Question
Review chpt 8-12 QUESTION 11 On the statement of cash flows, cash receipts from the sale of equipment is a (an): operating activity non-cash investing
Review chpt 8-12
QUESTION 11
On the statement of cash flows, cash receipts from the sale of equipment is a (an):
- operating activity
- non-cash investing and financing activity
- financing activity
- investing activity
QUESTION 12
On January 1, 2021, Entity J issued $2,000,000 of 4% bonds with a five-year term. Interest is payable annually on January 1. The market interest rate was 6%. The issue price was $1,831,509. Entity J uses the effective interest method for amortization of bond discount or premium. What is the interest expense for the first year? Round to the nearest dollar if necessary.
- $29,891
- $109,891
- $80,000
- 120,000
QUESTION 13
Entity H reports: Building (at cost) $400,000 and Accumulated Depreciation of $198,000. How should this be shown on its classified balance sheet?
- Book value of $202,000 should be shown under Intangible Assets.
- Book value of $598,000 should be shown under Property, Plant, and Equipment
- Building at $400,000 should be shown under Property, Plant, and Equipment, and Accumulated Depreciation of $198,000 should be shown under Current Liabilities.
- Book value of $202,000 should be shown under Property, Plant, and Equipment
QUESTION 14: Ratios are most useful in identifying
- relationships.
- causes.
- differences.
- investment opportunities.
QUESTION 15
Entity F lent its customer $15,000 on September 1, 2022 accepting a 6-month, 10% interest-bearing note, with principal and interest payable at maturity. At December 31, 2022, what adjusting entry must Entity F make to accrue interest revenue?
- Dr. Cash 250
- Cr. Interest revenue 250
- Dr. Interest receivable 500
- Cr. Interest revenue 500
- Dr. Cash 500
- Cr. Interest revenue 500
- Dr. Interest receivable 250
- Cr. Interest revenue 250
QUESTION 16
A company may prefer to finance an expansion by issuing bonds payable rather than issuing common stock because:
- current stockholders may not want to purchase more common stock
- earnings per share might be higher because fewer shares will be outstanding than had the company issued stock.
- bond interest is tax deductible
- all of the above
QUESTION 17
The best measure of a company's ability to generate sufficient cash to continue as a going concern is cash flow from:
- operating activities
- financing activities
- investing activities
- non-cash investing and financing activities
QUESTION 18
Entity I incurred various costs regarding its delivery truck which it purchased two years ago. For the cost that follows, indicate the proper treatment of the cost for financial accounting purposes:A rock shattered the windshield so it was replaced at a cost of $600.
- Capitalized
- Expensed
- Ignored
QUESTION 19
Depreciation and amortization
- is a process of asset valuation, not cost allocation.
- should only be taken if the company expects to replace the asset.
- provides for proper matching of expenses with revenues.
- results in an accumulation of cash for replacement of the asset.
QUESTION 20
Entity L reported net income of $125,000 for the current year and uses the indirect method to report operating activities cash flow.Merchandise Inventory decreased by $10,000 during the year. Choose the appropriate category on the statement of cash flows to report the decrease in Merchandise Inventory.
- Cash Flows From Operating Activities-Add to Net Income
- Cash Flows From Operating Activities-Deduct from Net Income
- Cash Flows From Investing Activities
- Cash Flows From Financing Activities
- Non-cash
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