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11) The following is summary of information presented on the financial statements of a company on December 31, 2015. Account 2015 2014 Current Assets $82,000 $70,000 Accounts Receivable 60,000 68,000 Merchandise Inventory 62,000 53,000 Current Liabilities 52,000 46,000 Long-term Liabilities 39,000 45,000 Common Stock 70,000 50,000 Retained Earnings 65,000 40,000 What would a horizontal analysis report show with respect to long-term liabilities? A) long-term liabilities decreased by $30,000 B) long-term liabilities decreased by 40% C) long-term liabilities decreased.
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21) Which of the following would appear on a statement of cash flows prepared using the direct method? A) adjustments to net income B) cash payments for salaries C) adjustments for gains and losses on sale of property D) increase/decrease in current assets 22) Which of the following items would be included as an operating.
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6) Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record the following transactions: Issued Common Stock for $28,000 Issued new Long-Term Notes Payable for $34,000 Repaid Long-Term Notes Payable for $40,000 Avatar Company Spreadsheet for Statement of Cash Flows Year Ended.
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71) Which of the following actions could increase the balance in the Paid-In Capital in Excess of Par—Common Account? A) cash dividend declared B) stock split C) 10% stock dividend declared D) purchase of treasury stock 72) Which of the following actions will decrease the balance in Retained Earnings? A) repayment of bond principal B) stock split C).
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Learning Objective 14-4 1) Martinez Installations Company uses the direct method to prepare its statement of cash flows. It has reported Sales Revenues of $200,000 on its income statement for the year 2015. If the balance in Accounts Receivable has gone up by $10,000 during the year, then $10,000 will have.
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20) Data for Nobell Inc. is as follows: 20152014 Net Sales$850,000$798,000 Cost of Goods Sold635,000580,000 Selling and Administrative Expenses50,00035,000 Other Expenses20,00015,000 Income Tax40,00055,000 Prepare a horizontal analysis of the comparative income statement of Nobell Inc. (Round percentage changes to one decimal place.) Use a multi-step income statement. Answer:  Nobell Inc. Comparative Income Statement Years Ended Dec 31, 2015 and 2014 Increase.
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8) Avatar Company uses the indirect method to prepare its statement of cash flows. Refer to the partially completed worksheet below. Complete the worksheet, including the data showing the net change in cash, plus all control totals. Avatar Company Spreadsheet for Statement of Cash Flows Year Ended December 31, 2014 Transaction Analysis Transaction Analysis Balance Panel A—Balance.
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61) Lopez Corp. uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2014: 1) Long-Term Notes Payable, beginning balance, $80,000 2) Long-Term Notes Payable, ending balance, $76,000 3) Common Stock, beginning balance, $3,000 4) Common Stock, ending balance, $26,000 5) Retained Earnings, beginning balance, $75,000 6).
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11) Interest Expense paid on a Note Payable would be included in the operating activities section of the statement of cash flows. 12) Avatar Auto Parts Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2015: 1) Sales Revenue, $515,000 2).
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21) Nelson Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: Nelson Corp. Comparative Balance Sheet December 31, 2014 and 2013 2014 2013 Increase/decrease Accounts Payable $8,000 $9,000 $(1,000) Accrued Liabilities 3,000 1,500 1,500 Long-Term Notes Payable 56,000 60,000 (4,000) Total liabilities $67,000 $70,500 $(3,500) The change in Accounts Payable will be shown as a negative cash flow in the.
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11) The rate of return on total assets measures a company's success in using its assets to earn income. Answer:  TRUE Diff: 1 LO:  15-4 AACSB:  Concept AICPA Functional:  Measurement 12) The ratio of the market price of a share of stock to the dividends paid per share is called the earnings per share. Answer:  FALSE Diff: 1 LO: .
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35) Avatar Auto Parts Company uses the direct method to prepare its statement of cash flows. Refer to the following financial statement information for the year ending December 31, 2015: Avatar Company Comparative Balance Sheet December 31, 2015 and 2014 2015 2014 Increase / (Decrease) Cash $33,000 $13,000 $20,000 Accounts Receivable 29,000 36,000 (7,000) Inventory 56,000 29,000 27,000 Plant and Equipment, net 126,000 92,000 34,000 Total Assets $244,000 $170,000 $74,000 Accounts Payable $9,000 $13,000 $(4,000) Accrued Liabilities 7,000 3,000 4,000 Long-term Notes Payable 70,000 79,000 (9,000) Total Liabilities $86,000 $95,000 $(9,000) Common Stock $55,000 $3,000 $52,000 Retained.
