Question 1

The statement of cash flows reports only the cash effects of operations during a period and financing transactions.

Accepted Answer

A) True 
 B)False

Question 2

Provide clear, concise answers for the following.
1. What are assets?
2. What are liabilities?
3. What is equity?
4. What are current liabilities?
5. Explain what working capital is and how it is computed.
6. What are intangible assets?
7. What are current assets?

Accepted Answer

1. Assets are probable future economic b

Question 3

Olmsted Company has the following items: common stock, $750,000; treasury stock, $105,000; deferred income taxes, $125,000 and retained earnings, $454,000. What total amount should Olmsted Company report as stockholders' equity?

Accepted Answer

A)  $974,000. 
B)  $1,099,000. 
C)  $1,224,000. 
D)  $1,349,000. 
A)  $974,000. 
B)  $1,099,000. 
C)  $1,224,000. 
D)  $1,349,000.

Question 4

Financial statement readers often assess liquidity by using the current cash debt coverage.

Accepted Answer

A) True 
 B)False

Question 5

For Randolph Company, the following information is available:   In Randolph's balance sheet, intangible assets should be reported at

Accepted Answer

A)  $190,000. 
B)  $220,000. 
C)  $750,000. 
D)  $780,000. 
A)  $190,000. 
B)  $220,000. 
C)  $750,000. 
D)  $780,000.

Question 6

The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the

Accepted Answer

A)  retained earnings statement. 
B)  income statement. 
C)  statement of cash flows. 
D)  statement of financial position. 
A)  retained earnings statement. 
B)  income statement. 
C)  statement of cash flows. 
D)  statement of financial position.

Question 7

Use the following information for questions 98 through 100.
The following trial balance of Reese Corp. at December 31, 2014 has been properly adjusted except for the income tax expense adjustment.   Other financial data for the year ended December 31, 2014:
$\bullet$Included in accounts receivable is $1,200,000 due from a customer and payable in quarterly installments of $150,000. The last payment is due December 29, 2016.
$\bullet$The balance in the Deferred Income Tax Liability account pertains to a temporary difference that arose in a prior year, of which $20,000 is classified as a current liability.
$\bullet$During the year, estimated tax payments of $525,000 were charged to income tax expense. The current and future tax rate on all types of income is 30%.
In Reese's December 31, 2014 balance sheet,
-The current liabilities total is

Accepted Answer

A)  $1,850,000. 
B)  $1,915,000. 
C)  $2,375,000. 
D)  $2,440,000. 
A)  $1,850,000. 
B)  $1,915,000. 
C)  $2,375,000. 
D)  $2,440,000.

Question 8

Which of the following statements about IFRS and U.S. GAAP accounting and reporting requirements for the balance sheet is not correct?

Accepted Answer

A)  The presentation formats required by IFRS and U.S. GAAP for the balance sheet are similar. 
B)  One difference between the reporting requirements under IFRS and those of U.S. GAAP balance sheet is that an IFRS balance sheet may list long-term assets first. 
C)  Both IFRS and U.S. GAAP require that property, plant and equipment be reported at historical cost on the balance sheet. 
D)  Both IFRS and U.S. GAAP require that comparative information be reported. 
A)  The presentation formats required by IFRS and U.S. GAAP for the balance sheet are similar. 
B)  One difference between the reporting requirements under IFRS and those of U.S. GAAP balance sheet is that an IFRS balance sheet may list long-term assets first. 
C)  Both IFRS and U.S. GAAP require that property, plant and equipment be reported at historical cost on the balance sheet. 
D)  Both IFRS and U.S. GAAP require that comparative information be reported.

Question 9

Companies frequently describe the terms of all long-term liability agreements in notes to the financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Use the following information for questions 98 through 100.
The following trial balance of Reese Corp. at December 31, 2014 has been properly adjusted except for the income tax expense adjustment.   Other financial data for the year ended December 31, 2014:
$\bullet$Included in accounts receivable is $1,200,000 due from a customer and payable in quarterly installments of $150,000. The last payment is due December 29, 2016.
$\bullet$The balance in the Deferred Income Tax Liability account pertains to a temporary difference that arose in a prior year, of which $20,000 is classified as a current liability.
$\bullet$During the year, estimated tax payments of $525,000 were charged to income tax expense. The current and future tax rate on all types of income is 30%.
In Reese's December 31, 2014 balance sheet,
-The current assets total is

Accepted Answer

A)  $6,080,000. 
B)  $5,555,000. 
C)  $5,405,000. 
D)  $4,955,000. 
A)  $6,080,000. 
B)  $5,555,000. 
C)  $5,405,000. 
D)  $4,955,000.

Question 11

In preparing a statement of cash flows, cash flows from operating activities

Accepted Answer

A)  are always equal to accrual accounting income. 
B)  are calculated as the difference between revenues and expenses. 
C)  can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash. 
D)  can be calculated by appropriately adding to or deducting from net income those items in the income statement that do affect cash. 
A)  are always equal to accrual accounting income. 
B)  are calculated as the difference between revenues and expenses. 
C)  can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash. 
D)  can be calculated by appropriately adding to or deducting from net income those items in the income statement that do affect cash.

