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Learning Objective 14-4 1) The main reason companies retire bonds prior to their maturity date is to relieve the pressure of paying interest payments. 2) An alternative to calling the bonds is to purchase them in the open market at their current market price. 3) Callable bonds are bonds that the issuer may.
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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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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 Answer:  B Diff: 2 LO:  16-4 AACSB:  Application AICPA Functional:  Measurement 22) Which of the following items.
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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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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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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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11) Interest Expense paid on a Note Payable would be included in the operating activities section of the statement of cash flows. Answer:  TRUE Diff: 2 LO:  16-4 AACSB:  Concept AICPA Functional:  Measurement 12) Avatar Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year.
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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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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 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. Answer:  FALSE Diff: 1 LO:  16-3 AACSB:  Concept AICPA Functional:  Measurement 2) If an investor wants to know how much cash a company can free.
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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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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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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) If $12,000 is invested for one year at an annual interest rate of 12%, it will grow in value to: A) $13,440. B) $14,400. C) $440. D) $400. Principal$12,000 Value after 1 year$13,440 6) Using the present value tables, compute the present value of $30,000 discounted back 6 periods at 7%. A) $24,500 B) $18,400 C) $23,700 D) $19,980 7) Using.
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Learning Objective 14-5 1) The United Way Payable account would normally be shown on the balance sheet under current liabilities. 2) FICA—OASDI tax payable would normally be shown on the balance sheet under long-term liabilities. 3) Federal Unemployment Taxes Payable is typically shown on the balance sheet under the long-term liabilities section. 4) The.
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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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31) The payment of interest on a loan would be considered a ________ on the statement of cash flows (direct method). A) cash outflow for operating activities B) cash outflow for investing activities C) cash outflow for financing activities D) non-cash activity Answer:  A Diff: 2 LO:  16-4 AACSB:  Concept AICPA Functional:  Measurement 32) On the statement of cash flows.
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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 Revenue1,000 Gain.
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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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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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Learning Objective 16-4 1) Martinez 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 to.
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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 Answer:  A Diff: 1 LO:  16-2 AACSB:  Concept AICPA Functional:  Measurement 32) Which of the following sections of.
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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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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) 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. Answer:  FALSE Diff: 1 LO:  16-2 AACSB:  Application AICPA Functional:  Measurement 12) While preparing the statement of cash flows using the indirect method, Depreciation.
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71) Allen Services purchased 20 delivery vehicles by issuing a 20-year installment Note Payable for $720,000. How would this transaction be shown on the statement of cash flows? A) in the investing activities section B) in the non-cash investing and financing activities section C) in the operating activities section D) in the financing activities.
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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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21) Nelson Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: The change in Accounts Payable will be shown as a negative cash flow in the adjustments to Net Income. Answer:  TRUE Diff: 1 LO:  16-2 AACSB:  Application AICPA Functional:  Measurement 22) Nelson Corp..
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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 16-5 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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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 15-3 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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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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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. Answer:  TRUE Diff: 1 LO:  16-2 AACSB:  Application AICPA Functional:  Measurement 2) Buying property, plant and equipment for cash would be considered a cash outflow for the financing activities section.
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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. Answer:  TRUE Diff: 1 LO:  16-1 AACSB:  Concept AICPA Functional:  Measurement 2) Investors and management use the statement of cash flows to evaluate a firm's profitability. Answer:  FALSE Diff: 1 LO:  16-1 AACSB: .
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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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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. Answer:  C Diff: 1 LO:  16-1 AACSB:  Concept AICPA Functional:  Measurement 12) Which of the following is one of the purposes of the statement of cash flows? A) to predict future.
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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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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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