1. Blackfly Ltd. had sales of $500,000 in 2007, all made on credit terms. The company collected $25,000 from credit sales made in 2006, and at the end of 2007 its customers owed the company $50,000. If its accounting policy is to provide for bad debts on the basis of 1% of sales, the bad debt expense would be *

$10,000

$ 7,500

$ 5,500

$ 5,000

none of the above

2. A mortgage loan that is due for payment in five years time is an example of *

a current liability

a long-term liability

a long-tem asset

equity

none of the above

3. Digman Co. had retained earnings of $400,000 and $50,000 in cash on January 1st. It made a net income of $100,000 in the year. Amortization expense was $250,000. Cash from operations was *

$50,000

$250,000

$300,000

$350,000

$550,000

4. A company that has issued new common shares for $50 million and repaid debt of $20 million out of the proceeds will have *

a positive flow of cash from investing activities

a negative flow of cash from investing activities

no net change in cash position

a positive flow of cash from financing activities

none of the above