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  Learning Objective 16-1 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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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 decisions C).
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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 BalanceTransaction AnalysisBalance Panel A—Balance.
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15) Davis Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2014: Operating expenses, $26,000 Accrued Liabilities, beginning balance, $3,000 Accrued Liabilities, ending balance, $5,000 What amount was paid to suppliers for operating expenses on a cash basis? A) $29,000 B) $28,000 C) $24,000 D) $31,000 16).
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41) Available-for-sale (AFS) investments that are planned to be held longer than a year are reported as: A) equity. B) current assets. C) long-term assets. D) either current assets or long-term assets. 42) Available-for-sale (AFS) investments are reported as ________ if the business expects to sell them within one year. A) current assets B) equity C) long-term assets D).
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Learning Objective 15-3 1) When a company makes investments in equity securities with less than 20% ownership using idle cash, its total equity will increase. 2) Equity securities, in which the investor owns less than 20% ownership in the voting stock of the investee, can be either trading investments or available-for-sale investments. 3).
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75) Starfire 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 provided.
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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 BalanceTransaction AnalysisBalance Panel A—Balance Sheet:Dec 31, 2013DebitCreditDec 31, 2014 Cash$18,000$21,000 Accounts.
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31) Which of the following is an example of investment income from securities? A) deferred tax assets B) depreciation of long-term assets C) sale of fixed assets D) interest earned from debt investments 32) Short-term investments: A) include debt and equity securities that the investor expects to hold for more than a year. B) are investments in.
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78) Fashion Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: Fashion 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) Additional information provided by the company includes the following: During 2014, the company repaid $60,000 of.
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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 BalanceTransaction AnalysisBalance Panel A—Balance Sheet:Dec 31, 2013DebitCreditDec.
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  Learning Objective 17-1 1) An annual report provides information about a company's financial condition. 2) A quarterly report filed with the Securities and Exchange Commission is called a Form 10-K. 3) Management's discussion and analysis section of the annual report is the company's attempt to explain its financial statements and to discuss its.
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36) The income statement and a partial balance sheet of Williams 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 Goods.
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Learning Objective 16-2 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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41) Walker Corp. uses indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: How will the change in inventory be shown on the statement of cash flows? A) positive cash flow under the operating activities section B) negative cash flow under the operating.
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31) Beige Corporation pays $500,000 to acquire 40% of the equity securities of Olive Technologies on May 5, 2015. This investment will be classified as a(n): A) trading investment. B) available for sale. C) significant interest investment. D) held-to-maturity. 32) Beige Corporation pays $500,000 to acquire 40% of the equity securities of Olive Technologies on.
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Learning Objective 15-2 1) When a company invests in a long-term bond investment by paying cash, the total assets remain unchanged 2) When a firm receives interest revenue on a bond, the equity remains unchanged. 3) When a firm collects the face value of a bond investment at maturity, the total assets increase. 4).
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Learning Objective 16-5 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 BalanceTransaction AnalysisBalance Panel A—Balance.
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Learning Objective 17-2 1) The study of percentage changes in comparative financial statements is called horizontal analysis. 2) Horizontal analysis compares each item in the income statement to the net sales amount. 3) Trend analysis is a form of horizontal analysis. 4) If an analyst wants to see how gross profit of a company.
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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) A debt security: A) represents a credit relationship with another company or governmental entity, and typically pays interest for a fixed period. B) represents stock ownership in another company and sometimes pays dividends. C) is a standardized contract between two parties to buy or sell an underlying security at a predetermined price.
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31) Which of the following sections of the statement of cash flows include 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 include.
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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 BalanceTransaction AnalysisBalance Panel A—Balance Sheet:Dec.
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Learning Objective 16-3 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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80) Samuel Corp. has provided the following information for the year ended December 31, 2015. Samuel Corp Comparative Balance Sheet December 31, 2015 and 2014 20152014Increase / (Decrease) Assets Current Assets: Cash$33,000$13,000$20,000 Accounts Receivable29,00036,000(7,000) Inventory56,00029,00027,000 Plants Assets, net126,00092,00034,000 Total Assets$244,000$170,000$74,000 Accounts Payable$9,000$13,000$(4,000) Accrued Liabilities7,0003,0004,000 Long-term Notes Payable70,00079,000(9,000) Total Liabilities$86,000$95,000$(9,000) Common Stock$55,000$3,000$52,000 Retained Earnings115,00078,00037,000 Treasury Stock(12,000)(6,000)(6,000) Total Stockholders' Equity$158,000$75,000$83,000 Total Liabilities and Stockholders' Equity$244,000$170,000$74,000 Samuel Corp Income Statement Year ended December 31, 2015 Sales Revenue$291,300 Interest.
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34) Avatar 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 Increase / 20152014 (Decrease) Cash$33,000$13,000$20,000 Accounts Receivable29,00036,000(7,000) Inventory56,00029,00027,000 Plant and Equipment, net126,00092,00034,000 Total Assets$244,000$170,000$74,000 Accounts Payable$9,000$13,000$(4,000) Accrued Liabilities7,0003,0004,000 Long-term Notes Payable70,00079,000(9,000) Total Liabilities$86,000$95,000$(9,000) Common Stock$55,000$3,000$52,000 Retained Earnings115,00078,00037,000 Treasury Stock(12,000)(6,000)(6,000) Total.
