Net book value ________.
ANSWER
INCORRECT
·
is the comparison of two fiscal periods, usually highlighting the changes in each account
·
is a method of presenting the cash flows from operating activities that begins with the company’s net income, which is prepared on an accrual basis, and then reconciles it back to the cash basis through a series of adjustments
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YOU WERE SURE AND INCORRECT
represents the amount of excess cash a business generates after taking into consideration the capital expenditures necessary to maintain its business
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THE CORRECT ANSWER
is the original cost of a plant or equipment asset less its accumulated depreciation
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I DON'T KNOW YET
Net book value is the original cost of a plant or equipment asset less its accumulated depreciation. The other answers are not correct.
Free cash flow represents the amount of excess cash a business generates after taking into consideration the capital expenditures necessary to maintain its business.
A comparative balance sheet is a balance sheet that presents (i.e. compares) two fiscal periods, usually highlighting the changes in each account.
The indirect method is a method of presenting the cash flows from operating activities that begins with the company’s net income, which is prepared on an accrual basis, and then reconciles it back to the cash basis through a series of adjustments.
Fall Service’s accountant reported $2,750,000 for the beginning balance of long-term liabilities. $200,000 of new debt was issued, and the ending balance of long-term liabilities was $2,250,000.
How much money did the company spend to repay the principal on the existing debt?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
$700,000
·
$600,000
·
$650,000
·
YOU WERE SURE AND INCORRECT
$750,000
·
I DON'T KNOW YET
The company spent $700,000 to repay the principal on the existing debt. The other answers are not correct.
Beginning long-term liabilities + Debt issuance - Repayments of principal = Ending long-term liabilities
$2,750,000 + $200,000 - ? = $2,250,000
Prepayments of principal = $2,950,000 - $2,250,000 = $700,000
Which of the following is the comparison of two fiscal periods, usually highlighting the changes in each account?
ANSWER
INCORRECT
·
Net book value
·
YOU WERE SURE AND INCORRECT
Free cash flow
·
THE CORRECT ANSWER
A comparative balance sheet
·
The indirect method
·
I DON'T KNOW YET
A comparative balance sheet is a balance sheet that presents (i.e. compares) two fiscal periods, usually highlighting the changes in each account. The other answers are not correct.
Net book value is the original cost of plant or equipment less its accumulated depreciation.
Free cash flow represents the amount of excess cash a business generates after taking into consideration the capital expenditures necessary to maintain its business.
The indirect method is a method of presenting the cash flows from operating activities that begins with the company’s net income, which is prepared on an accrual basis, and then reconciles it back to the cash basis through a series of adjustments.
Sandspring Mills Industries’ accountant reported $60,000 in the beginning balance of prepaid insurance. The insurance expense during the year was $30,000, and there was $55,000 in the ending balance of the prepaid insurance account.
What were the payments for insurance during the year?
ANSWER
INCORRECT
·
$35,000
·
YOU WERE SURE AND INCORRECT
$45,000
·
$15,000
·
THE CORRECT ANSWER
$25,000
·
I DON'T KNOW YET
The payments for insurance during the year were $25,000. The other answers are not correct.
Beginning balance of prepaid insurance + Payment for insurance – Insurance expenses = Ending balance of prepaid insurance
$60,000 + ? - $30,000 = $55,000
Insurance payments = $55,000 + $60,000 - $30,000
= $25,000
Which of the following is NOT a true statement about noncash investing and financing activities?
ANSWER
INCORRECT
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THE CORRECT ANSWER
Liabilities, such as bonds or notes payable, may be extinguished by converting them to cash instead of common stock.
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YOU WERE SURE AND INCORRECT
Major future noncash or financing activities will affect future cash flows, such as the future payment of dividends and interest.
·
Individuals and groups who make predictions about future cash flows need to know of any noncash investing or financing transactions that occurred during the year.
·
A manager engages in major investing or financing activities that do not involve cash.
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I DON'T KNOW YET
Liabilities, such as bonds or notes payable, may be extinguished by converting them to cash instead of common stock is NOT a true statement about a noncash investing and financing activities. Liabilities, such as bonds or notes payable, may be extinguished by converting them to common stock instead of cash.
Individuals and groups who make predictions about future cash flows need to know of any noncash investing or financing transactions that occurred during the year.
Significant future noncash or financing activities will affect future cash flows, such as the future payment of dividends and interest.
A manager often has significant investing or financing activities that do not involve cash.
Which of the following rules is a general rule for changes in current asset and liability accounts?
ANSWER
INCORRECT
·
If a current liability account increases, then subtract the change from the net income.
·
If a current asset account increases, then add the change to the net income.
·
YOU WERE SURE AND INCORRECT
If a current liability account decreases, then add the change to the net income.
·
THE CORRECT ANSWER
If a current asset account increases, then subtract the change from the net income.
·
I DON'T KNOW YET
If a current asset account increases, then subtract the change from the net income is the general rule for increases in current asset accounts. The other answers are not correct.