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31) Which of the following accurately describes working capital? A) Current assets minus merchandise inventory B) Current assets minus current liabilities C) Total debt minus stockholders' equity D) Cost of goods sold divided by average merchandise inventory Answer:  B Diff: 1 LO:  15-4 AACSB:  Concept AICPA Functional:  Measurement 32) Nobell Inc. provides the following data: 2015 2014 Cash $21,000 $18,000 Accounts Receivable, Net 31,000 35,000 Merchandise Inventory 53,000 25,000 Property, Plant, and.
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41) Partridge Inc. provides the following information for the year 2014: Net income $31,200 Market price per share of common stock $12.00/share Dividends paid $0.80/share Common stock outstanding at Jan 1, 2015 110,000 shares Common stock outstanding at Dec 31, 2016 150,000 shares The company has no preferred stock outstanding. Calculate the dividend yield for common stock. A) 6.67% B) 1.67% C) 3.67% D) 4.67% Answer: .
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22) Donald Corp. reported the following on its comparative income statement: (In millions)201720162015 Revenue$728$675$500 Cost of goods sold312258220 Prepare a horizontal analysis of revenues and cost of goods sold, both in dollar amounts and in percentages, for 2016 and 2017. (Round your percentage answers to two decimal places.) Answer:  For year 2017 Increase (Decrease) 20172016AmountPercentage Revenue$728$675$537.85 Cost of goods.
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41) Which of the following will happen to a stockholder's percentage ownership in the stock of a corporation when the corporation declares a stock dividend? A) The stockholder's percentage ownership decreases. B) The stockholder's percentage ownership can increase or decrease. C) The stockholder's percentage ownership increases. D) The stockholder's percentage ownership remains unchanged. 42) Which.
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11) Partisan Services purchased ten delivery vehicles by issuing a 10-year installment note payable for $320,000. This transaction would be shown in the investing activities section of the statement of cash flows. 12) While preparing the statement of cash flows using the indirect method, Depreciation Expense is subtracted from Net Income.
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Learning Objective 14-3 1) Free cash flow is calculated by adding cash payments planned for investments in long-term assets and cash dividends to the amount of net cash provided by operating activities. 2) If an investor wants to know how much cash a company can free up for new opportunities, such as.
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41) Walker Corp. uses indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: Walker Corp. Comparative Balance Sheet December 31, 2014 and 2013 2014 2013 Increase/decrease Cash $45,000 $27,000 $18,000 Accounts Receivable 48,000 45,000 3,000 Inventory 180,000 132,000 48,000 Total assets $273,000 $204,000 $69,000 How will the change in inventory be shown on the statement of cash flows? A) positive cash flow under the.
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75) Starfire Telescopes Company uses the indirect method to prepare the statement of cash flows. Refer to the following income statement: Starfire Company Income Statement Year Ended December 31, 2015 Sales Revenue$275,000 Interest Revenue2,600 Loss on Sale of Plant Assets2,000 Total Revenues and (Losses)$279,600 Cost of Goods Sold135,000 Salary Expense66,500 Depreciation Expense32,000 Other Operating Expenses35,900 Interest Expense2,400 Income Tax Expense6,500 Total Expenses278,300 Net Income/(loss)$1,300 Additional information.
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Chapter 15  Financial Statement Analysis   Learning Objective 15-1 1) An annual report provides information about a company's financial condition. Answer:  TRUE Diff: 1 LO:  15-1 AACSB:  Concept AICPA Functional:  Measurement 2) A quarterly report filed with the Securities and Exchange Commission is called a Form 10-K. Answer:  FALSE Diff: 1 LO:  15-1 AACSB:  Concept AICPA Functional:  Measurement 3) Management's discussion and analysis section of.
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71) Allen Services purchased twenty delivery vehicles by issuing a 20-year installment Note Payable for $720,000. On the statement of cash flows, this transaction would be shown in the ________. A) investing activities section B) non-cash investing and financing activities section C) operating activities section D) financing activities section 72) Which of the following will.
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Learning Objective 14-2 1) Issuing preferred stock to stockholders in exchange for cash would be shown under the financing activities section of the statement of cash flows. 2) Buying property, plant, and equipment for cash would be considered a cash outflow for the financing activities section of the statement of cash flows. 3).
