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87. Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statements—Interest Expense (assume that cash payments are equal to amount reported)—indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of.
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208. Dixie Corporation has 2,000,000 authorized shares of $10 par value common stock. As of June 30, 20x5, there were 1,000,000 shares issued and outstanding. On June 30, 20x5, the board of directors declared a $0.40 per share cash dividend to be paid on August 1, 20x5, to shareholders of record.
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97. Bailey Corp. sold investments for $204,000 cash that cost $180,000. The journal entry to record the transaction which correctly shows the increase in cash flow is: A. Cash                               204,000      Investments                                                180,000     Gain on Sale of Investments                                      24,000B. Cash      .
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141. Using the indirect method, calculate the amount of net cash flows from operating activities from the following data. Show your work. Net Income $51,000 Beginning Accounts Payable $ 3,000 Beginning Accounts Ending Accounts Payable 2,800    Receivable 5,000 Depreciation Expense 10,200 Ending Accounts Receivable 4,400 Amortization of Intangible Beginning Prepaid Expenses 1,000    Assets 800 Ending Prepaid Expenses 1,400 Dividends Declared and Paid 2,200 142. Following are the income statement and other information for.
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144. Which of the following has an effect on total stockholders' equity? A. Conversion of preferred stock into common stockB. Cash dividendC. Stock dividendD. Stock split 145. On which of the following dates involving stock dividends does a liability arise? A. Date of distributionB. Date of declarationC. Date of recordD. On no date 146. A large stock dividend should be recorded on the basis of A. par.
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191. Prepare in proper form the stockholders' equity section of the balance sheet from the following selected accounts and balances taken from the adjusted trial balance of Thomas Corporation on June 30, 20x5. Partial Adjusted Trial Balance Account Debit Credit Common Stock—$10 stated value, 50,000 shares authorized, 45,000 shares outstanding 450,000 Preferred Stock—$100 par value, 8 percent cumulative.
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196. Kolber Corporation is authorized to issue 200,000 shares of no-par stock. The company recently sold 80,000 shares for $13 per share.a. Prepare the entry in journal form to record the sale of the stock assuming there is no stated value.b. Prepare the entry in journal form if a $10 stated.
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130. When preparing a statement of cash flows using the indirect method, why is depreciation added back to net income within the operating activities section? 131. How is it possible for a company to show a net loss for a given year, yet produce positive net cash flows from operating activities? 132. Green Skies Company.
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210. Copperhead Corporation has 30,000 shares of $100 stated value no-par common stock authorized, and 20,000 shares were outstanding during 20x5. The following transactions relate to cash dividends of Copperhead Corporation for the year ended December 31, 20x5. Prepare entries in journal form without explanations to record the following transactions: June 1 Declared a.
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41. Cash flows to sales is a measure of how much operating cash flows did each dollar of sales generate.  42. A cash flow yield of 2.5 times is considered better than one of 3.0 times.  43. Free cash flow is measured in terms of dollars.  44. Cash flows to assets is measured in “times.”  45. Net cash flows.
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153. For 20x5, Sahara Company had average total assets of $520,000, sales of $450,000, net income of $50,000, net cash flows from operating activities of $75,000, dividend payments of $25,000, purchases of plant assets of $60,000, and sales of plant assets of $55,000. Using this information, compute (a) cash flow yield,.
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170. Identify (by code letter) each of the following characteristics as being an advantage of (A), a disadvantage of (D), or not applicable to (N) the corporate form of business. 1. Separate legal entity 6. Mutual agency 2. Taxable entity resulting in double taxation 7. Ease of transfer of ownership 3. Continuous existence 8. Ease of capital.
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117. If net cash flows from operating activities were $388,000, net income were $100,000, and net sales were $1,200,000, the cash flow yield would equal (Round amounts to two decimal places) A. $288,000.B. $812,000.C. 3.88 times.D. 3.09 times. 118. If net cash flows from operating activities were $296,000, net income were $200,000, and sales were $2,000,000, cash flows.
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11. The primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.  12. The primary purpose of the statement of cash flows is to provide information about a company's investing and financing activities during an accounting period.  13. Investors could use.
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145. Ralston Company's cash balance at December 31, 20x5, was $23,000. During the year, Ralston sold assets with a book value of $245,000 that resulted in a loss of $110,000.  Calculate the company's cash balance at December 31, 20x6, given the following information for the year ended December 31, 20x6. Show.
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47. Noncash investing and financing transactions A. appear as a separate schedule on the statement of cash flows.B. appear in either the investing or financing activities section, but not both.C. are excluded from the statement of cash flows.D. appear in both the investing and financing activities sections. 48. Cash equivalents do not include A. U.S. Treasury bills.B. money market accounts.C. marketable securities.D. commercial.