If a current asset account decreases, then add the change to the net income is the general rule for decreases in current asset accounts.
If a current liability account decreases, then subtract the change from net income is the general rule for decreases in current liability accounts.
If a current liability account increases, then add the change to the net income is the general rule for increases in current liability accounts.
Which of the following is a TRUE statement about the direct method?
ANSWER
INCORRECT
·
Most companies currently use the direct method.
·
THE CORRECT ANSWER
The indirect method and the direct method result in the same total amount of cash provided by operating activities.
·
YOU WERE SURE AND INCORRECT
The indirect method shows cash receipts and cash payments in a much more straightforward manner than the direct method.
·
The FASB and IASB both recommend that companies use the indirect method.
·
I DON'T KNOW YET
The indirect method and the direct method result in the same total amount of cash provided by operating activities is a TRUE statement about the direct method. The other answers are not correct.
The direct method shows cash receipts and cash payments in a much more straightforward manner than the indirect method
FASB and IASB both recommend that companies use the direct method.
Most companies use the indirect method.
Which of the following is a TRUE statement about the direct method?
ANSWER
INCORRECT
·
Most companies currently use the direct method.
·
THE CORRECT ANSWER
The indirect method and the direct method result in the same total amount of cash provided by operating activities.
·
YOU WERE SURE AND INCORRECT
The indirect method shows cash receipts and cash payments in a much more straightforward manner than the direct method.
·
The FASB and IASB both recommend that companies use the indirect method.
·
I DON'T KNOW YET
The indirect method and the direct method result in the same total amount of cash provided by operating activities is a TRUE statement about the direct method. The other answers are not correct.
The direct method shows cash receipts and cash payments in a much more straightforward manner than the indirect method
FASB and IASB both recommend that companies use the direct method.
Most companies use the indirect method.
Maxine’s Coffee Shop’s salaries and wages payable at the beginning of the period were $40,000, and the company had $200,000 for salaries and wage expenses during the year. The ending balance of salaries and wages payable was $65,000.
What were the payments for salaries and wages for the period?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
$320,000
·
YOU WERE SURE AND INCORRECT
$203,000
·
$230,000
·
$302,000
·
I DON'T KNOW YET
The payments for salaries and wages for the period were $320,000. The other answers are not correct.
Beginning balance of salaries and wages payable + Salaries and wages expense – Payments for salaries and wages = Ending balance of salaries and wages payable
$40,000 + $200,000 - ? = $80,000
Salaries and wages payments = $80,000 – $40,000 - $200,000 = $160,000
Stock issued to raise capital for projects involving biofuel production is ________ on the statement of cash flows.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
a financing activity
·
YOU WERE SURE AND INCORRECT
a non-cash adjustment to net income
·
an investing activity
·
never disclosed as a line item
·
I DON'T KNOW YET
Stock issued to raise capital for projects involving biofuel production is classified as a financing activity on the statement of cash flows. The other answers are not correct.
Astronomy World’s accountant uses the indirect method to prepare the statement of cash flows. The accountant reported the beginning property, plant, and equipment (PP&E) was $8,250,000. The company sold equipment with an original cost of $85,000 during the year, which resulted in an ending balance of $5,400,000 in property, plant, and equipment (PP&E).
How much cash was paid for new property, plant, and equipment (PP&E) during the year?
ANSWER
correct
·
$2,539,000
·
$2,395,000
·
YOU WERE SURE AND CORRECT
$2,935,000
·
$2,359,000
·
I DON'T KNOW YET
Which of the following transactions is NOT classified as an investing activity on the statement of cash flows?
ANSWER
correct
·
YOU WERE SURE AND CORRECT
Stock issued to raise capital for a project that involves the production of biofuel
·
An investment in an environmentally-friendly production equipment
·
An investment in solar paneling or wind turbines
·
An investment in a LEED certified building
·
I DON'T KNOW YET
Factory Machine’s accountant reported $750,000 in the beginning balance of inventory. The purchases of inventory were $5,000,000, and the ending balance of inventory was $625,000.
What is the cost of goods sold for the year?
ANSWER
correct
·
$675,000
·
$657,000
·
YOU WERE SURE AND CORRECT
$625,000
·
$652,000
·
I DON'T KNOW YET
Fall Service’s accountant reported $2,750,000 for the beginning balance of long-term liabilities. $200,000 of new debt was issued, and the ending balance of long-term liabilities was $2,250,000.
How much money did the company spend to repay the principal on the existing debt?
ANSWER
INCORRECT
·
$750,000
·
YOU WERE SURE AND INCORRECT
$650,000
·
THE CORRECT ANSWER
$700,000
·
$600,000
·
I DON'T KNOW YET
The company spent $700,000 to repay the principal on the existing debt. The other answers are not correct.
Beginning long-term liabilities + Debt issuance - Repayments of principal = Ending long-term liabilities
$2,750,000 + $200,000 - ? = $2,250,000
Prepayments of principal = $2,950,000 - $2,250,000 = $700,000
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