1. Tropical Tours reported revenue of $400,000 for its current year ended December 31. Accounts receivable at December 31 for the current year were $32,000. Last year, on December 31, they were $35,000. Using the direct method for reporting cash flows from operating activities, Tropical Tours would report cash collected from customers of:

   Answer

   		$400,000
   		$397,000
   		$403,000
   		$365,000

2 points

Question 4

1. Shively Mfg. Co. sold for $18,000 equipment that cost $40,000 and had a book value of $30,000. Shively would report:

   Answer

   		Operating cash inflows of $18,000.
   		Financing cash inflows of $18,000.
   		Operating cash inflows of $8,000.
   		Investing cash inflows of $18,000.

2 points

Question 5

1. On October 28, Mercedes Company committed to a plan to sell a division that qualified as a component of the entity according to GAAP regarding discontinued operations and was properly classified as held for sale on December 31, the end of the company's fiscal year. The division's loss from operations for the current year was $2,000,000. The division's book value and fair value less cost to sell on December 31 were $3,000,000 and $2,500,000, respectively. What before-tax amount(s) should Mercedes report as loss on discontinued operations in its current year income statement?

   Answer

   		$2,000,000
   		$2,500,000
   		None
   		$500,000 impairment loss included in continuing operations and a $2,000,000 loss from discontinued operations.

2 points

Question 6

1. Major Co. reported income of $300,000 for the year from continuing operations before income taxes and a before-tax extraordinary loss of $80,000. All income is subject to a 30% tax rate. In the income statement, Major Co. would show the following line-item amounts for income tax expense and net income:

   Answer

   		$66,000 and $210,000
   		$90,000 and $154,000
   		$90,000 and $276,000
   		$66,000 and $220,000

2 points

Question 7

1. Bird Brain Co. reported net income of $45,000 for the year ended December 31. January 1 balances in accounts receivable and accounts payable at the beginning of the year were $23,000 and $26,000 respectively. Year-end balances in these accounts were $22,000 and $28,000, respectively. Assuming that all relevant information has been presented, Bird Brain's cash flows from operating activities would be:

   Answer

   		$48,000
   		$44,000
   		$45,000
   		$46,000

2 points

Question 8

1. Shady Lane's income tax payable account decreased from $14 million to $12 million during the current year. If its income tax expense was $80 million, what was shown as an operating cash flow under the direct method?

   Answer

   		A cash outflow of $82 million.
   		A cash outflow of $80 million.
   		A cash outflow of $12 million.
   		A cash outflow of $78 million.