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Learning Objective 14-5 1) Genius Inc. uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record Net Income for the year ended December 31, 2014 of $49,000. Genius Inc. Spreadsheet for Statement of Cash Flows Year Ended December 31, 2014 Transaction Analysis Transaction Analysis Balance Panel.
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77) Lewis Inc. uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: Lewis Inc. Comparative Balance Sheet December 31, 2015 and 2014 20152014Increase/decrease Cash$42,000$36,000$6,000 Accounts Receivable62,00070,000(8,000) Inventory106,00050,00056,000 PP&E, net240,000180,00060,000 Total assets$450,000$336,000$114,000 Additional information provided by the company includes the following: Equipment costing $104,000 was purchased for cash. Equipment with a.
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Learning Objective 15-4 1) Working capital measures the ability to meet long-term obligations with current assets. Answer:  FALSE Diff: 1 LO:  15-4 AACSB:  Concept AICPA Functional:  Measurement 2) The current ratio is calculated as the total current assets divided by the total current liabilities. Answer:  TRUE Diff: 1 LO:  15-4 AACSB:  Concept AICPA Functional:  Measurement 3) A high current ratio indicates that current.
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79) Karaoke Records Company uses the indirect method to prepare its statement of cash flows. Refer to the following sections of the comparative balance sheet: Karaoke Company Comparative Balance Sheet December 31, 2014 and 2013 20142013Increase/decrease Accounts Payable$ 6,000$ 9,000$(3,000) Accrued Liabilities3,0001,5001,500 Long-Term Notes Payable126,000135,000(9,000) Total liabilities$ 135,000$ 145,500$(10,500) Common Stock45,0003,00042,000 Retained Earnings169,500111,00058,500 Treasury Stock(12,000)(7,500)(4,500) Total equity202,500106,50096,000 Total liabilities and equity337,500252,00085,500 Additional information: ?No stock.
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31) Which of the following sections of the statement of cash flows includes activities that increase and decrease long-term liabilities and stockholders' equity? A) the financing section B) the operating section C) the investing section D) the non-cash investing and financing section 32) Which of the following sections of the statement of cash flows includes.
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16) Prepare a vertical analysis report of the income statement shown below. (Round off the percentages to two decimal places.)   2015 Net Sales$7,000 Cost of Goods Sold3,800 Gross Profit$3,200 Operating Expenses: Selling Expenses$950 Administrative expenses670 Total Expenses$1,620 Operating Income$1,580 Other Revenues and (Expenses): Interest Revenue0 Interest Expense(750) Total Revenues and (Expenses)($750) Income Before Taxes$830 Income Tax Expense150 Net Income$680 Answer:  Percent of 2015Total Net Sales$7,000100.00 Cost of Goods Sold3,80054.29 Gross Profit$3,20045.71 Operating.
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4) Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record the increases and decreases in current assets (other than cash) and current liabilities. Avatar Company Spreadsheet for Statement of Cash Flows Year Ended December 31, 2014 Panel A—Balance Sheet Dec.
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11) A business's cash receipts and cash payments for a specific period are reported on a(n) ________. A) income statement B) balance sheet C) cash flow statement D) cash reconciliation statement 12) Which of the following is one of the purposes of the statement of cash flows? A) to predict future net income B) to evaluate management.
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Learning Objective 15-3 1) An analysis of a financial statement that reveals the relationship of each statement item to its base amount, which is the 100% figure, is known as vertical analysis. Answer:  TRUE Diff: 1 LO:  15-3 AACSB:  Concept AICPA Functional:  Measurement 2) In a vertical analysis of the income statement, each line item is shown.
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21) As per FASB guidelines, earnings per share should appear on the face of the income statement. Answer:  TRUE Diff: 1 LO:  15-4 AACSB:  Concept AICPA Functional:  Measurement 22) The price/earnings ratio shows the market price of $1 of earnings. Answer:  TRUE Diff: 1 LO:  15-4 AACSB:  Concept AICPA Functional:  Measurement 23) The dividend payout ratio indicates the amount of the dividend.
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7) Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record the following transactions: Purchased Treasury Stock for $3,000 Paid dividends of $10,000 Avatar Company Spreadsheet for Statement of Cash Flows Year Ended December 31, 2014 Transaction Analysis Transaction Analysis Balance Panel A—Balance Sheet Dec 31,.
