Accounting Expert Answers & Study Resources : Page 370

177) Use the direct method of cash flows to answer the question. Beginning A/R: $68,000Beginning Inventory: $42,500 Ending A/R: $79,000Ending Inventory: $47,000 Credit Sales: $745,000Beginning A/P: $29,000 Cost of Goods Sold: $412,000Ending A/P: $36,300 Calculate the cost of merchandise purchased during the year. 178) Use the direct method of cash flows to answer the question. Beginning A/R:.

140) The direct method lists the receipt and payment of cash for specific operating activities. 141) When a company uses the direct method to present the statement of cash flows, depreciation expense must be added to net income to reconcile to net cash provided by operating activities. 142) The direct.

77) Comparative balance sheets analyze balance sheets by comparing the ending balances of two fiscal periods; usually highlighting the changes in each account. 78) The indirect method of presenting the investing activities section of the statement of cash flow reconciles net income to net cash provided by investing activities. 79) When.

104) You win the lottery and must decide how to take the payout. Use an 8% discount rate for all parts of this question. Required: a.What is the present value of $12,000 a year received at the end of each of the next six years? b.What is the present value of taking.

142) Senseman Company has three potential projects from which to choose. Selected information on each of the three projects follows: Project A Project B Project C Investment required $ 42,500 $ 56,000 $ 53,700 Net present value of project $ 45,700 $ 75,400 $ 70,200 Using the profitability index, rank the projects from most profitable to least profitable. A) A, B, C B) C,.

117) A company uses the indirect method to prepare the statement of cash flows. It presents the following amounts on its financial statements. End of this year End of prior year Accounts receivable $115,000 $100,000 Cost of goods sold 560,000 Sales revenue 830,000 Accounts payable* 77,000 67,000 Inventory 90,000 105,000 Salary payable 12,000 10,000 Salary expense 49,000 45,000 *Relates solely to the acquisition of inventory What will appear in the operating.

137) Use the indirect method of preparing a statement of cash flows to answer the question. Ending balances for Sunday Hut are listed below: Item End of this year End of prior year Building $365,000 $0 Equipment 111,000 0 Notes Payable 39,000 33,000 Common Stock 256,000 192,000 Paid-in Capital in Excess of Par/Common 56,400 38,000 Retained Earnings 231,000 174,000 Net income for this year was $97,000 and dividends of $24,000 were declared.

170) A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements. End of this year End of prior year Accounts receivable $115,000 $100,000 Cost of goods sold 520,000 Sales revenue 850,000 Accounts payable* 80,000 65,000 Inventory 92,000 110,000 Salary payable 15,500 12,000 Salary expense 50,000 44,000 *Relates solely to the acquisition of inventory What will appear in the operating activities.

11) Financing activities include activities that affect long-term liabilities and owner's equity on the balance sheet. 12) Which of the following parties would have an interest in the cash a company has? A) Creditors expecting loans and interest to be repaid B) Employees expecting to be reimbursed for their work C) Investors expecting.

162) (Present value tables are needed.) Family Fun Park is evaluating the purchase of a new game to be located on its Midway. Family Fun has narrowed their choices down to two: the Wacky Water Race game and the Whack-A-Mole game. Financial data about the two choices follows. Wacky Water.

51) Suppose Whole Foods is considering investing in warehouse-management software that costs $600,000, has $60,000 residual value and should lead to cash cost savings of $130,000 per year for its five-year life. In calculating the ARR, which of the following figures should be used as the equation's denominator? A) $60,000 B) $600,000 C).

74) For each of the following transactions indicate the effect on the cash balance. Use + for increase, - for decrease, and 0 for no effect. ________a.Payment of cash dividends ________b.Payment of interest ________c.Sale of treasury stock ________d.Conversion of debt to common stock ________e.Payment of accounts payable ________f.Payment of salaries.

61) Speedy Print Shop bought a new high-speed photo copier for customers to be able to bring in their digital pictures to make high-quality copies. Its useful life is 6 years. The copier cost $7,740 and will generate annual cash inflows of $2,150. The residual value of the copier is.

133) The following information is available for three companies. The information relates to the companies' plant assets. For each of the companies, determine the unknown amounts. Fox Co. Wolf Co. Coyote Co. Beginning plant assets, net of depreciation $860,000 $715,000 $489,700 Ending plant assets, net of depreciation 950,000 702,400 288,300 Depreciation expense 55,300 49,500 (c) Gain (loss) on sale of plant assets 5,600 (b) (15,200) Cost of plant assets.

41) Gomez Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $ 850,000 $ 468,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $ 125,000 $ 78,000 Residual value $ 40,000 $ - Depreciation method Straight-line Straight-line Required rate of return 14% 10% What is the accounting rate of return for Proposal Y? A) 5.24% B) 4.17% C) 29.17% D) 16.67% 42) The Warren.

