Info
Warning
Danger

Study Resources (Accounting)

94. Provide three examples of noncash investing and financing activities. 95. What are the five categories of operating cash outflows under the direct method of reporting cash flows? 96. What are the four steps necessary to prepare the spreadsheet and its statement of cash flows? 97. How should the sale of a depreciable asset be presented on the.
5 Views
View Answer
84. The following is a list of items to be included in the 2016 statement of cash flows for the Winter Company: Beginning cash balance $ 90,000 Decrease in accounts payable 4,000 Increase in accounts receivable 3,000 Payment of dividends 6,000 Loss on sale of equipment 3,000 Decrease in prepaid expenses 1,000 Proceeds from bonds 46,000 Depreciation expense 12,000 Purchase of building 80,000 Net loss 32,000 Decrease in inventory 6,000 Proceeds from sale of.
4 Views
View Answer
79.Martha Co. has a defined benefit pension plan for its employees. The plan was amended at the beginning of 2016 which increased benefits based on services rendered by certain employees in prior periods. The actuary has reported that unrecognized prior service cost resulting from the amendment is $385,000. Five employees.
8 Views
View Answer
32. A company sold equipment for $5,000. The equipment originally cost $16,000 and had accumulated depreciation of $12,000. Which of the following statements is correct regarding the statement of cash flows prepared using the indirect method to report operating activities? a. $5,000 will be added to net income. b. Investing activities will reflect proceeds of.
3 Views
View Answer
124.Cambridge Company leased equipment from Amherst Company on January 1, 2016. Information about the lease is as follows: Lease payments, due at the beginning of each year $35,000 Lease term 7 years Estimated useful life of the equipment 10 years Cambridge's incremental borrowing rate 12% Interest rate implicit in the lease (known to Cambridge) 10% Residual value (not guaranteed by Cambridge) $20,000 Fair.
5 Views
View Answer
41.For a lease that contains a bargain purchase option, minimum lease payments include a.any guarantee by the lessee of the residual value. b.any payments on failure to renew or extend the lease. c.executory costs. d.minimum periodic rental payments required by the lease over the lease term. 42.Executory costs a.are included in the minimum lease payments by.
6 Views
View Answer
135.South Bend Corporation purchased equipment in December 2015 for $150,000. South Bend leased the equipment to the Kansas Company on January 1, 2016. Lease payments of $43,000 are to be made at the end of each year for six years. The present value of the minimum lease payments at 14%.
7 Views
View Answer
76. The information below was taken from the records of the Piper Company for the year ended December 31, 2016: Acquisition of building $250,000 Amortization of premium on bonds payable 2,000 Decrease in deferred income tax liability 8,000 Decrease in inventories 6,000 Decrease in salaries payable 2,000 Depreciation expense 24,000 Dividends paid 11,000 Loss on sale of land 18,000 Increase in accounts payable 14,000 Increase in accounts receivable 5,000 Issuance of long-term.
13 Views
View Answer
22. Which statement best defines a company's operating cash inflows? a. collections from customers and shareholders b. collections from customers and shareholders and earnings from investments c. collections from customers and earnings from investments d. collections from customers 23. According to current GAAP, cash flow per share statistics a. are required disclosures only if EPS information is disclosed. b. are not allowed disclosures. c. are required disclosures for.
5 Views
View Answer
21.A lease that transfers substantially all the risks and benefits of ownership from the lessor to the lessee is referred to as a.a capital lease. b.a capitalization lease. c.an operating lease. d.a transfer lease. 22.Which of the following combinations of payments would cause a lease to be classified as a capital lease? a.minimum periodic rental payments.
7 Views
View Answer
1.The lessor is the party in the lease agreement who acquires the right to use the leased asset in exchange for making future lease payments. a.True b.False 2.A capital lease is in economic substance a purchase by the lessee and a sale or financing arrangement by the lessor. a.True b.False 3.A lease is classified as a.
17 Views
View Answer
73. A statement of cash flows contains the following sections: a. net cash flow from operating activities b. cash flows from investing activities c. cash flows from financing activities d. investing and financing activities not affecting cash ? A list of items that appear on the statement is provided below: ____ 1. Depreciation expense ____ 2. Proceeds from sale of land at a gain ____ 3. Decrease in accounts payable ____ 4. Conversion.
15 Views
View Answer
97.One type of post-retirement benefit other than pensions is healthcare benefits. ? Required: Discuss the major differences between postretirement healthcare benefits and pensions. 98.In addition to providing pensions to their employees, many companies also offerother postemployment benefits. These are benefits going to former employees after employment but before retirement. ? Required: Describe how the cost of these.
