Some companies have little, if any, net income or earnings, yet they seem to have all the money they need for capital expenditures. Which of the following best explains how such companies operate? (A) They have good cash flows. (B) They lease capital equipment that does not show up on balance sheets. (C) They have accounts with many different banks. (D) They issue warrants to their officers. Which of the following should be shown net of tax on a corporation's income statement? (A) Discontinued operations (B) Operating income (C) Gross profit (D) Gain on sale of delivery truck Net Income is the result of a) the Trial Balance b) Revenue less Expenses c) The Balance Sheet d) Assets minus Liabilities The Sintar Corporation has just announced that it will pay $1.10 per share in dividends to its stockholders in the current quarter. The prior quarter's dividend was $1.00 per share. The announcement indicates which of the following? (A) Management is sending a signal that it expects the economy to expand. (B) Management is sending a signal that the company has good projected future earnings. (C) While the company was able to pay a higher dividend, management preferred a more conservative figure. (D) The company has overextended its cash position and may have liquidity problems in the future. Which of the following statements is true of accrual basis accounting? a) Accrual basis accounting is required by Generally Accepted Accounting Principles. b) Accrual basis accounting records expenses only when cash has been paid for them. c) Accrual basis accounting records revenue only when cash is received. d) Accrual basis accounting always results in greater net income than cash basis accounting All of the following might be considered in the economic evaluation of a business unit EXCEPT (A) wages paid to labor (B) projected annual revenues of competitors (C) the cost of materials used in the production process (D) the price at which goods produced are sold to customers Retained Earnings can be described as a) cumulative net income reduced by dividends b) cumulative revenues less expenses less distributions c) beginning retained earnings plus current year net income d) all of the above Gross profit is calculated as a) total sales revenue less sales discounts and allowances b) total sales revenue less operating expenses c) total net sales revenue less sales discounts d) total net sales revenue less cost of goods sold For a company with significant uncollectible receivables, the direct write-off method is unsuitable because a) it overstates liabilities on the balance sheet b) it violates the matching principle c) it uses estimates for determining the bad debt expenses Id) it is not allowed for tax reasons ABC, Inc., common stock has a current market price of $52 per share. Dividends have been $5 a share for several years and are expected to remain at that level for the foreseeable future. Other companies of similar risk and characteristics yield 10% in the marketplace. What should you recommend concerning ABC stock? (A) It should be purchased at $52 per share, because that is a fair price. (B) It should be purchased at $52 per share, because it will yield 10.1%. (C) It should not be purchased, because it will yield only 2%. (D) It should not be purchased at more than $50 per share. Which financial statement includes Cash, Accounts Payable, and Equity? a) Income Statement b) Trial Balance c) Chart of Accounts d) Balance Sheet Assets are listed in the order of their on the balance sheet a) magnitude b) dates of purchase c) liquidity d) durability When is a trial balance usually prepared? a) after each entry is journalized b) before the financial statements are prepared c) after the financial statements are prepared d) at the beginning of an accounting period The income statement presents a summary of an entity's revenues and expenses for a period of time. Which of the following statements is true of an income statement? a. There is a net income when total revenues are less than total expenses. b. There is a net loss when total expenses are less than total revenue. c. There is a net loss when total expenses are greater than total liabilities. d. There is net income when total revenues are greater than total expenses. Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year are called a) intangible assets b) plant assets c) long-term assets d) current assets Which of the following depreciation methods writes off a higher amount of depreciation in earlier years than in later years? a) the units-of-production method b) the straight-line method c) the double-declining-balance method d) the first-in, first-out method XYZ Co sold its office furniture for $5,000. Its original cost was $10,000 and at the time of sale, it had accumulated depreciation of $7,000. What was the effect of the transaction? a) gain of $5,000 b) gain of $2,000 c) loss of $2,000 d) loss of $5,000 The par value of stock is a) the current selling price of stock b) the highest price for which a share can sell c) the price paid if the corpration purchases its own stock back d) the amount assigned by a company to a share of its stock Outstanding stock refers to the Ja) shares of stock that are held by the stockholders b) shares of stock that are sold for the highest price c) total amount of stock that has been authorized by state law d) total amount of stock that has not been sold yet Which of the following corporate characteristics is a disadvantage of a corporation? a) Stockholders of a corporation have limited liability b) A corporation has a continuous life c) There is no mutual agency among the stockholders and the coporation d) Earnings of a corporation are taxed twice If bonds with a face value of $200,000 are sold at 98, the amount of cash proceeds is a. $202,000 b. $200,000 c. $196,000 d. $192,157 One of the purposes of the statement of cash flows is to a. determine the worth of the accounts receivable of the business b. to calculate the turnover of inventory c. evaluate the level of debt and leverage of a company d. predict the ability of a company to pay debts and dividends Which of the following is the typical order of the sections on a statement of cash flows? a. operating, financing, investing b. financing, investing, operating c. investing, operating, financing d. operating, investing, financing A partial listing of costs incurred at ABC Co. during October appears below: $114,000 4,600 81,000 23,000 51,600 Direct materials Utilities, factory Administrative salaries Indirect labor Sales commissions Depreciation of production equipment Depreciation of administrative equipment Direct labor Advertising 19,500 27,000 130,000 138,000 The total of the product costs listed above for October is: A partial listing of costs incurred at ABC Co. during September appears below: $115,000 4,800 77,000 24,300 51,600 Direct materials Utilities, factory Administrative salaries Indirect labor Sales commissions Depreciation of production equipment Depreciation of administrative equipment Direct labor Advertising 20,500 29,800 128,000 134,500 The total of the manufacturing overhead costs listed above for September