Answer following questions Question 1 Which one of the following would be an investing activity in the context of the statement of cash flows a Depreciation of plant equipment b Selling inventory c Purchasing treasury stock d Purchasing land for plant expansion Question 2 ABC Company had retained earnings of $71,000 at the start of the year, and $97,000 at the end of the year If dividends of $12,000 were paid, what was amount of net income a $38,000 b $26,000 c $14,000 d None of the above Question 3 Beginning inventory is 100 units $50 unit During the year, the following purchases were made (in chronological order) 500 units $60 unit 300 units $70 unit and 100 units $80 unit Ending inventory is 200 units Compute the cost of ending inventory under the LIFO method a $16,000 b $15,000 c $11,000 d $10,000 Question 4 At which of the following stages in the revenue production cycle would revenue typically be recognized under generally accepted accounting principles a Product is manufactured and stored b Customer orders the product c Product is shipped to the customer d Customer pays for the product Question 5 Cash paid for insurance during the year is $53,000 Prepaid Insurance was $9,800 at the beginning of the year, and $8,000 at the end of the year What was the amount of Insurance Expense for the year a $62,800 b $54,800 c $53,000 d $51,200 e $45,000 Question 6 In the context of financial accounting, as explained in class, taking a big bath refers to a Extensive re engineering of accounting processes b Significant inventory liquidation c Major restructuring charges d Large negative cash flow from operations Question 7 In an environment of rising costs, an advantage of using LIFO is a Lower income taxes payable in the current year b Higher net income for financial statement purposes c Both a and b d Neither a nor b Question 8 ABC Company has an unadjusted balance in Allowance for Bad Debts of $6,000 The amount of the allowance appearing on the balance sheet is $51,000 What is the amount of bad debt expense for the year a $6,000 b $45,000 c $51,000 d $57,000 Question 9 Negative operating cash flow is consistent with which of the following a The company is profitable, but is expanding inventories rapidly b The company is profitable, but is having difficulty collecting receivables c The company is operating at a loss d It is consistent with all of the above e It is consistent with none of the above Question 10 Which of the following items on the income statement will always cause cash flow from operations to be greater than net income, other things being equal a Sales Revenue b Insurance Expense c Depreciation Expense d Interest Revenue

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Answer following questions

Question 1

Which one of the following would be an "investing" activity in the context of the statement of cash flows?

	a.	Depreciation of plant equipment.
	b.	Selling inventory.
	c.	Purchasing treasury stock.
	d.	Purchasing land for plant expansion.

Question 2

ABC Company had retained earnings of $71,000 at the start of the year, and $97,000 at the end of the year. If dividends of $12,000 were paid, what was amount of net income?

Question 3

Beginning inventory is 100 units @ $50/unit. During the year, the following purchases were made (in chronological order): 500 units @ $60/unit; 300 units @ $70/unit; and 100 units @ $80/unit. Ending inventory is 200 units. Compute the cost of ending inventory under the LIFO method.

Question 4

At which of the following stages in the revenue production cycle would revenue typically be recognized under generally accepted accounting principles?

	a.	Product is manufactured and stored.
	b.	Customer orders the product.
	c.	Product is shipped to the customer.
	d.	Customer pays for the product.

Question 5

Cash paid for insurance during the year is $53,000. Prepaid Insurance was $9,800 at the beginning of the year, and $8,000 at the end of the year. What was the amount of Insurance Expense for the year?

Question 6

In the context of financial accounting, as explained in class, "taking a big bath" refers to:

	a.	Extensive re-engineering of accounting processes.
	b.	Significant inventory liquidation.
	c.	Major restructuring charges.
	d.	Large negative cash flow from operations.

Question 7

	a.	Lower income taxes payable in the current year.
	b.	Higher net income for financial statement purposes.
	c.	Both a and b.
	d.	Neither a nor b.

Question 8

ABC Company has an unadjusted balance in Allowance for Bad Debts of $6,000. The amount of the allowance appearing on the balance sheet is $51,000. What is the amount of bad debt expense for the year?

Question 9

	a.	The company is profitable, but is expanding inventories rapidly.
	b.	The company is profitable, but is having difficulty collecting receivables.
	c.	The company is operating at a loss.
	d.	It is consistent with all of the above.
	e.	It is consistent with none of the above.

Question 10

Which of the following items on the income statement will always cause cash flow from operations to be greater than net income, other things being equal?