Question 1

Which one of the following items is not generally used in preparing a statement of cash
flows?

Adjusted trial balance

Comparative balance sheets
Current income statement
Additional information

Question 2
If a company reports a net loss, it

will not be able to make capital expenditures.

will not be able to get a loan.
may still have a net increase in cash.
will not be able to pay cash
dividends

Question 3
The statement of cash flows will not report the

change in the cash balance for the current period.

amount of checks outstanding at the end of the
period.
uses of cash in the current period.
sources of cash in the current period.

Question 4
The statement of cash flows reports each of the
following except

cash sales.
cash receipts from operating activities.
the net change in cash.
cash payments from investing activities.

Question 5
The cash effects of transactions that create revenues and
expenses are
investing activities.
financing activities.
operating activities.

processing activities.

Question 6
The acquisition of land by issuing common stock is

a noncash transaction which is not reported in the body of a statement of cash

flows.
only reported if the statement of cash flows is prepared using the direct method.
a cash transaction and would be reported in the body of a statement of cash flows.
a noncash transaction and would be reported in the body of a statement of cash
flows.

Question 7
The order of presentation of activities on the statement of cash flows is

operating, investing, and financing.

financing, operating, and investing.
operating, financing, and investing.
financing, investing, and operating.

Question 8

Generally, the most important category on the statement of cash flows is cash flows from

investing activities.
operating activities.
financing activities.
significant noncash activities.

Question 9
Which of the following transactions does not affect cash during a period?

Write-off of an uncollectible account

Exercise of the call option on bonds payable
Collection of an accounts receivable
Sale of treasury stock

Question 10
Jeans Vegetable Market had the following transactions during 2014:
1. Issued $50,000 of par value common stock for cash.
2. Repaid a 6 year note payable in the amount of $22,000.
3. Acquired land by issuing common stock of par value $50,000.
4. Declared and paid a cash dividend of $7,000.
5. Sold a long-term investment (cost $3,000) for cash of $6,000.
6. Acquired an investment in IBM stock for cash of $10,000.

What is the net cash provided by financing activities?

$67,000
$28,000
$0
$21,000

Question 11
The net income reported on the income statement for the current year was $245,000.
Depreciation was $40,000. Account receivable and inventories decreased by $12,000 and
$35,000, respectively. Prepaid expenses and accounts payable increased, respectively, by
$1,000 and $8,000. How much cash was provided by operating activities?

$296,000
$339,000
$323,000
$311,000

Question 12

If a gain of $12,000 is incurred in selling (for cash) office equipment having a book value
of $110,000, the total amount reported in the cash flows from investing activities section
of the statement of cash flows is

$110,000.
$12,000.
$98,000.
$122,000.

Question 13
Starting with net income and adjusting it for items that affected reported net income but
which did not affect cash is called the

direct method.
working capital method.
cost-benefit method.
indirect method.

Question 14
Lake Norman Company reported net income of $225,000 for the current year.
Depreciation recorded on buildings and equipment amounted to $75,000 for the year.
Balances of the current asset and current liability accounts at the beginning and end of the
year are as follows:

End of Year Beginning of Year

Cash
$20,000
$15,000
Accounts receivable
22,000
32,000
Inventory
50,000
60,000
Accounts payable
12,000
18,000
Prepare the cash flows from the operating activities section of the statement of cash flows
using the indirect method. (Show amounts that decrease cash flow with either a - sign
e.g. -15,000 or in parenthesis e.g. (15,000).)
LAKE NORMAN COMPANY
Partial Statement of Cash Flows
$
Adjustments to reconcile net income to
:

Question 15
The following are independent situations.

Sales = $650,500; Accounts receivable increased by $27,500.

