Financial Accounting Questions

NEU FIN6101 MT EXAM WTR 2012 PLEASE PRINT NAME > Warning Your exam is incomplete please check column A for 1s to identify the incomplete question(s) MC - please select the best answer (2 points each, a total of 48 points) 1) Rail Corporation bought debt and equity securities that it intends to hold as shortterm investments. This purchase should be classified on Rail's statement of cash flows as a A. operating cash outflow. B. investing cash outflow. C. financing cash outflow. D. operating cash inflow. E. investing cash inflow. F. financing cash inflow. Choose Your Answer: 2) Joyner Corporation paid interest on longterm debt. This interest payment should be classified on Joyner's statement of cash flows as a A. operating cash outflow. B. investing cash outflow. C. financing cash outflow. D. operating cash inflow. E. investing cash inflow. F. financing cash inflow. Choose Your Answer: 3) Anderson Corporation sold debt and equity securities that it held as shortterm investments. This sale should be classified on Anderson's statement of cash flows as A. operating cash outflow. B. investing cash outflow. C. financing cash outflow. D. operating cash inflow. E. investing cash inflow. F. financing cash inflow. Choose Your Answer: 4) Garon Corporation declared and paid $50,000 cash dividends. This payment should be classified on Garon's statement of cash flows as a A. operating cash outflow. B. investing cash outflow. C. financing cash outflow. D. operating cash inflow. E. investing cash inflow. F. financing cash inflow. Choose Your Answer: 5) Which of the following statements about the direct and the indirect methods for preparing cash flows from operating activities is false? A. The direct method involves listing specific operating cash inflows and outflows, while the indirect method shows net income adjustments. B. Both the direct and indirect methods will show the same investing and financing sections. C. The direct method does not show losses from equipment sales but the indirect method does show such losses on the face of the statement. D. The direct and indirect methods result in different totals for cash flows from operating activities. E. Companies using the direct method must include a schedule reconciling net cash flow from operating activities with net income, but companies using the indirect method do not need such a schedule. Choose Your Answer: 6) When preparing cash flows from operating activities under the indirect method, which of the following are added to and subtracted from net income? Added to Net Income Subtracted from Net Income A. Interest Expense Increase in Current Liabilities B. Loss on Sale of Building Gain on Sale of Equipment C. Increase in Current Assets Gain on Sale of Equipment D. Interest Expense Depreciation Expense E. Sale of Treasury Stock Purchase of Bonds (ShortTerm Investment) Choose Your Answer: 7) Skilling Corporation's accounts receivable account balance at the end of 2011 and 2012 was $1,500,000 and $2,150,000, respectively. During 2012, Skilling's sales were $3,000,000, and $100,000 of accounts receivable were written off. During 2012, how much cash did Skilling receive from its customers? $2,150,000 A. $2,250,000 B. $2,350,000 C. $2,450,000 D. $2,550,000 E. Choose Your Answer: 8) In doubleentry bookkeeping, A. purchasing office furniture on credit decreases total assets. B. financing purchases with longterm notes payable decreases total liabilities. C. declaring dividends decreases total stockholders' equity. D. purchasing inventory and paying for it with cash has a positive net effect on total assets. E. net income decreases total stockholders' equity. Choose Your Answer: 9) Expenses normally have ___ balances and cause stockholders' equity to ___. A. debit; increase B. debit; decrease C. credit; increase D. credit; decrease E. credit; remain unchanged Choose Your Answer: 10) On May 1, 2012, Jackson Toy Company (JTC) purchased 1,000 robots at a cost of $4.50 per unit and subject to credit terms 2/10, net 45. JTC remitted full payment to the vendor on May 9, 2012. The total purchase price of the robots was $4,365 A. B. $4,410 C. $4,500 D. $4,545 E. $4,650 Choose Your Answer: Use the following information to answer questions 11 and 12 On November 1, 2011, Easterly Bank purchased a new vault door for $85,000. The bank paid an extra $2,400 for delivery costs, and $1,300 for installation costs. The vault door has a $5,000 estimated salvage value and a 10year estimated useful life. 11) What was the total cost of the machine to Easterly