QUIZ

A- Free cash flow is calculated as net cash provided by operating activities less capital expenditures and:

1- debt repayments.

2- dividends.

3- interest.

4- income taxes.

Practice Question 15

The cash flow statement for Schroder Corporation shows the following information:

Net cash provided by operating activities:$100,000Net cash used by investing activities:$(50,000)Net cash provided by financing activities:$10,000Cash balance at the beginning of the period:$30,000

The cash balance at the end of the period is:

1- $60,000.

2- $90,000.

3- nil.

4- $190,000

.Practice Question 24

ZYX Corporation states, in the notes to its 2019 financial statements, that it refinanced some of its long-term debt early in 2020, before the financial statements were issued. The debt continues to be classified as non-current on the 2019 statement of financial position. That means that ZYX:

1- prepared its financial statements using IFRS

2- prepared its financial statements using ASPE

3- may have prepared its financial statements under either IFRS or ASPE

4- is a going concern.

Rover Corporation reports the following information:

Net income$2,500,000Depreciation expense340,000Loss on the sale of investments77,000Increase in accounts receivable160,000

Rover should report cash provided by operating activities of

1- $1,923,000.

2- $2,500,000.

3- $2,757,000.

4- $3,077,000.

Testbank Question 13

Non-monetary assets include

1- accounts receivable and property, plant and equipment.

2- accounts and notes receivable and inventory.

3- inventory, property, plant and equipment, and intangibles.

4- accounts receivable and investments.

Testbank Question 23

An example of an item which is NOT an element of working capital is

1- short-term investments.

2- accrued interest on notes receivable.

3- goodwill.

4- inventory.

Which of the following balance sheet classifications would normally require the greatest amount of supplemental disclosure?

1- Current liabilities

2- Plant assets

3- Long-term liabilities

4-Current assets

A measure of a company's financial flexibility is the

1- current cash debt coverage ratio.

2- cash debt coverage ratio and free cash flow.

3- cash debt coverage ratio.

4- free cash flow.

Testbank Question 75

Maggins Inc. gives you the following information pertaining to the year 2020:

Net sales$880,000

Cost of goods sold550,000

Current assets525,000

Current liabilities262,500

Average total assets950,000

Total liabilities577,500

Net income165,000

The asset turnover ratio of Maggins Inc. is

1- 0.56.

2- 0.17.

3- 0.93.

4- 1.08.

Avonics Ltd., which follows ASPE had the following comparative statement of financial position:

Avonics Ltd.

Comparative Statement of Financial Position

December 31Assets20212020Cash$82,000$50,000Accounts receivable136,000102,000Inventory

80,000120,000Prepaid insurance10,0008,000Equipment308,000274,000Accumulated depreciationequipment

(70,000)(50,000)Total assets$546,000$504,000Liabilities and Shareholders' EquityAccounts payable$86,000$72,000Salaries and wages payable

12,0008,000Income taxes payable16,00018,000Mortgage payable

110,000124,000Common shares220,000210,000Retained earnings102,00072,000Total liabilities and shareholders' equity$546,000$504,000

Additional information:

Net income was $54,600.

New equipment was purchased and none was sold.

Common shares were issued for cash.

Cash dividends were paid to common shareholders.

Prepare the statement of cash flows using the indirect format.(Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

AvonicsLtd.

Statement of Cash Flow

net cash provided by operating activities

:Additional Problem 15

Kaitlin Ltd. had the following comparative Statement of Financial Position:

Kaitlin Ltd.

Comparative Statement of Financial Position

March 31

Assets 2021 2020

Cash $17,000 $12,000

Accounts receivable 60,000 40,000

Inventory 84,000 70,000

Prepaid expenses 6,000 4,000

Property, plant, and equipment 250,000 210,000

Accumulated depreciation (60,000) (48,000)

Total assets $357,000 $288,000

Liabilities and Shareholders' Equity

Accounts payable $35,000 $40,000

Interest payable 3,000 4,000

Income taxes payable 22,000 12,000

Bonds payable 90,000 64,000

Common shares 95,000 80,000

Retained earnings 112,000 88,000

Total liabilities and shareholders' equity$357,000 $288,000

Calculate the current ratio and debt to total assets ratio as at March 31, 2021 and March 31, 2020.(Round Current ratio to 1 decimal place, e.g. 15.1 and Debt to total asset ratio to 2 decimal places, e.g. 15.75.)

2021 2020

Current ratio

Debt to total assets ratio

Testbank Question 3

The statement of financial position is useful for all of the followingEXCEPT

1- evaluating a company's liquidity.

2- evaluating a company's financial flexibility.

3- determining free cash flows.

4- assessing a company's risk.

Testbank Question 40

Significant accounting policies may NOT be

1- unusual or innovative in application.

2- omitted from financial-statement disclosure.

3- selected on the basis of judgement.

4- selected from existing acceptable alternatives.

Testbank Question 40

Significant accounting policies may NOT be

1- unusual or innovative in application.

2- omitted from financial-statement disclosure.

3- selected on the basis of judgement.

4- selected from existing acceptable alternatives

.Testbank Question 40

Significant accounting policies may NOT be

1- unusual or innovative in application.

2- omitted from financial-statement disclosure.

3- selected on the basis of judgement.

4-selected from existing acceptable alternatives.

In a statement of cash flows, interest payments to lenders and other creditors should be classified as cash outflows for

1- operating activities.

2- borrowing activities.

3-financing activities.

4- lending activities

.

Ratios that measure how effectively an entity is using is assets are called

1- solvency ratios.

2- liquidity ratios.

3- activity ratios.

4- profitability ratios

Testbank Question 77

Financial or capital market risks are related

1- investing activities only.

2- operating and financing activities.

3- financing activities only.

4- both financing and investing activities.