Accounting Expert Answers & Study Resources : Page 23

36) The cash flow from investing activities appears exactly the same whether the company uses the direct or the indirect method to prepare the cash flow statement. 37) The direct method of preparing the cash flow statement provides a clearer way of analysing cash flow information than the indirect method. 38) Most.

26) All companies must issue both ordinary and preference shares. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 27) Which of the following occurs when a shareholder invests cash in a company in exchange for shares? A) One asset is increased and another asset is decreased. B).

56) Saunders Hardware sells on the instalment plan. Sales-related figures for Saunders Hardware for 2017 were as follows: sales, $600 000; down payments on the sales, $60 000; collections on instalments, $250 000; beginning inventory, $90 000; ending inventory $60 000; and purchases, $400 000. What is Saunders Hardware's gross.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 66) Qtopia Company uses the direct method to prepare its cash flow statement. It has reported sales revenue of $100 000 on its income statement for the year 2016. If the balance in accounts receivable has.

21) Lerner Company had the following transactions in 2016, its first year of operations. ?Issued 22,000 ordinary shares. The issue price of the shares was $16.00 per share. ?Issued 1500 preference shares for $170 per share. ?Earned net profit of $35,000. ?Paid no dividends. At the end of 2016, what is the total amount of.

1) The body that is responsible for the issue of accounting standards in Australia is: A) The Australian Securities and Investments Commission. B) The Australian Accounting Standards Board. C) The Institute of Chartered Accountants in Australia. D) CPA Australia. 2) Accounting standards in the USA are issued by: A) Congress. B) the Financial Accounting Standards Board. C) the.

21) Which of the following would NOT be classified as an operating activity? A) Dividends paid B) Interest received C) Interest paid D) Dividends received 22) Which of the following is the CORRECT order of the sections on a cash flow statement? A) Financing, investing, operating B) Investing, operating, financing C) Operating, financing, investing D) Operating, investing, financing 23) Which.

46) A payment of interest on a loan would be considered a: A) non-cash activity. B) cash outflow from investing activities. C) cash outflow from financing activities. D) cash outflow from operating activities. 47) Cash received from selling inventory would be considered a: A) cash inflow from financing activities. B) cash inflow from operating activities. C) cash outflow.

66) Accounting standard AASB 101 requires that a summary of accounting policies should be included: A) in a schedule attached to the annual report. B) in the initial section of the notes to the financial statements. C) on the first page of the annual report. D) as a footnote to the balance sheet. 67) AASB.

16) Share capital consists of: A) amounts received from shareholders. B) earnings generated by the company. C) amounts paid by customers. D) capital raised by issuing debentures. 17) Which of the following describes retained earnings? A) Internally generated capital that results from profitable business transactions B) Internally generated capital that results from employees' contributions C) Externally generated capital.

51) Which profit recognition method is the most conservative? A) sales method B) percentage of completion method C) collection (receipt of cash) method D) instalment method 52) In 2017, Amana sold 10 refrigerators that cost $825 each for a price of $1 285 each. Payments are made in 10 equal instalments with no down payment..

36) Which of the following describes a retained earnings deficit? A) When the retained earnings is less than the total share capital B) When the retained earnings is a negative amount C) When the company records a loss for the year D) When the company does not pay out any dividends TRUE/FALSE. Write 'T' if.

11) Which of the following describes the financing activities as shown in the cash flow statement? A) Includes transactions that primarily impact current assets and current liabilities B) Includes transactions affecting the non-current liabilities and equity of the business C) Includes increases and decreases in non-current assets D) Shows the beginning and ending balance.

16) Which of the following will decrease the amount of Total shareholders' equity? A) Repayment of debenture principal B) Cash dividend C) Share dividend D) Share split 17) Which of the following occurs when the board of directors declares a 3-for-1 share split on 16,000 outstanding shares of $25 per ordinary share? A) The number of.

1) A cash flow statement is generated to show: A) the expenses the company incurred during the time period. B) the inflow and outflow of cash during the time period. C) how profits were generated. D) the revenues the company has earned. 2) Which one of the following is a principal function of the cash.

