Question 1

The IFRS definition of current liabilities differs from the definition of current liabilities under GAAP.

Accepted Answer

A) True 
 B)False

Question 2

The portion of long-term debt that matures during the coming year is classified as a current liability.

Accepted Answer

A) True 
 B)False

Question 3

List and explain three common cash flow measures based upon balance sheet information.

Accepted Answer

1. Liquidity is a measure of an asset's

Question 4

When preparing the operating activities section of the statement of cash flows under the indirect method, depreciation expense is subtracted from net income.

Accepted Answer

A) True 
 B)False

Question 5

When preparing the operating activities section of the statement of cash flows under the indirect method, losses on sales of equipment are omitted.

Accepted Answer

A) True 
 B)False

Question 6

Dividend payments to shareholders are classified as operating activities on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 7

Moore Corporation reported net income of $200,000 for the current year ended June 30. Accounts receivable had a beginning balance of $34,000 and an ending balance of $44,000. Accounts payable had a beginning balance of $29,000 and an ending balance of $41,000. Assuming that this is all of the relevant information, Moore's cash flows from operating activities are ________.

Accepted Answer

A)  $178,000 
B)  $202,000 
C)  $198,000 
D)  $222,000 
A)  $178,000 
B)  $202,000 
C)  $198,000 
D)  $222,000

Question 8

Presented below are selected accounts for San Marcos Corporation for December 31 of the current year.  
 What is total stockholders' equity for San Marcos Corporation?

Accepted Answer

A)  $770 
B)  $918 
C)  $1,353 
D)  $1,438 
A)  $770 
B)  $918 
C)  $1,353 
D)  $1,438

Question 9

The statement of cash flows summarizes a firm's cash inflows and outflows at a specific point in time.

Accepted Answer

A) True 
 B)False

Question 10

All of the following activities are classified as financing activities on a statement of cash flows except ________.

Accepted Answer

A)  distribution of dividends in the form of stock 
B)  issuance of serial bonds 
C)  payment of mortgage 
D)  sale of treasury stock 
A)  distribution of dividends in the form of stock 
B)  issuance of serial bonds 
C)  payment of mortgage 
D)  sale of treasury stock

Question 11

Presented below are selected accounts for San Marcos Corporation for December 31 of the current year.  
 What are long-term assets for San Marcos Corporation?

Accepted Answer

A)  $1,175 
B)  $1,640 
C)  $1,710 
D)  $1,945 
A)  $1,175 
B)  $1,640 
C)  $1,710 
D)  $1,945

Question 12

When using the direct method of reporting cash flows from operating activities, increases in accounts receivable are subtracted from revenues to arrive at cash receipts from customers.

Accepted Answer

A) True 
 B)False

Question 13

Which financial statement is the first to be prepared?

Accepted Answer

A)  balance sheet 
B)  statement of comprehensive income 
C)  statement of shareholders' equity 
D)  statement of cash flows 
A)  balance sheet 
B)  statement of comprehensive income 
C)  statement of shareholders' equity 
D)  statement of cash flows

Question 14

What are three limitations associated with the balance sheet?

Accepted Answer

1. Many balance sheet accounts are repor

Question 15

Matthews Company Presented below is selected financial information for Matthews Corporation for the most recent fiscal year ended December 31 ($ millions)
$$\begin{array} { | l | r | l | r | } 
\hline \text { Current assets: } & & \text { Current liabilities: } & \
 \hline \text { Cash and cash equivalents } & \$ 2,452 & \text { Accounts payable } & \$ 5,030 \
\hline \text { Short-term investment } & 1,416 & \text { Other current liabilities } & 2,727 \
\hline \text { Receivables, net } & 1,250 & \text { Total current liabilities } & 7,757 \
\hline \text { Merchandise inventories } & 5,144 & \text { Noncurrent liabilities } & 2,469 \
\hline \text { Other current assets } & 1,367 & \text { Shareholders' Equity } & 4,970 \
\hline \text { Total current assets } & 11,629 & \text { Total liabilities and shareholders' equity } & \$ 15,196 \
\hline \text { Noncurrent assets } & 3,567 & & \
\hline \text { Total assets } & \$ 15,196 & & \
\hline
\end{array}$$ $$\begin{array} { | l | r | } 
\hline \text { Revenues } & \$ 40,339 \
\hline \text { Costs and Expenses } & \underline{38,889} \
\hline \text { Operating Income } & 1,450 \
\hline \begin{array} { l } 
\text { Other income/expense (including interest expense of } \
\$ 90 )
\end{array} &\underline{(63)}\
\hline \text { Income before income tax } & 1,387 \
\hline \text { Income tax expense } &\underline{( 141 )} \
\hline \text { Net income } & \underline{ \$ 1,246 } \
\hline
\end{array}$$ $$\begin{array} { l } 
\text { Previous Year's Financial Data } \
\text { Total Assets } &\underline{\$14,013}\
\text { Shareholders' Equity }&\underline{3,989}
\end{array}$$ 
Working capital for Matthews Corporation is ________.