21) Which of the following is an acceptable basis for the preparation of the statement of cash flows? A) The sum of cash, inventory, and money market accounts B) The sum of cash and accounts receivable C) Cash D) The sum of cash and cash equivalents 22) Which of the following items is.

87) If a company uses the indirect method to prepare the statement of cash flows, which of the following items would be added to net income in determining the net cash flow from operating activities? A) An increase in inventory would be added to net income. B) A decrease in accounts.

127) The balance sheet for Bostick Corporation follows: Ending balance Beginning balance Assets: Current assets: Cash and cash equivalents $ 58,400 $ 44,600 Accounts receivable $ 19,000 $ 22,300 Inventory $ 48,900 $ 53,000 Total current assets $ 126,300 $ 119,900 Property, plant, and equipment $ 287,800 $ 275,300 Less accumulated depreciation $ 108,600 $ 101,550 Net property, plant, and equipment $ 179,200 $ 173,750 Total assets $ 305,500 $ 293,650 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 26,030 $ 29,580 Wages.

31) If the accounting rate of return exceeds the required accounting rate of return, A) invest in the capital asset. B) do not invest in the capital asset. C) only invest if the payback period is also greater than the required rate of return. D) only invest if the payback period is also less.

85) You have been awarded a scholarship that will pay you $500 per semester at the end of each of the next 8 semesters that you earn a GPA of 3.5 or better. You are a very serious student and you anticipate receiving the scholarship every semester. Using a discount.

169) (Present value tables are needed.) Shaker Investments, a private investment holding company, is searching for a new investment opportunity. Shaker Investments has identified two potential investment opportunities: an upstart fast food chain and a growing organic grocery chain. Information for each investment follows: Fast FoodOrganic Grocery ChainChain Investment$975,000$1,500,000 Useful life (years)1515 Estimated annual net.

75) One dollar to be received in the future is worth more than one dollar today. 76) The net present value method does not incorporate the time value of money. 77) The principal amount, the interest rate, and the number of periods are all factors needed to calculate the time value of.

132) (Present value tables are required.) The Speedy-Delivery Company has two options for its delivery truck. The first option is to purchase a new truck for $15,000. The new truck will have a useful life of 5 years and a residual value of $2,000. Operating costs for the new truck.

160) If a company uses the direct method to prepare the statement of cash flows, how will the amount of cash payments to employees be computed? A) The amount of cash payments to employees is computed as salary expense plus the ending balance salaries payable. B) The amount of cash payments.

168) (Present value tables are needed.) Georgia Peach Farms is upgrading its fruit washing/separating machine. Georgia has narrowed the decision down to two machines: Machine A and Machine B.Pertinent information for each machine follows: Machine AMachine B Investment$450,000$650,000 Useful life (years)1010 Estimated annual net cash inflows for useful life$75,000$120,000 Residual value$25,000$35,000 Depreciation methodstraight-linestraight-line Required rate of return10%12% Required: a.Calculate.

31) The ________ is the most important section on the statement of cash flows because it reflects the day-to-day operations that determine the future of an organization. A) operating section B) financing section C) investing section D) None of the above 32) Which of the following sections from the statement of cash.

112) The interest rate that makes the net present value of the investment equal to zero is the internal rate of return. 113) The internal rate of return is used as the discount rate when calculating the net present value of a project. 114) The net present value method assumes that all.

71) The Toth Company bought a new specialty machine that cost $100,000 with a 4-year life with no residual value. The company plans to generate annual cash inflows of $30,000 each year for 4 years. Calculate the accounting rate of return. 72) The Hawn Corporation bought a new machine that cost.

21) The Nichols Corporation data for the current year: Account Current year Prior year Current assets $75,600 $60,000 A/R $59,400 $44,000 Mdse. Inventory $51,200 $40,000 Current liabilities $71,500 $55,000 Long-term liabilities $36,000 $30,000 Common stock (5,000 shares) $47,460 $42,000 Retained earnings $31,240 $17,000 Net sales revenue $607,700 $515,000 COGS $469,700 $385,000 Gross Profit $138,000 $130,000 Selling/General expenses $49,080 $52,000 Net income before taxes $88,920 $78,000 Income tax expense $20,520 $18,000 Net Income $68,400 $60,000 What would a horizontal analysis report with respect to long-term liabilities? A) Long-term liabilities increased by $6,000. B) Long-term liabilities decreased by 5.92%. C).

1) Generally, using more than one year of data to analyze company performance is desirable. 2) Investors and creditors generally evaluate a company by using a single year's data. 3) Most financial statement analysis covers trends of more than one year. 4) Horizontal analysis is the study of percentage changes in comparative financial.

97) Operating activities resulting from the sales of goods and services relate to A) retained earnings reported on the balance sheet. B) assets and liabilities reported on the balance sheet. C) the income statement. D) net income on the retained earnings statement. 98) All of the following would be done when calculating the change in.

