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Cash flows from paying suppliers for the purchase of inventory are classified as: investing activities financing activities distribution activities operating activities QUESTION 2 Which statement

  1. Cash flows from paying suppliers for the purchase of inventory are classified as:

    investing activities

    financing activities

    distribution activities

    operating activities

QUESTION 2

  1. Which statement of financial position accounts are most affected by financing activities?

    Non-current liabilities and shareholders' equity

    Current liabilities

    Current assets

    Non-current assets

QUESTION 6

  1. Which of the following statements is false regarding the issuance of equity (shares) versus debt (bonds) to raise capital for a company?

    The declaration of dividends reduces the amount of the company's taxable income

    Interest accrues; whereas, dividends do not accrue

    The payment of bond interest is a contractual requirement

    The payment of dividends is at the discretion of the board of directors

1 points

QUESTION 7

  1. Which of the following statements is false regarding how the cash flow effects of the changes in the equipment and accumulated depreciation accounts would be reported on a statement of cash flows if the indirect method is used to prepare the operating activities section?

    Depreciation expense would be added to total comprehensive income in the operating activities section

    The cash paid to purchase equipment would be reported as a cash outflow in the investing activities section

    Cash proceeds from the sale of the equipment would be reported as a cash inflow in the investing activities section

    A loss on the sale of the equipment would be subtracted from total comprehensive income in the operating activities section

1 points

QUESTION 8

  1. The following items were reported on the statement of financial positions and statement of comprehensive income for Online.com:

    Accounts receivable, 30 June 2016 $455 000

    Accounts receivable, 30 June 2017 $225 000

    Sales for financial year ended 30 June 2017 $1 700 000

    What amount would be reported in the operating activities section of Online.coms statement of cash flows for collections from customers under the direct method, assuming that all sales are on credit?

    $1 250 000

    $1 930 000

    $975 000

    $1 725 000

1 points

QUESTION 9

  1. Brumfield issued 8 000 ordinary shares for $28 per share.

    In addition to the increase in cash, what effect does this transaction have on Brumfield's accounting equation?

    Ordinary shares increases $224 000

    Ordinary shares decreases $224 000 and contributed capital increases $224 000

    Ordinary shares increases $8 000 and retained earnings increases $168 000

    Ordinary shares increases $175 000 and the gain on share issuance increases $175 000

1 points

QUESTION 10

  1. When a company declares a cash dividend:

    no entry is necessary

    equity decreases

    cash decreases

    liabilities decrease

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