Calculate cash receipts from sales.
Cash receipts from sales

Cost of goods sold = $430,000; inventory decreased by $75,000; accounts payable

decreased by $28,500.
Calculate cash payments for purchases.
$

Cash payments for purchases

The Income statement shows $12,500 in income taxes. The balance sheet shows an
increase in taxes payable of $1,500.
Calculate the cash paid for income taxes.
$

Cash paid for income taxes

Operating expenses total $75,750; Depreciation expense = $37,200; Prepaid

expenses increased by $15,400; Accrued wages decreased by $10,600.
Calculate cash payments for operating expenses.
Cash payments for operating expenses $

Question 16
Use the following information to perform the calculations below (using the indirect
method). Clearly label the amount of each answer as positive or negative and show
all your calculations.
Net income
Depreciation expense
Beginning accounts
receivable
Ending accounts
receivable

$401,000 Beginning accounts payable

97,000 Ending accounts payable

$119,000
146,000

420,000 Purchase of long-term assets

612,000

439,000 Issuance of long-term debt

220,000

Beginning inventory
Ending inventory

516,000 Issuance of stock for cash

Issuance of stock for long-term
550,000
assets

Beginning prepaid
insurance

42,000 Purchase of treasury stock

Ending prepaid insurance

48,000

Sale of long-term investment

at cost

180,000
110,000
64,000
56,000

Calculate the amount of cash flows from operating activities. (Show amounts that
decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
Cash flows from operating activities

Calculate the amount of cash flows from investing activities. (Show amounts that
decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
Cash flows from investing activities

Calculate the amount of cash flows from financing activities. (Show amounts that
decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g.
(15,000).)
Cash flows from financing activities

Calculate the net change in cash.

Net change in cash

Question 17
The following information is available for Chenard Corporation for the year ended
December 31, 2014.
Beginning cash balance
Accounts payable decrease
Depreciation expense
Accounts receivable increase
Inventory increase
Net income
Cash received for sale of land at book value
Sales revenue
Cash dividends paid
Income tax payable increase
Cash used to purchase building
Cash used to purchase treasury stock
Cash received from issuing bonds

$35,000
3,200
76,000
8,200
13,000
269,100
35,000
747,000
12,000
4,700
144,000
32,000
206,000

Prepare a statement of cash flows using the indirect method. (Show amounts that
decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
CHENARD CORPORATION
Statement of Cash Flows-Indirect Method
For the Year Ended December 31, 2014
$
Adjustments to reconcile net income to
$

Question 18
The three accounts shown below appear in the general ledger of Hale Corp. during
2014
Equipment
Date
Jan. 1
July 31
Sept. 2
Nov. 10

Debit Credit Balance

Balance
160,000
Purchase of equipment
70,000
230,000
Cost of equipment constructed
53,000
283,000
Cost of equipment sold
59,000 224,000
Accumulated Depreciation-Equipment

Date
Jan. 1 Balance
Accumulated depreciation on equipment
Nov. 10
sold
Dec. 31 Depreciation for year
Retained Earnings
Date
Jan. 1 Balance
Aug. 23 Dividends (cash)
Dec. 31 Net income

Debit Credit Balance

71,000
30,000

41,000
23,000

64,000

Debit Credit Balance

105,000
19,000
86,000
54,000 143,000

From the postings in the accounts, indicate how the information is reported on a
statement of cash flows using the indirect method. The loss on sale equipment was
$7,000. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or
in parenthesis e.g. (15,000).)
HALE CORPORATION
Partial Statement of Cash Flows
For the Year Ended December 31, 2014
$
Adjustments to reconcile net income to
$

Click if you would like to Show Work for this question:

Open Show Work

Question Attempts: 0 of 1 used

Save for
later

Question 19
Which one of the following is not a characteristic generally evaluated in analyzing
financial statements?

Marketability
Profitability
Liquidity
Solvency

Question 20
Short-term creditors are usually most interested in evaluating

profitability.
liquidity.
solvency.

Su

marketability.

Question 21
A technique for evaluating financial statements that expresses the relationship among
selected items of financial statement data is

vertical analysis.
common size analysis.
ratio analysis.
horizontal analysis.

Question 22
The formula for horizontal analysis of changes since the base period is the current year
amount

plus the base year amount divided by the base year amount.
divided by the base year amount.
minus the base year amount divided by the base year amount.
minus the base year amount divided by the current year amount.

Question 23

Horizontal analysis evaluates a series of financial statement data over a period of time

that has been arranged from the lowest number to the highest number.
to determine which items are in error.
to determine the amount and/or percentage increase or decrease that has taken place.
that has been arranged from the highest number to the lowest number.

