Question 1

Hollander Company gave a long-term note payable in the amount of $285,000 to acquire a new piece of equipment.This transaction will be reported on the statement of cash flows as a _____.

Accepted Answer

A) $285,000 investing outflow and $285,000 financing inflow 
B) $285,000 operating outflow and $285,000 financing inflow 
C) $285,000 investing inflow and $285,000 financing outflow 
D) noncash transaction reported in a separate schedule

Question 2

All of the following are charges against income that do not require cash except _____.

Accepted Answer

A) depreciation 
B) depletion 
C) amortization of leaseholds 
D) sales discounts

Question 3

The statement of cash flows is used for all of the following except_____.

Accepted Answer

A) showing the relationship of net income to changes in cash 
B) determining a company's ability to pay its debts when they are due 
C) revealing commitments that may restrict future courses of action 
D) evaluating the creditworthiness of the organization

Question 4

Formal certificates of indebtedness that are accompanied by a promise to pay interest at a specified annual rate for unsecured debt

Accepted Answer

The answer of Formal certificates of indebtedness that are accompanied...

Question 5

Austin Company reported cost of goods sold of $700,000, a decrease in inventory of $60,000, and an increase in accounts payable of $35,000._____ was paid to Austin Company's suppliers.

Accepted Answer

A) $795,000 
B) $725,000 
C) $675,000 
D) $605,000

Question 6

Tommy Company's income statement showed rent expense of $16,000.The beginning and ending balances in the Prepaid Rent account were $5,000 and $3,000, respectively.Cash paid for rent was_____.

Accepted Answer

A) $24,000 
B) $19,000 
C) $16,000 
D) $14,000

Question 7

An inventory method that assigns the same unit cost to each unit available for sale

Accepted Answer

The answer of An inventory method that assigns the same...

Question 8

The wages expense of Ben Corporation was $45,000.Beginning wages payable was $6,000.Ending wages payable was $3,000.Cash paid to employees was_____.

Accepted Answer

A) $50,000 
B) $48,000 
C) $45,000 
D) $43,000

Question 9

They contain explanations for the summary figures that appear in the main financial statements

Accepted Answer

The answer of They contain explanations for the summary figures...

Question 10

Accounts payable, wages payable, and income taxes payable are all considered current liabilities.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following does not correctly state the nature or purpose of par value?

Accepted Answer

A) Par value is a valuable tool used by both the shareholders and the corporation. 
B) Par value is the minimum level of investment by owners required by law in some states. 
C) The term "stated value" is conceptually equivalent to par value. 
D) Some states permit common stock to be issued without either a par or stated value.

Question 12

Creditors cannot seek payment from shareholders as individuals if the corporation itself cannot pay its debt

Accepted Answer

The answer of Creditors cannot seek payment from shareholders as...

Question 13

Earnings per share = net income / average number of common and preferred shares outstanding during the year.

Accepted Answer

A) True 
 B)False

Question 14

A company does not pay dividends on treasury stock.

Accepted Answer

A) True 
 B)False

Question 15

A corporation's own stock that has been issued and subsequently repurchased by the company and is being held for a specific purpose

Accepted Answer

The answer of A corporation's own stock that has been...

Question 16

Orlando Company's beginning and ending accounts payable amounts were $140,000 and $130,000, respectively.Inventory purchases on account were $480,000.Orlando Company paid _____ to its suppliers.

Accepted Answer

A) $490,000 
B) $480,000 
C) $460,000 
D) An indeterminable amount

Question 17

Listed below are increases decreases) in selected accounts of Space Company. Accounts receivable $\$ 20,000$
Inventory $\quad 40,000$ )
Accounts payable $\quad 68,000$
$\begin{array} { l l } \text { Wages payable } & 21,000 ) \end{array}$ Net income for Space Company was $42,000.The net cash provided by operating activities was_____.

Accepted Answer

A) $69,000 
B) $15,000 
C) $109,000 
D) $67,000)

Question 18

The value that is printed on the face of the stock certificate

Accepted Answer

The answer of The value that is printed on the...

Question 19

At the beginning of the current year, Fred Company had the following balances in their stockholders' equity accounts as of December 31, 20X5: Paid-in capital $\quad \$ 43,000$
Retained earnings 27,000 
During the year ended December 31, 20X6, Fred Company generated $35,400 in net income, and declared and paid $10,000 in dividends.The ending balance in the Retained Earnings account at December 31, 20X6 is_____.

Accepted Answer

A) $23,400 
B) $27,000 
C) $52,400 
D) $66,400

Question 20

Gross profit is the difference between sales and cost of goods sold.

Accepted Answer

A) True 
 B)False

Exam 16: Understanding Corporate Annual Reports: Basic Financial Statements

Hollander Company gave a long-term note payable in the amount of $285,000 to acquire a new piece of equipment.This transaction will be reported on the statement of cash flows as a _____.

All of the following are charges against income that do not require cash except _____.

The statement of cash flows is used for all of the following except_____.

Formal certificates of indebtedness that are accompanied by a promise to pay interest at a specified annual rate for unsecured debt

Austin Company reported cost of goods sold of $700,000, a decrease in inventory of $60,000, and an increase in accounts payable of $35,000._____ was paid to Austin Company's suppliers.

Tommy Company's income statement showed rent expense of $16,000.The beginning and ending balances in the Prepaid Rent account were $5,000 and $3,000, respectively.Cash paid for rent was_____.

An inventory method that assigns the same unit cost to each unit available for sale

The wages expense of Ben Corporation was $45,000.Beginning wages payable was $6,000.Ending wages payable was $3,000.Cash paid to employees was_____.

They contain explanations for the summary figures that appear in the main financial statements

Accounts payable, wages payable, and income taxes payable are all considered current liabilities.

Which of the following does not correctly state the nature or purpose of par value?

Creditors cannot seek payment from shareholders as individuals if the corporation itself cannot pay its debt

Earnings per share = net income / average number of common and preferred shares outstanding during the year.

A company does not pay dividends on treasury stock.

A corporation's own stock that has been issued and subsequently repurchased by the company and is being held for a specific purpose

Orlando Company's beginning and ending accounts payable amounts were $140,000 and $130,000, respectively.Inventory purchases on account were $480,000.Orlando Company paid _____ to its suppliers.

The value that is printed on the face of the stock certificate

Gross profit is the difference between sales and cost of goods sold.