Question $6$Not yet answeredMarked out of $17$ Flag questionQuestion textIn this Part of the final exam, there are $10$ questions, worth a total of $17$ points. You must answer all of them. When entering a number, just the digits $-$ no dollar signs, commas, or decimal points, unless instructed otherwise. The select all that apply questions require more than one correct answer. Saint Nick Gifts Inc. is gearing up for the holiday season. The following transactions and events have occurred: Dec. $1-$ Borrowed $$20,000$ from the Far North Bank for three years, at $6\%$ interest. Interest is due on the first day of every month, starting on January $1$ next year. Dec. $5-$ Hired seven elves to package toys $($they start work tomorrow$)$ and nine reindeer to deliver them on Christmas Eve. Dec. $24-$ Since they were hired, the seven elves have worked for $14$ days each, $7\mathrm{.}5$ hours per day, and today Santa pays them $$22$ per hour. Dec. $24-$ As the North Pole is in Canada, Santa has deducted the following in total from the elves' pay: EIT $$2,525$; CPP $$550$; and EI $$350.$ The appropriate employer portion is also accrued. Dec. $26-$ The deliveries were successful and the reindeer are paid with apples, oats, honey, and whatever milk and cookies Santa was able to take away. Dec. $28-$ Santa's accountants, Scrooge, Grinch & Partners, tell Santa that he owes $$8,000$ for last year's income taxes. He has not paid this amount yet. It will be paid in April. Dec. $31-$ The first interest amount on the loan, due tomorrow, is accrued. Jan. $1-$ The bank deducts the interest from Santa's account. Jan. $15-$ Santa pays the Canada Revenue Agency the amount owed with respect to the elves' payroll. If you use an accounting chart to help you analyze the above transactions, you can then answer the following questions. How much interest does Santa pay on January $1?(2$ points$)$Answer $1$ Question $6$ How much, in total, was the elves' gross pay on December $24?(2$ points$)$Answer $2$ Question $6$ How much, in total, was the elves' net pay on December $24?(2$ points$)$Answer $3$ Question $6$ How much does Santa pay the Canada Revenue Agency on January $15?(2$ points$)$Answer $4$ Question $6$ How does Santa record the December $1$ transaction? $(1$ point$)$Multiple choice $1$ Question $6$increase both Cash and Retained Earnings increase both Cash and Accounts Payable no entry is needed until the loan is paid increase both Cash and Owners Equity increase both Cash and Bank Loan Payable Which of the above items are events, not transactions, and require no entry? $(1$ point$)$Multiple choice $2$ Question $6$December $5,26,$ and $28$ December $5,24,$ and $26$ All of the items are transactions which require entries.December $5$ and $26$ only December $24,26,$ and $28$ How does Santa record the December $28$ transaction? $(1$ point$)$Multiple choice $3$ Question $6$increase both Income Tax Payable and Income Tax Expense increase both Income Tax Payable and EIT Expense increase both EIT Payable and EIT Expense Increase Income Tax Expense and decrease Cashincrease both EIT Payable and Income Tax Expense How does Santa record the interest accrual on December $31?(1$ point$)$Multiple choice $4$ Question $6$increase both Interest Payable and Interest Expense increase both Bank Loan Payable and Interest Expense increase both Accounts Payable and Interest Expense increase both Accounts Payable and Bank Fee Expense increase both Interest Payable and Bank Fee Expense no entry required How does Santa record the interest payment on January $1?(1$ point$)$Multiple choice $5$ Question $6$decrease Interest Payable, Bank Loan Payable, and Cashdecrease both Interest Expense and Cash decrease both Accounts Payable and Cash decrease both Bank Loan Payable and Cash decrease both Interest Payable and Cash Which accounts will be affected, and how, by the January $15$ payment? Select all that apply. $(4$ points$)$EI Payable increases CPP Payable decreases Income Tax Expense increases Wages Expense increases Wages Payable decreases Employee Benefits Expense decreasesEmployee Benefits Expense increases Cash increases Income Tax Payable decreases CPP Payable increases EI Payable decreases Cash decreases EIT Payable decreases EIT Payable increases Question $7$Not yet answeredMarked out of $13$ Flag questionQuestion textIn this Part of the final exam, there are $13$ questions. All of them are multiple$-$choice and are worth $1$ point each, for a total of $13$ points. You must