Question 24
Horizontal analysis evaluates financial statement data

on a certain date.
as it may appear in the future.
within a period of time.
over a period of time.

Question 25
Assume the following sales data for a company:
2014
2013
2012
2011

$1,050,000
950,000
800,000
650,000

If 2011 is the base year, what is the percentage increase in sales from 2011 to 2013?

100%
61.5%
46.2%
68.4%

Question 26
Comparative balance sheets are usually prepared for

two years.
four years.
three years.
one year.

Question 27
Assume the following sales data for a company:
2014
2013
2012

$945,000
877,500
675,000

If 2012 is the base year, what is the percentage increase in sales from 2012 to 2013?

30%
71.4%
76.9%
40%

Question 28
In performing a vertical analysis, the base for sales revenues on the income statement is

net income.
net sales.
cost of goods available for sale.
sales.

Question 29
The current ratio is

used to evaluate a company's liquidity and short-term debt paying ability.

calculated by subtracting current liabilities from current assets.

used to evaluate a company's solvency and long-term debt paying ability.
calculated by dividing current liabilities by current assets.

Question 30
The acid-test (quick) ratio

is the same as the current ratio except it is rounded to the nearest whole percent.
is used to quickly determine a company's solvency and long-term debt paying
ability.
relates cash, short-term investments, and net receivables to current liabilities.
is calculated by taking one item from the income statement and one item from the
balance sheet.

Question 31
Blaney Clothing Store had a balance in the Accounts Receivable account of $437,500 at
the beginning of the year and a balance of $500,000 at the end of the year. Net credit
sales during the year amounted to $3,000,000. The average collection period of the
receivables in terms of days was

365 days.
60.1 days.

53.2 days.
57 days.

Question 32
Exeter Corporation had net income of $3,000,000 in 2013. Using 2013 as the base year,
net income decreased by 40% in 2014 and increased by 110% in 2015.
Compute the net income reported by Exeter Corporation for 2014 and 2015.
2014

2015

Net Income

$
$
Click if you would like to Show Work for this question: Open Show Work

Question 33
The following items were taken from the financial statements of St. Johns, Inc., over a
four-year period:
Item
2015
2014
2013
2012
Net Sales
$655,000 $640,000 $575,000 $500,000
Cost of Goods Sold 520,000 480,000 435,000 400,000
Gross Profit
$135,000 $160,000 $140,000 $100,000
Using horizontal analysis and 2012 as the base year, compute the trend percentages for
net sales, cost of goods sold, and gross profit. (Round answers to 0 decimal places, e.g.
114%)
Item

2015

2014

2013

2012

Net Sales

Cost of Goods
Sold

Gross Profit
%
%
Click if you would like to Show Work for this
question:

Open Show Work

Question 34
Here is financial information for Valdez Express Inc.
December 31, 2014 December 31, 2013
Current assets
Plant assets (net)
Current liabilities
Long-term liabilities
Common stock, $1 par
Retained earnings

$114,000
414,000
91,000
134,500
149,500
153,000

$80,000
360,000
65,000
90,000
115,000
170,000

Prepare a schedule showing a horizontal analysis for 2014 using 2013 as the base
year. (If amount and percentage are a decrease show the numbers as negative, e.g.
-55,000, -12.1% or (55,000), (12.1%). Round percentages to 1 decimal places, e.g.
12.1%.)
VALDEZ EXPRESS INC.
Condensed Balance Sheet
December 31
Increase or (Decrease)
2013
Amount
Percentage

2014
$

%
%

$
%

%
%
$

Click if you would like to Show Work for this question: Open Show Work

Question 35
Managerial accounting applies to each of the following types of businesses except

service firms.
manufacturing firms.
merchandising firms.
managerial accounting applies to all types of firms.

Question 36
The major reporting standard for presenting managerial accounting information is

the current tax law.

relevance.
the cost principle.
generally accepted accounting principles.

Question 37
Managerial accounting does not encompass

calculating product cost.

determining cost behavior.
profit planning.
calculating earnings per share.