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18) Atlantis Inc. has the following data: Atlantis Inc. Comparative Balance Sheet December 31, 2016 and 2015 20162015 Assets Total Current Assets$200,000$100,000 Property, Plant, and Equipment, Net550,000500,000 Other Assets50,00050,000 Total Assets$800,000$650,000 Liabilities Total Current Liabilities$150,000$100,000 Long-term Debt350,000250,000 Total Liabilities500,000350,000 Stockholders' Equity Total Stockholders' Equity300,000300,000 Total Liabilities and Stockholders' Equity$800,000$650,000 Perform a vertical analysis of Atlantis's balance sheet for each year. (Round your percentage answers to one decimal.
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36) The income statement and a partial balance sheet of Williams Alloy Company for the year ended December 31, 2014 is presented below. Prepare the operating activities section of the statement of cash flows using the direct method. Assume the Accrued Liabilities relate to Miscellaneous Operating Expenses. Income Statement Sales Revenues$1,500,000 Cost of.
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31) The payment of interest on a loan would be considered a ________ on a direct method statement of cash flows. A) cash outflow for operating activities B) cash outflow for investing activities C) cash outflow for financing activities D) non-cash activity 32) On a direct method statement of cash flows, cash received from selling.
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5) Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record the acquisition of plant assets for $52,000 cash. Avatar Company Spreadsheet for Statement of Cash Flows Year Ended December 31, 2014 Panel A—Balance Sheet Dec 31, 2013 Debit Credit Dec 31, 2014 Cash $18,000 $21,000 Accounts Receivable 35,000 4,000 31,000 Inventory 25,000 28,000 53,000 Plant.
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Learning Objective 13-6 1) Earnings per share is calculated as net income plus preferred dividends divided by the weighted average number of common shares outstanding. 2) A higher price/earnings ratio signifies a higher return on investment. 3) The rate of return on common stockholders' equity shows the relationship between net income available to.
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Learning Objective 13-4 1) Treasury stock is a contra equity account. 2) The journal entry for the purchase of treasury stock includes a credit to the Cash account. 3) Treasury stock is recorded at cost without reference to par value. 4) The purchase of treasury stock ________. A) decreases both assets and stockholders' equity B) increases.
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2) Avatar Company uses the indirect method to prepare its statement of cash flows. Using the worksheet shown below, enter the adjustments needed to record Depreciation Expense for the year of 2014 of $12,000. Avatar Company Spreadsheet for Statement of Cash Flows Year Ended December 31, 2014 Transaction Analysis Transaction Analysis Balance Panel A—Balance Sheet Dec 31, 2013 Debit Credit Dec.
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1) The study of percentage changes in comparative financial statements is called horizontal analysis. Answer:  TRUE Diff: 1 LO:  15-2 AACSB:  Concept AICPA Functional:  Measurement 2) Horizontal analysis compares each item in the income statement to the net sales amount. Answer:  FALSE Diff: 1 LO:  15-2 AACSB:  Concept AICPA Functional:  Measurement 3) Trend analysis is a form of horizontal analysis. Answer:  TRUE Diff: 1 LO: .
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Learning Objective 14-1 1) The statement of cash flows explains why net income as reported on the income statement does not equal the change in the cash balance. 2) Investors and management use the statement of cash flows to evaluate a firm's profitability. 3) Operating activities on a statement of cash flows include.
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18) Data for Atlantis Inc. is given below: Atlantis Inc. Comparative Balance Sheet December 31, 2015 and 2014 20152014 Assets Current Assets: Cash$12,000$10,200 Accounts Receivable, Net16,10016,800 Merchandise Inventory45,00031,000 Prepaid Expenses6,5003,900 Total Current Assets$79,600$61,900 Property, Plant, and Equipment, Net265,000233,000 Total Assets$344,600$294,900 Liabilities Total Current Liabilities$9,900$11,200 Long-term Liabilities60,00050,000 Total Liabilities69,90061,200 Stockholders' Equity Preferred Stock, 3%75,00075,000 Common Stockholders' Equity, no par$199,700$158,700 Total Liabilities and Stockholders' Equity$344,600$294,900 Prepare a horizontal analysis of the comparative balance sheet.
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Learning Objective 13-5 1) Companies can report a negative amount in retained earnings. 2) Companies usually report their retained earnings restrictions on the balance sheet. 3) The statement of retained earnings reports how the company's retained earnings balance changed from the beginning of the period to the end of the period. 4) A deficit.
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