Question 12

Which of the following events will appear in the cash flows from financing activities section of the statement of cash flows?

Accepted Answer

A)  Cash purchases of equipment. 
B)  Cash purchases of bonds issued by another company. 
C)  Cash received as repayment for funds loaned. 
D)  Cash purchase of treasury stock. 
A)  Cash purchases of equipment. 
B)  Cash purchases of bonds issued by another company. 
C)  Cash received as repayment for funds loaned. 
D)  Cash purchase of treasury stock.

Question 13

One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

Accepted Answer

A)  failure to reflect current value information. 
B)  the extensive use of separate classifications. 
C)  an extensive use of estimates. 
D)  failure to include items of financial value that cannot be recorded objectively. 
A)  failure to reflect current value information. 
B)  the extensive use of separate classifications. 
C)  an extensive use of estimates. 
D)  failure to include items of financial value that cannot be recorded objectively.

Question 14

An example of an item which is not an element of working capital is

Accepted Answer

A)  accrued interest on notes receivable. 
B)  goodwill. 
C)  goods in process. 
D)  temporary investments. 
A)  accrued interest on notes receivable. 
B)  goodwill. 
C)  goods in process. 
D)  temporary investments.

Question 15

Free cash flow is calculated as net cash provided by operating activities less

Accepted Answer

A)  capital expenditures. 
B)  dividends. 
C)  capital expenditures and dividends. 
D)  capital expenditures and depreciation. 
A)  capital expenditures. 
B)  dividends. 
C)  capital expenditures and dividends. 
D)  capital expenditures and depreciation.

Question 16

A limitation of the balance sheet that is not also a limitation of the income statement is

Accepted Answer

A)  the use of judgments and estimates 
B)  omitted items 
C)  the numbers are affected by the accounting methods employed 
D)  valuation of items at historical cost 
A)  the use of judgments and estimates 
B)  omitted items 
C)  the numbers are affected by the accounting methods employed 
D)  valuation of items at historical cost

Question 17

For Grimmett Company, the following information is available:   In Grimmett's balance sheet, intangible assets should be reported at

Accepted Answer

A)  $245,000. 
B)  $275,000. 
C)  $845,000. 
D)  $875,000. 
A)  $245,000. 
B)  $275,000. 
C)  $845,000. 
D)  $875,000.

Question 18

Presented below are data for Bandkok Corp.   Stockholders' Equity at January 1, 2015 is

Accepted Answer

A)  $3,832. 
B)  $2,660. 
C)  $2,860. 
D)  $3,940. 
A)  $3,832. 
B)  $2,660. 
C)  $2,860. 
D)  $3,940.

Question 19

Houghton Company has the following items: common stock, $800,000; treasury stock, $105,000; deferred income taxes, $125,000 and retained earnings, $390,000. What total amount should Houghton Company report as stockholders' equity?

Accepted Answer

A)  $960,000. 
B)  $1,085,000. 
C)  $1,210,000. 
D)  $1,295,000. 
A)  $960,000. 
B)  $1,085,000. 
C)  $1,210,000. 
D)  $1,295,000.

Question 20

Balance sheet format.
The following balance sheet has been submitted to you by an inexperienced bookkeeper. List your suggestions for improvements in the format of the balance sheet. Consider both terminology deficiencies as well as classification inaccuracies.   Note 1. The reserve for contingencies has been created by charges to earned surplus and has been established to provide a cushion for future uncertainties.
Note 2. The inventory account includes only items physically present at the main plant and warehouse. Items located at the company's branch sales office amounting to $40,000 are excluded since the company has consistently followed this procedure for many years.

Accepted Answer

1. The heading should be as of a specifi

Exam 5: Balance Sheet and Statement of Cash Flows

The statement of cash flows reports only the cash effects of operations during a period and financing transactions.

Provide clear, concise answers for the following. 1. What are assets? 2. What are liabilities? 3. What is equity? 4. What are current liabilities? 5. Explain what working capital is and how it is computed. 6. What are intangible assets? 7. What are current assets?

Olmsted Company has the following items: common stock, $750,000; treasury stock, $105,000; deferred income taxes, $125,000 and retained earnings, $454,000. What total amount should Olmsted Company report as stockholders' equity?

Financial statement readers often assess liquidity by using the current cash debt coverage.

For Randolph Company, the following information is available: In Randolph's balance sheet, intangible assets should be reported at

The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the

Which of the following statements about IFRS and U.S. GAAP accounting and reporting requirements for the balance sheet is not correct?

Companies frequently describe the terms of all long-term liability agreements in notes to the financial statements.

In preparing a statement of cash flows, cash flows from operating activities

Which of the following events will appear in the cash flows from financing activities section of the statement of cash flows?

One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

An example of an item which is not an element of working capital is

Free cash flow is calculated as net cash provided by operating activities less

A limitation of the balance sheet that is not also a limitation of the income statement is

For Grimmett Company, the following information is available: In Grimmett's balance sheet, intangible assets should be reported at

Presented below are data for Bandkok Corp. Stockholders' Equity at January 1, 2015 is

Houghton Company has the following items: common stock, $800,000; treasury stock, $105,000; deferred income taxes, $125,000 and retained earnings, $390,000. What total amount should Houghton Company report as stockholders' equity?

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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