6 Views
View Answer
102.Refer to Exhibit 20-5. If Baltimore requires a 7% annual return, what is the correct amount of interest revenue to be recognized by Baltimore for 2016 (round the answer to the nearest dollar)? a. $7,774 b. $7,175 c. $6,527 d. $5,928 103.Refer to Exhibit 20-5. If Baltimore requires a 7% annual return, how much gross profit will Baltimore record.
8 Views
View Answer
62. A company's unearned rental revenue account increases from the beginning to the end of the year. In the statement of cash flows using the direct method, the cash collected from tenants would be a. rent revenue plus unearned rent revenue at the beginning of the year. b. rent revenue plus the increase in unearned.
8 Views
View Answer
104. Current GAAP permits two methods of calculating and reporting a company's net cash flow from operating activities on its statement of cash flows. ? Required: ?Identify the two methods. Which method does the FASB prefer? Which method do most companies use and why? 105. The statement of cash flows classifies cash inflows and outflows into.
9 Views
View Answer
147.How is the present value of the minimum lease payment computed? 148.What are the disclosure requirements for lessee’s of operating leases and what two disclosures are required for all leases? 149.In whatthree classifications can lessors categorize their leases? 150.What are the two components of net receivables for leases? .
6 Views
View Answer
89. Your friend is in business and wants your advice on preparing and interpreting the statement of cash flows for 2016. Information regarding the business is as follows: Cash received from customers $ 175,000 Cash paid to vendors 75,000 Cash paid to employees 140,000 Cash paid for interest 35,000 Depreciation expense 40,000 Cash paid in acquiring equipment 375,000 Cash received from issuing bonds 250,000 Cash received.
15 Views
View Answer
61.Refer to Exhibit 20-2. What is the amount of interest expense associated with the leased equipment for the year ending December 31, 2016? a. $2,400 b. $8,651 c. $9,196 d. $20,000 62.Refer to Exhibit 20-2. What would be the debit to Leased Equipment under Capital Leases on January 1, 2016? (Round amounts to the nearest dollar.) a. $72,096 b. $76,635 c. $100,000 d. $110,000 63.Refer to Exhibit 20-2..
6 Views
View Answer
92.One of the distinguishing characteristics of a direct financing lease is that a. the lessor is normally a dealer or manufacturer. b. the net investment in the lease is equal to the cost of the asset or carrying value of the asset. c. the lease has two sources of earnings: interest revenue and profit or loss.
44 Views
View Answer
81. Accounting information from the records of the Sarah Jane's Clothing Corporation at the end of 2016 is shown below: Net income $100,000 Proceeds from sale of long-term investment in marketable securities 20,000 Proceeds from sale of building 80,000 Gain on sale of building 35,000 Increase in accounts receivable 5,000 Increase in accounts payable 7,000 Cash dividends declared 5,000 Depreciation expense 18,000 Patent amortization expense 1,000 Amortization of premium on.
4 Views
View Answer
Exhibit 21-2In preparation for completing the statement of cash flows using the spreadsheet method, Williams Company provided the following information relating to patents for 2016: Balance, 1/1/2016 $4,800 Purchase of 10-year life patent for cash 2,000 Sale of patent at book value (1,400) Amortization of patents   (290) Balance, 12/31/2016 $5,110 ? 52. Refer to Exhibit 21-2. The Cash Flows from Operating Activities.
9 Views
View Answer
82.Which of the following facts would require a lessor to classify a lease as an operating lease? a. Important uncertainties exist about unreimbursable costs yet to be incurred by the lessor. b. No bargain purchase option is provided for by the lease agreement. c. The lease term is 65% of the estimated economic life of the.
5 Views
View Answer
92. The Percy's Landing Co. reported the following condensed income statement for 2016: Percy's Landing CO. Condensed Income Statement For the Year Ended December 31, 2016 Sales ? $305,000 Cost of goods sold ?  150,000 Gross profit ? $155,000 Operating expenses: ? ? ? Depreciation. $42,000 ? ? Insurance expense 5,000 ? ? Salaries expense 80,000 127,000 Income before taxes ? $ 28,000 Income taxes ?     6,000 Net income ? $ 22,000 ? Also during 2016, the company's current assets and current liabilities changed as follows: ? Increase (Decrease) Cash $49,500 Accounts.
10 Views
View Answer
21.Change in an accounting principle is accounted for a.prospectively. b.by a prior period adjustment. c.by a retrospective application of a new accounting principle. d.by constructive application of a new accounting principle. 22.A retrospective adjustment requires a change in the a.prior period financial statements to look like the current period financial statements. b.current period income to reflect the.
