Question 1

The following are accounting items taken from the records of Paul Company for 2015:  Required:
Prepare the net cash flow from operating activities section of Paul Company's 2015 statement of cash flows using the indirect method.

Accepted Answer

The answer of The following are accounting items taken from...

Question 2

Below is a list of account balances for Fraggle Company:  What is Fraggle Company's net income, assuming a 30% tax rate?

Accepted Answer

A)  $163,380 
B)  $233,400 
C)  $242,500 
D)  None of these answer choices is correct.

Question 3

Which of the following sections will not appear in the statement of cash flows?

Accepted Answer

A)  operating activities 
B)  investing activities 
C)  financing activities 
D)  selling activities

Question 4

For income reporting purposes, items can appear in any of the following components of the income statement, the statement of retained earnings, and related schedules and footnotes:
a. income from continuing operations or supporting schedules
b. results from discontinued operations
c. statement of comprehensive income
d. statement of retained earnings
e. disclosure
Several items of accounting information are listed below:
____ 1. Selling expenses
____ 2. Loss on sale of plant assets
____ 3. Unrealized losses due to market value changes in available-for-sale equity security investments
____ 4. Cash dividends declared on common stock
____ 5. Unrealized gains due to foreign currency translation adjustments
____ 6. Interest revenue
____ 7. Loss on sale of a major component of the business
____ 8. How a company defines cash and cash equivalents
Required:
By placing the letters a-f) in the spaces provided above, identify where the information would be most appropriately reported. If the information would not appear in any of the above components, place an X) in the space.

Accepted Answer

The answer of For income reporting purposes, items can appear...

Question 5

Under GAAP for segment reporting, a company must report

Accepted Answer

A)  a measure of profit or loss for each reportable segment. 
B)  factors used to identify its reportable segments. 
C)  the types of products and services from which each reporting segment derives its revenues. 
D)  All of these must be reported.

Question 6

A company that discontinues and disposes of an operation component) should include the gain or loss on sale in the income statement as an)

Accepted Answer

A)  prior-period adjustment. 
B)  a component of other comprehensive income. 
C)  an amount that is reported after income from continuing operations but before net income. 
D)  bulk sale of fixed assets included in income from continuing operations.

Question 7

All of the following are included in the computation of cost of goods sold except

Accepted Answer

A)  freight-out. 
B)  purchase returns and allowances. 
C)  beginning finished goods inventory. 
D)  freight-in.

Question 8

Which is the most commonly computed coverage ratio?

Accepted Answer

A)  debt ratio 
B)  interest coverage ratio 
C)  return on common equity 
D)  net profit margin

Question 9

Lester Company reported the following information for the year ended December 31, 2015: Net income $1,000,000
Preferred dividends declared and paid 160,000
Common dividends declared and paid 90,000
Average common shares outstanding 100,000 Ending market price per share 35
Net sales 3,100,000
What was Lester's earnings per share for 2015?

Accepted Answer

A)  $8.40 
B)  $10.00 
C)  $7.50 
D)  $31.00

Question 10

An operating segment is significant and reportable if it satisfies at least one of three tests. Which of the following is not one of those three tests?

Accepted Answer

A)  profit test 
B)  revenue test 
C)  asset test 
D)  ratio test

Question 11

Depreciation is an example of which expense recognition principle?

Accepted Answer

A)  association of cause and effect 
B)  systematic and rational allocation 
C)  cost recovery 
D)  immediate recognition

Question 12

Which of the following statements regarding a statement of cash flows is false?

Accepted Answer

A)  The most common method used by most companies for reporting operating activities is the direct method. 
B)  Operating activities include all transactions and other events related to the earnings process. 
C)  It requires a reconciliation of beginning and ending cash balances. 
D)  It helps users assess a company's need for external financing.

Question 13

The following information relates to Zhulu Corporation in thousands):  Required:
Compute the amount of dividends paid during the year, using the financial capital maintenance approach.

Accepted Answer

The answer of The following information relates to Zhulu Corporation...

Question 14

A company is not required to follow a specific format in making the disclosures for its segments but the FASB encourages the most useful format for its specific circumstances.

Accepted Answer

A) True 
 B)False

Question 15

Together with the cash flow statement, the income statement enables the investors to determine the rate of return the company is generating relative to the amount of capital invested.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a component of the income statement?

Accepted Answer

A)  unusual gains and losses 
B)  net income 
C)  income taxes 
D)  accumulated other comprehensive income

Question 17

Which of the following would appear after the heading of operating income?

Accepted Answer

A)  cost of goods sold 
B)  other operating income items gains or losses) 
C)  operating expenses 
D)  unusual gains or losses

Question 18

Exhibit 5-1
The following condensed income statement of Ranger Corporation is presented for the two years ended December 31, 2016 and 2015:   On January 1, 2016, Ranger entered into an agreement to sell one of its separate operating divisions for $2,000,000. The sale resulted in a gain on disposition of $900,000 on November 12, 2016, and qualifies as a discontinued component. This division's contribution to Ranger's reported income before income taxes for each year was as follows:
  2016  $\quad $ $\quad $$700,000 loss
2015  $\quad $ $\quad $$400,000 loss
 Assume an income tax rate of 30%.
-Refer to Exhibit 5-1. In the preparation of a revised comparative income statement, Ranger should report income from continuing operations after income taxes for 2016 and 2015, respectively, amounting to

Accepted Answer

A)  $1,540,000 and $700,000. 
B)  $1,540,000 and $980,000. 
C)  $1,680,000 and $700,000. 
D)  $1,680,000 and $980,000.

Question 19

The gross profit of Larry Company for 2015 is $300,000, cost of goods manufactured is $400,000, the beginning inventories of goods in process and finished goods are $28,000 and $35,000, respectively, and the ending inventories of goods in process and finished goods are $50,000 and $70,000, respectively. The cost of goods sold of Larry Company for 2015 must have been

Accepted Answer

A)  $378,000. 
B)  $265,000. 
C)  $278,000. 
D)  $365,000.

Question 20

The subtotal, gross profit, will be disclosed on

Accepted Answer

A)  a multiple-step income statement. 
B)  both multiple-step and single-step income statements. 
C)  neither multiple-step nor single-step income statements. 
D)  a single-step income statement.

Exam 5: The Income Statement and the Statement of Cash Flows Time Value of Money Module

The following are accounting items taken from the records of Paul Company for 2015: Required: Prepare the net cash flow from operating activities section of Paul Company's 2015 statement of cash flows using the indirect method.

Below is a list of account balances for Fraggle Company: What is Fraggle Company's net income, assuming a 30% tax rate?