Accepted Answer

A)  $2,578 
B)  $4,970 
C)  $3,872 
D)  $7,439 
A)  $2,578 
B)  $4,970 
C)  $3,872 
D)  $7,439

Question 16

Valley Mills Enterprises Presented here are cash flows (in $ Millions) for Valley Mills Enterprises' most recent fiscal year.
$\begin{array}{lrr}
\underline{\text { Cash received from: }}\
  \text { Customers } &\$2,500\
 \text { Interest on investments } &300\
 \text { Sale of old equipment } &250\
 \text { Sale of company's capital stock } &800\
 \text {  Long-term debt proceeds} &1,700\
\end{array}$

$\begin{array}{lr}
\underline{\text { Cash paid for: }}\
\text { Interest on debt } & \$ 300 \
\text { Income tax } & 130 \
\text { Principal payments on debt } & 900 \
\text { Purchase of building } & 5,000 \
\text { Purchase of inventory } & 1,800 \
\text { Dividends on capital stock } & 400 \
\text { Operating expenses } & 825
\end{array}$ 
Net cash flows provided (used) by operating activities (direct method) are ________.

Accepted Answer

A)  ($255) 
B)  ($525) 
C)  ($755) 
D)  $570 
A)  ($255) 
B)  ($525) 
C)  ($755) 
D)  $570

Question 17

There is a direct relationship between a company's interest coverage ratio and degree of solvency.

Accepted Answer

A) True 
 B)False

Question 18

Under the direct method, calculating cash paid for merchandise includes ________.

Accepted Answer

A)  adding an increase in Accounts Payable 
B)  subtracting an increase in Accounts Payable 
C)  adding a decrease in Inventory 
D)  subtracting an increase in Inventory 
A)  adding an increase in Accounts Payable 
B)  subtracting an increase in Accounts Payable 
C)  adding a decrease in Inventory 
D)  subtracting an increase in Inventory

Question 19

Land held for resale is classified as property, plant, and equipment.

Accepted Answer

A) True 
 B)False

Question 20

Two components of return on equity are liquidity and solvency.

Accepted Answer

A) True 
 B)False

Exam 6: Statements of Financial Position and Cash Flows and the Annual Report

The IFRS definition of current liabilities differs from the definition of current liabilities under GAAP.

The portion of long-term debt that matures during the coming year is classified as a current liability.

List and explain three common cash flow measures based upon balance sheet information.

When preparing the operating activities section of the statement of cash flows under the indirect method, depreciation expense is subtracted from net income.

When preparing the operating activities section of the statement of cash flows under the indirect method, losses on sales of equipment are omitted.

Dividend payments to shareholders are classified as operating activities on the statement of cash flows.

Presented below are selected accounts for San Marcos Corporation for December 31 of the current year. What is total stockholders' equity for San Marcos Corporation?

The statement of cash flows summarizes a firm's cash inflows and outflows at a specific point in time.

All of the following activities are classified as financing activities on a statement of cash flows except ________.

Presented below are selected accounts for San Marcos Corporation for December 31 of the current year. What are long-term assets for San Marcos Corporation?

When using the direct method of reporting cash flows from operating activities, increases in accounts receivable are subtracted from revenues to arrive at cash receipts from customers.

Which financial statement is the first to be prepared?

What are three limitations associated with the balance sheet?

There is a direct relationship between a company's interest coverage ratio and degree of solvency.

Under the direct method, calculating cash paid for merchandise includes ________.

Land held for resale is classified as property, plant, and equipment.

Two components of return on equity are liquidity and solvency.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

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