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19) Data for Nobell Inc. is as follows: Nobell Inc. Comparative Balance Sheet December 31, 2015 and 2014 20152014 Assets Current Assets: Cash$121,000$100,000 Accounts Receivables, Net117,000125,000 Merchandise Inventory70,00085,000 Total Assets$308,000$310,000 Liabilities Total Current Liabilities63,50050,000 Long-term Liabilities100,000100,000 Total Liabilities163,500150,000 Stockholders' Equity Retained Earnings94,500110,000 Common Stockholders' Equity50,00050,000 Total Liabilities and Stockholders' Equity$308,000$310,000 Prepare a horizontal analysis of the comparative balance sheet of Nobell Inc. Round percentage changes to one decimal place. 20).
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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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37) Sentrino Company uses the direct method for its statement of cash flow. Assume Accrued Liabilities relate to Operating Expenses. It reports the following information regarding the year ending December 31, 2014: Income Statement Sales Revenue$312,000 Cost of Goods Sold247,000 Operating expenses:  2,500 Net Income$32,500 Partial Balance Sheet 20132014 Accounts Receivable (net)$15,600$19,500 Inventories28,60023,400 Accrued Liabilities3,9001,560 Accounts Payable (inventory)9,10015,600 Assume that there were.
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5) Although the direct method is easier to use, the Financial Accounting Standards Board (FASB) prefers the indirect method of reporting cash flows from operating activities. 6) The amount of net cash flow from operating activities will be different in the direct and indirect methods when preparing the statement of cash.
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35) Avatar 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 Increase / 20152014 (Decrease) Cash$33,000$13,000$20,000 Accounts Receivable29,00036,000(7,000) Inventory56,00029,00027,000 Plant and Equipment, net126,00092,00034,000 Total Assets$244,000$170,000$74,000 Accounts Payable$9,000$13,000$(4,000) Accrued Liabilities7,0003,0004,000 Long-term Notes Payable70,00079,000(9,000) Total Liabilities$86,000$95,000$(9,000) Common Stock$55,000$3,000$52,000 Retained Earnings115,00078,00037,000 Treasury Stock(12,000)(6,000)(6,000) Total.
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73) Johnson Company uses the indirect method to prepare the statement of cash flows. Refer to the following comparative balance sheet for Avatar Company and complete the third column for increases or decreases. Johnson Company Comparative Balance Sheet December 31, 2014 and 2013 20142013Increase/decrease Cash$39,600$19,800 Accounts Receivable26,40038,500 Inventory204,000126,500 Total assets270,000184,800 Accounts Payable4,8006,600 Accrued Liabilities2,4001,100 Long-Term Notes Payable100,80099,000 Total liabilities108,000106,700 Common Stock36,0002,200 Retained Earnings135,60081,400 Treasury Stock(9,600)(5,500) Total.
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11) Consolidated statements combine the balance sheets, income statements, and cash flow statements of the parent company with those of its controlling interest affiliates. 12) Consolidation accounting is the way to combine the financial statements of two or more companies that have the same owners. 13) Which of the following is true.
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11) When there is an unrealized loss on trading investments, the ________ will decrease. A) total equity B) cash C) total liabilities D) long term investments 12) Sinopia Corporation reported trading investments of $15,000 on December 31, 2015. The company realizes a decrease of $3,000 in the fair value of the trading investments by the.
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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 BalanceTransaction AnalysisBalance Panel A—Balance Sheet:Dec 31, 2013DebitCreditDec 31,.
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Learning Objective 14-7 1) The fact that invested cash earns income over time is called the time value of money. 2) Simple interest means that interest is calculated on the principal and on all previously earned interest. 3) Compound interest means that interest is calculated only on the principal amount. 4) A stream of.
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11) Partisan Services purchased 10 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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21) Aurum Services acquired 100,000 shares of Gamma Metals on January 1, 2015. Gamma pays a cash dividend of $0.25 per share on March 2, 2015. With the current investment, Aurum Services holds 8% of Gamma. In the journal entry on March 2, 2015: A) Long-term Investments—Available-for-Sale will be credited. B) Dividend.
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25) A company's Inventory account increased $27,900 and its Accounts Payable account decreased $19,500 during the year. The Accounts Payable relates only to the acquisition of inventory. Sales were $795,300 and Cost of Goods Sold was $549,400. What was the payment made to the suppliers of inventory? A) $577,300 B) $568,900 C) $596,800 D).
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17) Data for Atlantis Inc. follow: Atlantis Inc. Comparative Income Statement Years Ended Dec 31, 2015 and 2014 20152014 Net Sales Revenue$550,000$500,000 Expenses: Cost of Goods Sold245,000220,000 Selling and Administrative Expenses100,00096,000 Other Expenses(Interest Expense)12,0009,000 Income Tax Expense58,00047,000 Total Expenses$415,000$372,000 Net Income$135,000$128,000 Prepare a horizontal analysis of the comparative income statement of Atlantis Inc. Round percentage changes to one decimal place. Use a multiple.
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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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Learning Objective 14-8 1) On January 1, 2015, Finch Company issued $72,000 of 5-year bonds with a stated rate of 8%. The market rate at time of issue was 12%, so the bonds were discounted and sold for $61,401. Finch uses the effective-interest method of amortization for bond discount. Semiannual interest.
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11) Held-to-maturity investments are categorized as current assets or long-term assets on the balance sheet, depending on the maturity date. 12) Long-term investments are also known as marketable securities. 13) Long-term investments are all investments that are not short-term. 14) Held-to-maturity investments are categorized as long-term assets on the balance sheet, irrespective of.
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