61) The ________ section from the statement of cash flows would include the issuance of a stock dividend. A) operating B) financing C) investing D) None of the above 62) Which of the following would be considered an operating activity on the statement of cash flows? A) Dividends paid to stockholders B) Gain on sale.

1) The statement of cash flows shows not only the amount of cash used during a particular time, but also how the cash was used. 2) The statement of cash flows reflects cash flows during a period of time. 3) The statement of cash flows does not report why cash.

152) (Present value tables are needed.) The Janus Vending Machine Company is looking to expand its business by adding a new line of vending machines. The management team is considering expanding into either soda machines or snack machines. Following is the relevant financial data relating to the decision: Soda Machines Snack.

75) For each of the following transactions, indicate the section in which it will be included. Use O for the operating section, I for the investing activities section, F for the financing section, S for a separate schedule of noncash investing and financing activities, and N for items not disclosed.

180) The ________ capital budgeting method uses accrual accounting income. A) accounting rate of return B) payback C) net present value D) internal rate of return 181) Which of the following is not an advantage of post-audits of capital investments? A) They indicate whether project should continue or should be abandoned. B) They help.

150) How will the amount of cash payments to employees be computed if a company uses the direct method to prepare the statement of cash flows? A) Cash payments to employees will be equal to salary expense plus the beginning balance in salary payable. B) Cash payments to employees will.

11) Using a base year as 100% and expressing other years as a percentage of the base year is an example of A) trend analysis. B) vertical analysis. C) horizontal analysis. D) benchmarking. 12) Which type of analysis includes the computation of the percentage change in total assets between two balance sheet dates? A) Profitability B).

51) An outflow of cash from an investing activity would be A) making loans to third parties. B) issuing notes payable. C) paying cash dividends to stockholders. D) purchasing treasury stock. 52) Money borrowed for a mortgage would be a(n) ________ activity. A) operating B) financing C) investing D) non-cash 53) All of the following are cash outflows from.

174) Use the direct method of cash flows to answer the question. Beginning A/R: $68,000Beginning Inventory: $42,500 Ending A/R: $79,000Ending Inventory: $47,000 Credit Sales: $745,000Beginning A/P: $29,000 Cost of Goods Sold: $412,000Ending A/P: $36,300 Compute the change in accounts receivable for the year. 175) Use the direct method of cash flows to answer the question. Beginning A/R:.

95) If you invest $1,200 at the end of every year for five years at an interest rate of 10%, the balance of your investment in 5 years will be closest to A) $1,933. B) $6,000. C) $7,326. D) $4,549. 96) Income from an apartment building you own totals $260,000 per year. You plan on.

135) The income statement and a partial balance sheet for Regovich Company is presented below. Prepare the operating activities section of the statement of cash flows using the indirect method. Regovich Company Income Statement For the Current Year Sales $550,00 Cost of goods sold   390,000 Gross profit $160,000 Operating expenses:    Salaries $70,000    Depreciation expense 28,000    Miscellaneous 10,000 108,000 Net income $52,000 Regovich Company Partial.

41) The ________ section from the statement of cash flows would include the payment of a long-term mortgage payable with cash. A) investing B) financing C) operating D) None of the above 42) Paying cash dividends would be A) a cash outflow from operations. B) a cash outflow from financing. C) a cash outflow from investing. D).

170) The ARR is the only method that uses accrual accounting figures and thus making it important to financial statement users. 171) Neither the payback period nor the IRR capital budgeting method recognizes the time value of money. 172) The payback and accounting rate of return models are conceptually better than the.

122) What will happen to the net present value (NPV) of a project if the discount rate is increased from 8% to 10%? A) NPV will always decrease. B) NPV will always increase. C) The discount rate change will not affect NPV. D) We cannot determine the direction of the effect on NPV.

107) A company uses the indirect method to prepare the statement of cash flows. How will a gain from the sale of equipment be presented on the statement? A) A gain from the sale of equipment will be an addition in the investing activities section. B) A gain from the.

11) Which of the following items would be considered a capital asset? A) Purchase of office supplies to be used internally over the next year B) Payment for this year's advertising campaign C) Construction of a new store building D) Donation of money to United Way 12) Which of the following is a characteristic.

71) List three ways that owners and investors use the statement of cash flows. 72) How can a company that has shown net income in recent years be required to declare bankruptcy? How can the statement of cash flows provide an advanced warning about this possibility? 73 .

76) For each of the following independent transactions, indicate the type of activity (operating, investing or financing) and the effect on cash (amount and increase or decrease). Transaction Type of Activity Effect on Cash a. Declared cash dividends of $21,000 during the current period. Dividends payable on January 1 were $1,700 and on December.

21) The accounting rate of return uses non-cash flow factors including depreciation in calculating the operating income of the asset. 22) Investments with longer payback periods are more desirable, all else being equal. 23) The payback method can be used when the net cash inflows from a capital investment are unequal. 24).