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31. Since investing activities center on the long-term assets shown on the balance sheet, they do not include any short-term investments shown under current assets on the balance sheet  32. A decrease in plant assets shown in the investing activities section of the statement of cash flows would be presented based on the.
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107. Northbrook Corporation is preparing a statement of cash flows. The following transactions occurred during the year:1. Sold machinery for $9,000 cash.2. Purchased a building for $80,000 cash.3. Issued $70,000 worth of stock to acquire an airplane.4. Converted long-term bonds by issuing $100,000 worth of stock.5. Declared and paid a $10,000.
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212. On August 26, 20x5, Via Linda Corporation's board of directors declared a 2 percent stock dividend applicable to the outstanding shares of its $5 par value common stock, of which 150,000 shares are authorized, 130,000 are issued, and 10,000 are held in the treasury. The stock dividend was distributable on.
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1. Financial statement analysis is used to show how items in a company’s financial statements relate to the company’s financial performance objectives.  2. Liquidity is the ability to earn a satisfactory net income.  3. Profitability is the ability to pay bills when due and to meet unexpected needs for cash.  4. The lower the current ratio, the.
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198. Lawler Corporation had both the following transactions occur on the same day:1. Issued 60,000 shares of its $5 par value common stock for $720,000 cash.2. Issued 20,000 shares of its $5 par value common stock in exchange for land and a building. The building is estimated to have a market.
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190.  1. When a corporation declares a dividend that exceeds retained earnings.      Record date. 2. Dividends per share divided by Market price per share.      Stock dividend. 3. A dividend that involves no distribution of assets.      Liquidating dividends. 4. The equity of the owner of one share of stock in the net assets of a company.      Book value per share. 5. No journal entry is.
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11. A limitation of using industry norms in financial performance evaluation is that some companies in the same industry may not be strictly comparable.  12. Both diversified companies and conglomerates operate in a single, well-defined industry.  13. Disclosure of segment information is useful in the analysis of diversified companies.  14. Companies in the same industry are not.
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143. Following are the income statement and other information for American Horse Corporation. American Horse Corporation Income Statement For the Year Ended December 31, 20x5 Sales $6,000 Cost of goods sold 3,000 Gross margin $3,000 Operating expenses $1,200 Depreciation expense     600 1,800 Income before income taxes $1,200 Income taxes expense    300 Net income $  900 Accounts receivable (net) increased by $1,500 during the year. Inventory decreased by.
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164. Return on equity is measured in terms of A. days.B. times.C. a percentage.D. dollars. 165. To evaluate the amount of dividends they receive, investors use the ratio called A. Price/Earnings ratioB. Return on EquityC. Dividend yield ratioD. Current ratio 166. Adobe Corporation had net income of $120,000 in 20x4 and $164,000 in 20x5.  Total stockholders’ equity at the end of 20x4 was $760,000 and.
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1. The purchase of trading securities with cash is considered an investing activity.  2. Because noncash investing and financing transactions do not affect cash, they should not be reflected in the body of the statement of cash flows.  3. The payment of taxes would be included in the operating activities section of the statement of.
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200. Danielle Corporation is authorized to issue 100,000 shares of $5 stated value common stock and 2,000 shares of $100 par value, 8 percent preferred stock. Prepare entries in journal form without explanations to record the following transactions: Apr. 15 Issued 1,000 shares of common stock to an attorney for a bill of $9,000.
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202. On its December 31, 20x4 , balance sheet, Bronco Corporation reported its stockholders' equity as follows: Common stock—$5 par value, 100,000 shares authorized, 50,000 shares issued and outstanding $250,000 Additional paid-in capital 125,000 Retained earnings 400,000 Total stockholders' equity $775,000 During 20x5 , the following transactions occurred:Reacquired 2,500 shares at $7 per share.Sold 1,200 shares of treasury stock at $8.
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57. Lincoln Company engaged in this transaction: Collected accounts receivable.Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows. A. Does not represent a cash flow.B. Operating activities section.C. Financing activities section.D. Investing activities section. 58. Lincoln Company engaged in this transaction: Accrued interest expense on long-term bonds.
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138. What does it mean when a company has positive free cash flow?  What does it mean when a company has negative free cash flow? 139.  1. Activities that involve obtaining resources from stockholders and creditors.      Cash equivalents 2. A type of marketable security that a company buys and sells for making a profit in the near.