Question 38
Financial statements for external users can be described as

managerial reports.
user-specific.
general-purpose.
special-purpose.
Click if you would like to Show Work for this question: Open Show Work

Question 39
Managerial accounting reports can be described as

macro-reports.
special-purpose.
general-purpose.
classified financial statements.

Question 40
In an analogous sense, external user is to internal user as generally accepted accounting
principles are to

relevance to decision.
SEC.
special-purpose.
timely.

Question 41
The work of factory employees that can be physically and directly associated with
converting raw materials into finished goods is

manufacturing overhead.
indirect labor.
indirect materials.
direct labor.

Question 42
Manufacturing costs include

direct materials and direct labor only.

direct materials, direct labor, and manufacturing overhead.
direct materials and manufacturing overhead only.
direct labor and manufacturing overhead only.

Question 43
As current technology changes manufacturing processes, it is likely that direct

labor will decrease.

materials will increase.

materials will decrease.

labor will increase.

Question 44
Which one of the following costs would not be inventoriable?

Factory insurance costs

Period costs
Indirect materials
Indirect labor costs

Question 45
Criba Company has the following data: direct labor $580,000, direct materials used
$421,000, total manufacturing overhead $206,000, and beginning work in process
$47,000.

Compute total manufacturing costs.

Total manufacturing costs

Compute total cost of work in process.

Total cost of work in

$
process.
Click if you would like to Show Work Open
for this question:
Show
Work

Question 46
Kwik Delivery Service reports the
following costs and expenses in
June 2013.
Indirect materials
$ 8,400
Depreciation on delivery
11,200
equipment
Dispatcher's salary
5,000
Property taxes on office
870
building
CEO's salary
12,000
Gas and oil for delivery
3,200
trucks
Driver's salaries
14,000
Advertising
5,100
Delivery equipment
300
repairs
Office supplies
650
Office utilities
1,490
Repairs on office
180
equipment

Determine the total amount of delivery service (product) costs.

Product costs

Determine the total amount of period costs.

Period
$
costs
Click if you would like to Show
Work for this question:

Question 47
Glavine Corporation incurred the following
costs while manufacturing its product.
Materials used in product
Depreciation on plant
Property taxes on store
Labor costs of assembly-line
workers
Factory supplies used
Advertising expense
Property taxes on plant
Delivery expense
Sales commissions
Salaries paid to sales clerks

$120,000
60,000
7,500
110,000
23,000
45,000
19,000
21,000
35,000
50,000

Work-in-process inventory was $22,000 at

January 1 and $15,500 at December 31.
Finished goods inventory was $65,000 at
January 1 and $50,600 at December 31.

Compute cost of goods manufactured.

Cost of goods manufactured

Compute cost of goods sold.

Cost of goods sold $

Open
Show
Work

Click if you would like to Show Work for this question: Open Show Work

Question 48
The following information is available for Elliot Company.
January 1, 2013
2013
December 31, 2013
Raw materials inventory
$26,000
$30,000
Work in process inventory
13,500
22,200
Finished goods inventory
30,000
21,000
Materials purchased
$170,000
Direct labor
220,000
Manufacturing overhead
180,000
Sales
800,000

Compute cost of goods manufactured.

Cost of goods manufactured

Prepare an income statement through gross profit.

Elliot Company
Income Statement
December 31, 2013
$
$

$
Click if you would like to Show Work for this question: Open Show Work

Question 49
The two basic types of cost accounting systems are

job order and job accumulation systems.

job order and process cost systems.
job order and batch systems.
process cost and batch systems.
Click if you would like to Show Work for this question: Open Show Work

Question 50
A process cost system would most likely be used by a company that makes

college graduation announcements.

breakfast cereal.
motion pictures.
repairs to automobiles.

Question 51
Which of the following would be accounted for using a job order cost system?

The production of automobiles.

The refining of petroleum.
The construction of a new campus building.
The production of personal computers.

Question 52
Process costing is used when

production is aimed at filling a specific customer order.

dissimilar products are involved.
the production process is continuous.
costs are to be assigned to specific jobs

Question 53
The flow of costs in a job order cost system

generally follows a LIFO cost flow assumption.

involves accumulating manufacturing costs incurred and assigning the accumulated
costs to work done.
cannot be measured until all jobs are complete.
measures product costs for a set time period.