26) Which of the following would be a reason for a company to appropriate a portion of retained earnings? A) To increase the amount of earnings available for dividends B) To limit the amount of retained earnings available for dividends in order to retain sufficient funds for growth C) To ensure that the.

46) Which of the following is the correct description of dividends in arrears, as it applies to cumulative preference shares? A) The amount of dividends that will be paid in the coming year B) The cumulative amount of dividends which were not paid in previous years C) The amount of dividends that were.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 36) Comprehensive income is equal to the profit for the period, excluding the effects of discontinued operations and extraordinary items. 37) RT Company shows a loss from flooding of $235 000 for the year. This loss will.

56) Most preference shares are non-cumulative. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 57) Which of the following is the price for which a person can buy or sell a share of shares? A) Market value B) Amortised value C) Book value D) Liquidation value 58) Which of the.

26) The financing activities section of the cash flow statement includes paying dividends and paying off loans. 27) The investing activities section of the cash flow statement reflects the cash flows that increase or decrease non-current assets. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 28).

11) Which of the following is a TRUE statement? A) Both a share split and a share dividend will decrease total assets. B) Neither a share split nor a share dividend will affect total assets or total liabilities. C) Both a share split and a share dividend will increase total liabilities. D) A share.

1) The account to be debited when a share dividend is declared and distributed on the same date would be: A) Dividends. B) Cash. C) Retained earnings. D) Ordinary share capital. 2) Which of the following is NOT true of share dividends? A) Share dividends affect only shareholders' equity accounts. B) Share dividends have no effect on.

21) If a company buys back shares, which of the following is TRUE? A) Total equity will decrease. B) Total equity will increase. C) The number of issued shares will increase. D) The company records a gain or loss on the buy-back. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement.

76) Sonesta Company sold equipment for cash. The income statement shows a loss on sale of $9000. The net book value of the asset prior to the sale was $25,900. Which of the following statements describes the cash effect of the transaction? A) positive cash flow of $16,900 from investing activities B).

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 51) Declaring and paying dividends causes a decrease in both assets and equity. 52) If preference shares are non-cumulative, then the company does NOT need to pay dividends that were passed in previous years. 53) If preference shares.

41) Which business would be most likely to use the percentage of completion method to record income? A) Accountant B) Grocery store C) Plumber D) Construction firm 42) Which type of business would be most likely to use the instalment method to record revenue? A) medical practitioner B) real estate developer C) pharmacy D) construction firm Table 17-1 In 2016, a.

Table 17-1 In 2016, a developer sells land for $800 000. The cost of the land was $500 000. He receives a $200 000 down payment plus three instalments of $300 000, $200 000 and $100 000 which will be paid in 2017, 2018 and 2019. He uses the instalment method.

56) A company's Inventory account increased $28,300 and its Accounts payable account decreased $20,000 during the year. The Accounts payable relates only to the acquisition of inventory. Sales were $795,900 and Cost of sales was $549,800. What was the payment made to the suppliers of inventory? A) $48,300 B) $578,100 C) $598,100 D) $569,800 57).

6) Which of the following statements describes the company characteristic of transferability of company ownership? A) The liabilities of the company cannot be extended to the personal assets of the shareholder. B) Shareholders are not authorised to sign contracts or make business commitments on behalf of the company. C) Companies pay income tax.

31) Which of the following best describes discontinued operations on the income statement? A) The gains and losses from transactions that are not part of the normal operations of the business B) The profit or loss generated from the normal operations of the business C) The profit or loss from segments of the.

86) Avatar Company uses the indirect method to prepare the cash flow statement. Please refer to the following section of the comparative balance sheet:     2017 2016 Increase/decrease Accounts payable $4 000 $6 000 $(2 000) Accrued liabilities 2 000 1 000 1 000 Long-term bills payable 84 000 90 000 (6 000) Total liabilities $90 000 $97 000 $(7 000)   The change in accounts payable will be shown as a.

101) Companies sometimes make investments that do NOT require cash. Such transactions are called non-cash investing activities and appear in a separate section of the cash flow statement. 102) Companies sometimes obtain financing other than cash. Although such transactions do not directly involve cash, they still must be reported in the.