the BEST answer for all of them.MyOwnBiz Inc. has been your business for the past several years. You have put together your cash flow statements for the past $3$ years to get a better idea of how your business is managing cash flow.Year ending December $31202120202019$Cash flow from operations$56,00050,00040,000$Cash flow from investing$25,0005,0005,000$Cash flow from financing$(30,000)(20,000)25,000$Net change in cash$51,00035,00070,000$Cash, beginning of year$237,000202,000132,000$Cash, end of year$288,000237,000202,000$Profit for the year$59,00052,00045,000$ The next five questions relate to the cash flow statements above. Which section of the cash flow statement is considered the most important? Why?Multiple choice $1$ Question $7$the change in cash, because it shows the year$-$over$-$year difference investing, because it shows how much the company has spent on long$-$lived assets financing, because it shows how much the company has borrowed All are considered equally important.operating, because it is the only sustainable source of cash Which life$-$cycle stage was the business most likely in$,$ back in $2019?$Multiple choice $2$ Question $7$start$-$up maturity declinegrowth either growth or maturity Which life$-$cycle stage is the business most likely in by $2021?$Multiple choice $3$ Question $7$growth either maturity or growthstart$-$up decline maturity Cash flow from investing activities has increased in $2021.$ Which of the following transactions can cause investing cash flow to increase?Multiple choice $4$ Question $7$borrowing from the bank selling long$-$lived assets lower dividendslower depreciation expense receiving contributions from owners Cash flow from financing activities has gone from positive to negative over the years. Which of the following transactions can cause financing cash flow to decrease?Multiple choice $5$ Question $7$increased depreciation expense purchase of long$-$lived assets paying down a bank loan higher income tax ratepaying fewer dividends The rest of the questions in this Part are independent and not related to the cash flow statements above.Which type of financial ratio is calculated from both income statement and balance sheet figures?Multiple choice $6$ Question $7$profitability liquidity profitability and efficiencyEfficiency solvency Which type of financial ratio tells you how well a company can cover its long$-$term liabilities?Multiple choice $7$ Question $7$profitability and efficiencyprofitability solvency efficiency liquidity Which type of financial ratio tells you how well a company can cover its current liabilities?Multiple choice $8$ Question $7$efficiency profitability liquidity solvency profitability and efficiency Which of the following is a liquidity ratio?Multiple choice $9$ Question $7$days' sales in accounts receivable gross profit ratio debt$-$to$-$equity ratio debt$-$to$-$total$-$assets ratiocurrent ratio In a horizontal analysis of an income statement, what is the correct formula to calculate the percentages?Multiple choice $10$ Question $7$divide the change in each item from last year by net sales divide the change by net salesdivide each item's amount by profit divide each item's amount by net sales divide the change in each item from last year by last year's amount divide each item's amount by last year's amount In a vertical analysis of a balance sheet, what is the correct formula to calculate the percentages?Multiple choice $11$ Question $7$divide each asset item by total assets and divide each liability item by total liabilities divide each item by total assets divide the change in each item from last year by last year's amountdivide each item by total current assets divide each item by total equity A vertical analysis of an income statement tells youMultiple choice $12$ Question $7$whether or not a company is a going concern. the portion of net sales that each subsequent line on the statement comprises. how a specific item has changed from year to year. whether or not a company is more profitable than its competitors. how much cash the company has and whether or not it can pay its debts. A horizontal analysis of a balance sheet tells youMultiple choice $13$ Question $7$how much cash the company has and whether or not it can pay its debts.whether or not a company is more profitable than its competitors. how a particular item has changed from year to year the portion of total assets that a particular asset comprises whether or not a company is a going concern.