Exam 16: Basic Accounting Concepts, Techniques, and Conventions

Working capital = fair market value of current assets less the fair market value of current liabilities.

A _ _ is not considered a cash equivalent.

Gross profit is the difference between sales and cost of goods sold.

A company does not pay dividends on treasury stock.

Georgia Company's beginning and ending inventory amounts were $150,000 and $140,000, respectively. Cost of goods sold was $670,000. Georgia Company purchased of inventory.

Table 16- 1 12/31/20\times6 12/31/20\times5 Currentassets: Cash \ 24,800 \ 17,600 Accounts receivable 57,600 44,800 Table 16.2 Sales \9 16,800 Less: Cost of goods sold (391,200) Gross profit \5 25,600 Less operating expenses: Wage expense \2 39,200 Supply expense 20,000 Insurance expense 19,200 Depreciation expense 57,600 Amortization expense 12,000 Rent expense (381,600) Operatingincome \ 144,000 Interest expense (24,000) -Referring to Tables 16- 1 and 16- 2, the cash paid for interest by Silver Company in 20X6 was:

The cash paid to long- term creditors is included in the section of the statement of cash flows.

The balance sheet usually shows cash equivalents at cost or market price, whichever is higher.

Carson Company had net income of $21,850 for the current year. Depreciation \ 8,400 Interest expense \ 3,900 Provision for taxes \ 5,700 Increases (decreases) in selected accounts $\begin{array}{ll}\text { Accounts receivable } & \$ 1,800 \\\text { Accounts p ayable } & \$ 3,200 \\\text { Income tax payable } & \$(700) \\\text { Inventory } & \$(5,000)\end{array}$ Required: Compute the net cash provided by operating activities using the indirect method.

The account Unearned Revenue is found on the income statement of most United States' companies.

Long- lived assets that are not physical in nature

The time span during which a company spends cash to acquire goods and services that it uses to produce the organization's output, which in turn is sold to customers, who in turn pay for their purchases with cash

With respect to the relationship between depreciation and cash, which one of the following statements is incorrect?

Deferred taxes are only a liability.

An inventory method that recognizes the actual cost paid for each physical item sold

Bank deposits in checking accounts plus money on hand

Dividends paid are an addition to retained earnings.

All of the following are charges against income which do not require cash except:

Cash and all other assets that a company reasonably expects to convert to cash or sell or consume within one year or during the normal operating cycle, if longer than a year

The cash paid to purchase equipment is included in the section of a statement of cash flows.