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Title : ACCOUNTING 2101
MULTIPLE CHOICE QUIZ
Accounting 2101 1. A building costing $67,000 was sold at a loss of $8000. On the date of the sale, the building had accumulated depreciation of $32,000. On the statement of cash flows, what amount should be reported as an investing activity from sale of the building? a. $27,000 b. $24,000 c. $43,000 d. $59,000 2. The direct method for preparation of the operating activities section of the statement of cash flows: a. Is required by the FASB b. Separately lists each major item of operating cash receipts and cash payments c. Reports a different amount of cash flows from operations than if the indirect method is used. d. Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement. 3. Determine the cash paid to suppliers for purchase of inventory as would be reported in the operating activities section of the statement of cash flows if the cost of goods sold for the year is $209,000 and merchandise inventory increased by $86,000 and accounts payable decreased by $23,000. a. $100,000 b. $318,000 c. $146,000 d. $272,000 4. Information from the comparative Balance Sheets of XYZ Company is shown below. The Net Income of XYZ Company for 2009 was $220,000. The only items affecting Retained Earnings were Net Income and Dividends paid. Determine the cash flows from Financing activities for XYZ Company for 2009. Common Stock $5 par $545,000 $475,000 Paid-in Capital in excess of par $685,000 $555,000 Retained Earnings $315,500 $157,500 a.Net Cash used by Financing Activities $8,000 b.Net Cash provided by Financing Activities $138,000 c.Net Cash provided by Financing Activities $8,000 d.Net Cash used by Financing Activities $88,000 5. Which of the following transactions would affect cash flows in the current year? a. Payment of dividends declared in a previous year. b. A write off of an uncollectible account. c. Issuance of stock dividend. d. Recognition of depreciation expense 6. The following information is available from A Corporation's accounting records for the year ended December 31, 2008: Cash paid to repay the principal on a Note payable $15,000 Cash paid for interest on the above Note payable $2,000 Cash received from customers $400,000 Dividends received from investments in equity securities $8,000 Cash paid for purchase of supplies$350,000 Cash received from sale of equipment used in operations $60,000 Income taxes paid $48,000 Cash dividends paid to shareholders $30,000 If the Cash Flow Statement is prepared using the Direct method, the net cash flows (used) or provided by operating activities for the Year ended December 31, 2008 would be: a.$8,000 b.$23,000 c.$60,000 d.($15,000) 7. For the current year A Corporation had a beginning and ending inventory balance of $56,000 and $32,000 respectively. A corporation makes all its inventory purchases on account and has a beginning and ending balance in its Accounts Payable account of $273,000 and $154,000 respectively. The Cost of Goods Sold during the period was $189,000 If A corporation uses the direct method of reporting cash flows from operating activities, determine the cash payments for inventory for the period. a. $284,000 b. $46,000 c. $214,000 d. $332,000 8. The Unearned Rent account had a balance of $18,000 at the beginning of the period and a balance of $36,000 at the end of the period. If the rent earned during the period was $5,000, what was the amount of cash received toward advance rent? a. $13,000 b. $5,000 c. $49,000 d. $23,000 9. Mega Sales sells some store fixtures acquired a few years back. The acquisition cost of the fixtures is $12,500, the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold at a gain of $250. This event would be recorded in the Investing section of the statement of cash flows as an: a. inflow of $3,000 b. inflow of $250 c. outflow of $12,500 d. inflow of $2,750 10. The Income Statement of a Company showed Revenues Earned from Consulting Fees totaling $180,000 during the current year. The comparative balance sheet indicates Unearned Consulting Fees of $52,500 at the beginning of the year and $45,000 at the end of the year respectively. If the Direct Method is used to prepare the statement of Cash Flows, The amount of Cash inflow from Consulting Fees that would be reported in the operating activities section of the statement of cash flows would be? a. $172,500 b. $187,500 c. $180,000 d. $7,500 11. The current period statement of cash flows includes the following: Cash balance at the beginning of the period $410,000 Cash provided by operating activities $185,000 Cash used in investing activities $43,000 Cash used in financing activities $97,000 The cash balance at the end of the period is: a. $85,000 b. $455,000 c. $735,000 d. $45,000 12. The following selected account balances appeared on the financial statements of the Franklin Company: Accounts Receivable, Jan. 1 $13,000 Accounts Receivable, Dec. 31 $9,000 Accounts Payable, Jan 1 $4,000 Accounts payable Dec. 31 $7,000 Merchandise Inventory, Jan 1 $10,000 Merchandise Inventory, Dec 31 $15,000 Sales $56,000 Cost of Goods Sold $31,000 The Franklin Company uses the direct method to calculate net cash flow from operating activities. Cash paid to suppliers is: a. $39,000 b. $33,000 c. $29,000 d. $23,000 13. A Company sold equipment for $50,000 