Question 1

If accounts receivable increased from $12,000 to $15,000 during the year and if sales amounted to $100,000 for the year, cash receipts from customers amounted to $103,000.

A. True

B. False

Question 2

When net income is used as a starting point in measuring cash flows from operating activities, there is no need to add depreciation expense to net income.

A. True

B. False

Question 3

What is the acid-test ratio for the following data? Cash - $34,000; marketable securities - $16,000; accounts and notes receivable, net - $46,000; merchandise inventory - $61,000; prepaid expenses - $3,000; accounts and notes payable, short term - $64,000; accrued liabilities - $16,000.

A. 1:2

B. 2:1

C. 1.2:1

D. 3:1

E. 4:1

Question 4

Express cost of goods sold as a common-size percentage using the following data. Sales - $45,000; cost of goods sold - $29,340; gross profit from sales - $15,660; operating expenses - $10,800; net income - $4,860.

A. 66 percent

B. 100 percent

C. 65.2 percent

D. 6.03 percent

Question 5

A stock split would be reported in a separate schedule.

A. True

B. False

Question 6

A company must publish a statement of cash flows for each period for which it publishes an income statement.

A. True

B. False

Question 7

Cash received from the issuance of long-term debt is a financing activity.

A. True

B. False

Question 8

When a statement of cash flows is prepared, dividends paid are reported as an investing activity.

A. True

B. False

Question 9

Collections of loans are a financing activity.

A. True

B. False

Question 10

Capital stock issued as a stock dividend is reported in a statement of cash flows.

A. True

B. False