106) If an investor wants to know how much cash a company can free up for new opportunities, such as expanding into a new sales region, they would most likely wish to calculate the company's free cash flow figure. 107) Free cash flow is the same thing as cash flow from.

16) Which of the following sections from the cash flow statement includes activities that increase and decrease non-current assets? A) The financing section B) The investing section C) The non-cash investing and financing section D) The operating section 17) Which of the following sections from the cash flow statement includes activities that affect profit on.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 41) Retained earnings represents: A) the assets of the company less the liabilities. B) the accumulated profits of the company less dividends paid out. C) capital contributed by the shareholders of a company. D) a liability on the company balance.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 81) In creating a cash flow statement using the indirect method, a gain on the sale of non-current assets must be shown as an addition to Profit in the operating activities section. 82) In creating a cash.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 61) Buying property, plant and equipment would be considered a cash outflow from financing. 62) Selling property, plant and equipment would be considered a cash inflow from investing. 63) Issuing preference shares to shareholders would be a financing.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 61) Which of the following measures a company's success in using assets to earn profit? A) Days' sales in receivables B) The rate of return on total assets C) The rate of return on shareholders' equity D) Inventory turnover 62) Which.

31) Which of the following would NOT appear on a cash flow statement prepared using the direct method? A) Increase/decrease in current liabilities B) Payments to suppliers C) Interest received D) Collections from customers TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 32) The Australian Accounting Standards require the.

66) If a company has a strong rate of return on total assets, that shows that they can easily pay off their current liabilities with their current assets. 67) If a company has a strong rate of return on ordinary shareholders' equity, that is an indication of good cash flow. MULTIPLE CHOICE..

6) Which of the following is a reason why a company would do a share split? A) To reduce the market price at which the share is trading B) To defend against a hostile takeover C) To provide the shareholders with something of value when the company cannot afford a cash dividend D) To.

71) In creating a cash flow statement using the indirect method, which of the following statements is TRUE about depreciation expense? A) It is added back to purchases of non-current assets under investing activities. B) It is added back as an adjustment to profit in the operating activities section. C) It is shown.

51) Avatar Company uses the direct method to prepare its cash flow statement. Refer to the following information reported for the year 2016: 1) Sales revenue, $519,000 2) Accounts receivable, beginning balance, $96,000 3) Accounts receivable, ending balance, $57,000 In the operating activities section of the cash flow statement, what amount will be shown.

11) Shareholders of a company have unlimited liability for the company's debt. 12) A disadvantage of the company is the separation between the owners of the company (the shareholders) and the managers of the company, which can sometimes result in a conflict of interests. MULTIPLE CHOICE. Choose the one alternative that best.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 61) In most businesses, profit is recognised at the point of sale. 62) The term 'revenue recognition' means the recording of revenue in the accounting records and its reporting in the income statement. 63) Under the percentage of.

41) Which of the following sections from the cash flow statement includes borrowing money and paying off loans? A) The non-cash investing and financing section B) The operating section C) The financing section D) The investing section 42) Of the following, which is NOT a cash outflow from an investing activity? A) Loans made to another.

6) The term cash, as used on the cash flow statement, includes all of the following, EXCEPT: A) cash on hand. B) cash due from customers within 30 days. C) cash in bank. D) cash equivalents. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 7) Cash equivalents are assets.

96) Which of the following sections from the cash flow statement would include the payment of a bill payable by issuing ordinary shares? A) The payment of a bill payable by issuing ordinary shares would be included in the financing section. B) The payment of a bill payable by issuing ordinary shares.

91) Sonesta Company owed one of its creditors $250 000 but did not have enough cash to repay the debt. Following lengthy negotiations, the parties agreed that Sonesta would issue 100 000 ordinary shares to settle the debt. How would this transaction be shown on the cash flow statement? A) In.

31) Dallkin Company issued 10,000 ordinary shares on 1 January 2016. The shares were sold at $25 per share. The journal entry for this transaction would include a: A) debit to Cash for $250,000and a credit to Retained earnings for $250,000 B) credit to Cash for $250,000 and a debit to Ordinary.