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204. The following amounts were reported by Paloma Corporation on December 31, 20x4 : Common stock—$5 par value $150,000 Additional paid-in capital 120,000 Treasury stock (8,000 shares at cost) 60,000 On January 3, 20x5 , 5,000 shares of treasury stock were sold. After the sale of the treasury shares, total stockholders' equity amounted to $277,500. No stockholders' equity.
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77. If the indirect method is used to prepare a statement of cash flows, which of the following would be added to net income to arrive at net cash flows from operating activities? A. Decrease in accrued liabilities.B. Decrease in income taxes payable.C. Decrease in accounts receivable.D. Increase in prepaid expenses. 78. If the indirect method is used.
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67. Lincoln Company engaged in this transaction: Received 6-month’s rent in advance from a tenant in its office building.Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows. A. Financing activities section.B. Schedule of noncash investing and financing transactions.C. Operating activities section.D. Investing activities section. 68. Lincoln Company.
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215. The following facts pertain to Quail Corporation: Retained Earnings balance, December 31, 20x4 $550,000 Cash dividends declared and paid in 20x5 60,000 Cash dividends declared but not paid in 20x5 20,000 Retained Earnings balance reported on December 31, 20x5 , balance sheet 675,000 216. Compute the book values per share for (a) preferred and (b) common stock.
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154. All of the following would appear on the statement of stockholders' equity except A. declaration of cash dividends.B. an issuance of common stock.C. net income.D. declaration of a stock split. 155. Which of the following items will not be disclosed on a statement of stockholders' equity? A. Conversion of preferred stock into common stockB. Results of discontinued operationsC. Purchase of treasury.
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193. Prepare in proper form the stockholders' equity section of the balance sheet from the following selected accounts and balances taken from the adjusted trial balance of Barger Corporation as of December 31, 20x5. Partial Adjusted Trial Balance Account Debit Credit Common Stock—$10 par value, 90,000 shares authorized, 40,000 shares issued and outstanding 400,000 Preferred Stock—$100 par value, 7.
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175. Define outstanding stock. 176. If there is no change in the number of shares authorized and issued from one year to the next, but there is a change in the number of shares outstanding on those same dates, how would you explain that change? 177. Why might someone prefer to invest in a company.
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149. The following information relates to Royale Enterprises for the year ended December 31, 20x5: Net Income $300,000 Depreciation Expense 72,000 Amortization of Intangible Assets 9,000 Beginning Accounts Receivable 336,000 Ending Accounts Receivable 351,000 Beginning Inventory 413,000 Ending Inventory 450,000 Beginning Prepaid Expenses 34,000 Ending Prepaid Expenses 38,000 Beginning Accounts Payable 95,000 Ending Accounts Payable 116,000 Purchase of Long-Term Assets for Cash 493,000 Cash from Issuance of Long-Term Debt 160,000 Issuance of Stock for Cash 128,000 Issuance of Stock for.
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206. Baird Corporation had 60,000 shares of $5 par value common stock issued and outstanding on December 31, 20x4. Each share was issued during 20x2 at $14 per share. Prepare the entries in journal form without explanations for the following transactions occurring in 20x5: Jan. 4 Purchased 10,000 shares of treasury stock for $16.
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21. When preparing a statement of cash flows using the indirect method, amortization expense is added to net income in the cash flows from operating activities section of the statement of cash flows.  22. When preparing a statement of cash flows using the indirect method, a gain on sale of land is deducted.
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151. Use the following data for Jenkins Co. to prepare a statement of cash flows using the indirect method for the year ended June 30, 20x6. Jenkins Co. Income Statement For the Year Ended June 30, 20x6 Sales $700,000 Less expenses Cost of goods sold $400,000 Depreciation expense 40,000 Administrative expenses 104,000 Selling expenses 70,000 Loss on sale of investment          1,000   615,000 Income before income taxes $ .
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147. The activity from the Long-Term Investments account for Fisk Corporation appears below. In addition, the income statement shows a loss on the sale of investments of $32,000. Long-Term Investments Beginning balance, 20x5 $184,000 Purchases 278,000 Sales (202,000) Ending balance, 20x5 $260,000 Based on the information given, compute the amounts to be shown and indicate.
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185. In recent years, Redbird Corporation, a small manufacturer of jet skis for the leisure industry, has followed the practice of issuing a 10 percent stock dividend annually. Although the company's net income has been almost $4 million in each of the past three years, retained earnings have declined from about.
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21. The most complete financial newspaper in the United States is The Wall Street Journal.  22. Annual financial statements are subjected to a full audit by an independent auditor.  23. For details about the financial histories of companies, one could consult publications of Moody's and Standard & Poor's.  24. Companies file their quarterly reports with the SEC.
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