6 Views
View Answer
72.Which of the following is not a required disclosure by a lessee of an operating lease? a. rental expense for the period b. total contingent rentals c. the amount of any sublease rentals d. the gross amount of assets under operating leases 73.The lessee's disclosures should include the future minimum rental payments as of the date of the latest.
9 Views
View Answer
42. The IFRS categories of cash flows are a. long-term changes and short-term changes. b. operating and other. c. operating, investing, and financing. d. operating and nonoperating. 43. Mayberry’s statement of cash flow is completed using the visual inspection method. Information regarding the Mayberry Company in 2016 appears below: Net income $140,000 Dividends paid 20,000 Decrease in inventory 15,000 Increase in accounts payable 30,000 Proceeds from issue of common stock 70,000 Depreciation.
7 Views
View Answer
90.What four alternative methods for accounting for prior service cost were considered by accounting regulators? 91.What five alternatives were examined by regulators to determine which best met the recognition-measurement criteria of a liability? 92.Define the following:expected postretirement benefit obligation (EPBO)accumulated postretirement benefit obligation (APBO) 93.What are the three major differences between the accounting.
7 Views
View Answer
85.What estimates are necessary to account for a defined benefit pension plan? 86.What five components comprise pension expense? 87.What three methods are available to provide guidance for companies to recognize gains or losses in pension expense? 88.The IASB's 2011 amendment to IAS 19 removedthe smoothing of devices in pension accounting, whichmeans thatcompanies will.
6 Views
View Answer
112.Which of the following is not a required disclosure by a lessor of a sales-type lease? a. the guaranteed residual value accruing to the benefit of the lessor b. total contingent rentals included in revenue for the period c. unearned income d. a general description of the lessor's leasing arrangements 113.Lessee leased some land and buildings from Lessor. There.
7 Views
View Answer
155.In certain respects, IFRS provide more principles-based guidance in accounting for lease transactions. Describe the differences between IFRS and GAAP in lease capitalization criteria that demonstrate the more principles-based approach of the IFRS. 156.Lessees may try to avoid having a lease be classified as a capital lease. Explain why a lessee.
7 Views
View Answer
88. Jamison Company is preparing its statement of cash flows for the current year. During the year, the company retired two issuances of debt and properly recorded the transactions. These transactions were as follows: ? 1) Paid cash of $115,000 to retire bonds payable with a face value of $120,000 and a book.
6 Views
View Answer
11.A change in accounting entity is limited to presenting consolidated or combined financial statements in place of individual statements or a change in the subsidiaries that make up a group of companies in which one would report either as consolidated financial statements or changing the mix of companies included in.
6 Views
View Answer
1.An advantage of retrospective adjustment method is that it achieves comparability and consistency between accounting periods. a.True b.False 2.A change in a reporting entity is accounted for by a prospective adjustment so that all financial statements are presented for the same entity. a.True b.False 3.Correction of an error involves corrections to reported financial statements similar to.
12 Views
View Answer
11. Under the direct method of reporting operating cash flows, a company deducts its operating cash outflows from its operating cash inflows to determine its net cash provided by (or used) in operating activities. a. True b. False 12. Under the direct method of reporting operating cash flows, a company computes the cash.
9 Views
View Answer
11.A lessee reports noncash investing and financing activity on the statement of cash flows when recording a capital lease. a.True b.False 12.The existence and term of renewal or purchase options and escalation clauses are disclosed for capital leases only. a.True b.False 13.A direct financing capital lease results in a manufacturers or dealers profit or loss and.
7 Views
View Answer
132.Motor City, Inc. leased equipment from Des Moines Company on January 1, 2016. Annual December 31 payments of $15,000 were required. The present value of these payments, discounted at 9% for nine years, is $89,929 (rounded). The lease is a direct financing lease. ? Required: ?Prepare all December 31, 2016, entries for Des.
6 Views
View Answer
99. What working paper information does a company need for its statement of cash flows under the direct method? 100. Why do companies use the spreadsheet method to prepare the statements of cash flows? 101. What are the four steps necessary to complete the statement of cash flows using the visual inspection method? 102. What is the.
7 Views
View Answer
1. Receipts of dividends from investments in equity securities would be reported in the financing activities section of the cash flow statement. a. True b. False 2. Generating positive cash flows from operations is one of the most important cash flow activities of a company. a. True b. False 3. GAAP allows the use of either.
18 Views
View Answer