format income statements are prepared primarily for external reporting purposes. b. In a contribution format income statement, sales minus cost of goods sold equals the gross margin. c. The contribution format income statement is useful for external reporting purposes, but has serious limitations when used for internal purposes. d. In a contribution format income statement for a merchandising company, cost of goods sold is a fixed cost that gets included in the "Fixed expenses" portion of the income statement. 14. Which of the following is a true statement? a. All depreciation costs are always considered a product cost in a manufacturing firm. b. In a manufacturing company, selling and administrative expenses are product costs under generally accepted accounting principles. c. Indirect costs, such as manufacturing overhead, are always fixed costs. d. Even if operations are interrupted or cut back, committed fixed costs remain largely unchanged in the short term. 15. One division of Mustang Company produces and sells popsicles designed for horses. While demand for the popsicles has consistently increased over the years, the cost of personnel assigned to this department has increased much more than the increase in sales would warrant. To determine the cause of production supervisors, marketing supervisors, the accountant specifically assigned to the popsicle division, sales commissions from sales of the popsicles, labor mixing popsicle ingredients, janitorial staff specifically assigned to the popsicle division, Management needs to know which of these personnel costs would be a direct cost of producing one popsicle. A. labor mixing the ingredients B. the accountant assigned to the division C. sales commissions from sales of popsicles D. production supervisors II. (55 points) Turn your scan-tron over and begin with number 51. 51. Land that was purchased several years ago for $78,000 was sold this year for $93,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $78,000 b. None; this is a financing activity. c. $93,000 d. $15,000 52. Spade Company recorded the following events last year: Issuance of shares of the company's own common stock. $150,000 Purchase of long-term investment $60,000 Dividends paid to the company's own shareholders......... $27,000 Cash paid to suppliers for inventory purchases........ $2,000 Repayment of principal on the company's own bonds...... $190,000 Interest paid to lenders ....... $18,000 Collection by Spade of a loan made to another company $130,000 Purchase of equipment...... $370,000 The net cash provided by (used in) financing activities on the statement of cash flows would be: A. $41,000 B. $(85,000) C. $947,000 D. $(67,000) 53. Mustang Corporation's most recent balance sheet appears below Comparative Balance Sheet Ending Beginning Balance Balance Assets: Cash and cash equivalents $ 34 $29 Accounts receivable 44 41 Inventory 72 60 Property, plant and equipment 610 550 Less accumulated depreciation...... 274 229 Total assets S486 5451 Liabilities and stockholders' equity: Accounts payable $32 $28 Bonds payable 305 400 Common stock..... 51 30 Retained earnings 98 27) Total liabilities and stockholders' equity. $486 5451 The company's net income for the year was $246; its depreciation expense was $70; equipment was sold at a $20 gain; and cash dividends were $30. The net cash provided by (used in) operating activities for the year was: A $325 B. $285 C. $277 D. $255 54. Maroon and Gold Company's cash decreased by $8,000. Cash provided by operating activities was $20,000. Net cash used in financing activities was $14.000. Based on this information, the net cash flow from investing activities on the statement of cash flows was: A. a net $8,000 increase. B. a net $14,000 increase. C. a net $6,000 decrease. D. a net $14,000 decrease, 55. Mustang Company produced and sold 10,000 units of its product last year and found that its fixed cost per unit was $27.00. This year, demand for Mustang's product increased such that Mustang is expecting to produce and sell 15,000 of its product, a 50% increase. This increase is within the company's relevant range. Which is true regarding this year's expected fixed cost? A. Total fixed cost is expected to be $405,000 B. Fixed cost per unit is expected to be $27.00. C. Total fixed cost is expected to be $270,000 D. Fixed cost per unit is expected to be $40.50