cash, purchased a building for $120,000 by signing a note payable for $30,000, and paying cash for the balance, sold investments for $45,000 cash, and repaid a note payable for $15,000 and paid $1,300 of interest on the note. The net cash flow provided or (used) by investing activities for the year was: a. ($10,000) b. ($25,000) c. ($40,000) d. $5,000 14. A business uses the direct method of reporting cash flows from operating activities. The cost of merchandise sold during the year was $75,000 and merchandise inventories were $18,500 and $15,500 at the beginning and the end of the year, respectively. Accounts payable were $9,000 and $7,500 at the beginning and end of the year, respectively. given these facts, determine the cash payments for inventory during the period. a. $70,500 b. $76,500 c. $79,500 d. $73,500 15. A Company had $3 par common stock with a total par value of $60,000, before its recent 3-for-1 stock split. The market price of the stock was $30 per share before the split. Which of the following is true as a result of the split? a.The balance in the common stock account increased to $180,000. b.The market price of the stock would approximate $90 after the stock split. c.The par value of the stock decreased to $1 per share. d.There were 20,000 shares of common stock issued after the split. 16. A company's stockholder's equity section consisted of 50,000 shares of 4%,$50 par cumulative preferred stock outstanding and 150,000 shares of $1 par common stock outstanding. The company has declared and paid dividends as follows: 2006: $35,000 2007: $0 2008: $75,000 2009:$300,000. Determine the amount of dividend paid to Common Stockholders in 2009. a.$0 b.$10,000 c.$175,000 d.$200,000 17. A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 30% stock dividend on a date when the market price was $10 a share. The effect of the declaration and issuance of the stock dividend is to: a.decrease retained earnings, increase common stock, and no change in paid in capital in excess of par-common b. increase retained earnings, decrease common stock, and increase paid-in capital in excess of par-common c. decrease retained earnings, increase common stock, and increase paid-in capital in excess of par-common d. increase retained earnings, decrease common stock, and decrease paid-in capital in excess of par-common 18. The stockholders' equity section of the December 31, 2009, balance sheet for Interiors, Inc. before its recent stock dividend was as follows: Common Stock, $5 par, 100,000 shares issued and outstanding $500,000 Paid-in Capital in Excess of Par-CommonStock $100,000 Retained Earnings $725,000 Total Stockholders' Equity $1,325,000 Interiors declared a 10% stock dividend when the market price per share was $8.00. After the stock dividend, the components of Interior's stockholders' equity section were: Common Stock Paid-in Capital Retained Earnings a.$580,000 $100,000 $645,000 b.$550,000 $100,000 $805,000 c.$550,000 $130,000 $645,000 d.$580,000 $130,000 $805,000 19. The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a: a.Preemptive right b.Cumulative right c.Voting right d.Financial leverage 20. A Corporation had the following stock as part of its stockholders equity: -7%, $100 par Cumulative Preferred Stock, 45,000 shares authorized, 12,000 shares issued, 10,000 shares outstanding.- $8 par, Common Stock, 250,000 shares authorized, 140,000 shares issued, 110,000 shares outstanding. No dividends were declared in the past two years. In the current year, $300,000 is declared as dividend. The Dividend received by common shareholders will be: a.$90,000 b.$0 c.$216,000 d.$48,000 21. The Par Value of a share of stock refers to the: a.market value of the stock on the date financial statements are prepared. b.the maximum selling price of a share of stock. c.value assigned to a share of stock in the corporate charter. d.issue price of the stock 22. What is the effect of a 2 for 1 stock split, if a corporation has $5 par Common Stock, 200,000 shares authorized, 100,000 shares issued and 80,000 shares outstanding and the current market price of the common stock is $20? a.The total par value of the shares increases to $2,000,000. b.Retained Earnings decreases by $400,000. c.Paid in Capital increases by $ 1,000,000. d.A shareholder who owned 6,000 shares of common stock in the corporation will now have 12,000 shares with an approximate market price of $10 each 23. On March 1, 2007, A Company purchased 800 shares of its own $2 par common stock for $8,000. On April 30, 2007, it reissued 400 of these shares for $4,800 and on June 15, 2007, reissued 300 more shares for $2,100. If there were no prior treasury stock transactions, the journal entry to record the reissue of the 300 shares will include a: a.credit to Treasury Stock for $2,100 b.debit to Retained Earnings for $900 c.debit to Paid in Capital, Treasury Stock for $800 d.credit to Common Stock for $600 24. XYZ Company had 400,000 authorized shares of $8 par common stock. It issued 120,000 of these shares at $14 per share. There were no shares held in treasury. Later, when the market price of the stock was $22 a share, XYZ declared a 6% stock dividend. Compute the amount transferred from the Retained Earnings account to Contributed Capital accounts as a result of the stock dividend. a.$158,400 b.$100,800 c.$57,600 d.$528000