Question 54
Raab Mfg. provided the following information from its accounting records for 2014:
Expected production

32,000 labor hours

Actual production

30,000 labor hours

Budgeted overhead

$976,000

Actual overhead

$928,000

How much is the overhead application rate if Raab bases the rate on direct labor hours?

$30.93 per hour

$29.00 per hour

$30.50 per hour

$32.53 per hour

Question 55
FreeWater Company provided the following information from its accounting records for
2014:
Expected production

50,000 labor hours

Actual production

45,000 labor hours

Budgeted overhead

$1,257,500

Actual overhead

$1,449,900

How much is the overhead application rate if Freewater Company bases it on direct labor
hours?

$29.00 per hour

$27.94 per hour
$32.22 per hour

$25.15 per hour

Click if you would like to Show Work for this question: Open Show Work

Question 56
Manufacturing overhead is applied to each job

only if the overhead costs can be directly traced to that job.

by means of a predetermined overhead rate.
at the time when the overhead cost is incurred.
at the end of the year when actual costs are known.
Click if you would like to Show Work for this question: Open Show Work

Question 57
The predetermined overhead rate is

not calculated until actual overhead costs are incurred.

determined on a moving average basis throughout the year.
determined at the beginning of the year.
determined at the end of the current year.

Click if you would like to Show Work for this question: Open Show Work

Question 58
Colby Company estimates that annual manufacturing overhead costs will be $600,000.
Estimated annual operating activity bases are: direct labor cost $460,000, direct labor
hours 40,000 and machine hours 80,000. The actual manufacturing overhead cost for the
year was $601,000 and the actual direct labor cost for the year was $456,000. Actual
direct labor hours totaled 40,200 and machine hours totaled 79,000. Colby applies
overhead based on direct labor hours.
Compute the predetermined overhead rate and determine the amount of manufacturing
overhead applied. Determine if overhead is over- or underapplied and the amount.
Overhead rate

Manufacturing overhead

$
Click if you would like to Show Work for this
question:

per direct labor

hour

Open Show Work

Question 59
The manufacturing operations of Bryant, Inc. had the following balances for the month of
January:
Inventories
January 1 January 31
Raw materials
$12,000
$13,000
Work in process
21,000
$23,000
Finished goods
14,000
$16,000
Bryant transferred $270,000 of completed goods out of work in process during January.

Compute the cost of goods sold.

Cost of goods sold

$
Click if you would like to Show Work for this question: Open Show Work

Question 60
Finn Manufacturing Company uses a job order cost accounting system and keeps
perpetual inventory records.
June 1 Purchased raw materials for $20,000 on account.
8 Raw materials requisitioned by production:
Direct
$8,000
materials
Indirect
1,000
materials
15 Paid factory utilities, $2,100 and repairs for factory equipment, $8,000.
25 Incurred $96,000 of factory labor.
Time tickets indicated the
25
following:
(6,000
hrs
Direct
$12 =
$72,000
Labor
per
hr)
(3,000
Indirect hrs
=
24,000
Labor
$8 per
hr)
$96,000
Applied manufacturing overhead to production based on a predetermined
overhead rate of $7 per direct labor hour worked.
Goods costing $18,000 were completed in the factory and were
28
transferred to finished goods.
30 Goods costing $15,000 were sold for $20,000 on account.
25

Prepare journal entries to record the above transactions during the month of June.
(Credit account titles are automatically indented when the amount is entered. Do
not indent manually.)

Date Account Titles and Explanation

June
1
(Purchase of raw materials on
account)
8

(To assign materials to jobs and

overhead)
15
(To record payment of factory
utilities and repairs)
25
(To record factory labor costs)
25

(To assign factory labor to jobs and

overhead)
25
(To apply overhead to jobs)
28
(To record completion of production)
30

Debit

Credit

(To record
sales of
finished
goods and its
cost)
Click if you would
like to Show Work
for this question:

Open
Show
Work

Show List of Accounts

Question Attempts: 0 of 1 used

Save
Submit
for
Answer
later