Question 1

Cash paid to suppliers can be derived by adjusting costs of goods sold for changes in inventory.

Accepted Answer

A) True 
 B)False  False

Question 2

The Additional Paid-In Capital account is reported on the balance sheet at the

Accepted Answer

A)  current market value of the stock minus par value.
B)  historical sales price of the stock minus the par value.
C)  net realizable value of the stock minus par value.
D)  discounted present value of the future dividends minus par value. B

Question 3

The elapsed time beginning with the initiation of production and ending with the cash collection of the receivables from the sale of the product refers to the company's production cycle.

Accepted Answer

A) True 
 B)False  False

Question 4

The Retained Earnings account is comprised of the cumulative earnings less dividends since the inception of the corporation.

Accepted Answer

A) True 
 B)False

Question 5

Below are the condensed balance sheet and income statement for the Beltway Company,Inc.Assuming there were no disposals of fixed assets during the year 2014,provide a statement of cash flows using the indirect method for the year ended December 31,2014.
Condensed balance sheet December 31,2014

Accepted Answer

The answer of Below are the condensed balance sheet and...

Question 6

Cash collected from customers can be derived by appropriately adjusting revenue for changes in accounts receivable.

Accepted Answer

A) True 
 B)False

Question 7

The balance sheet provides critical information for understanding an entity's profitability.

Accepted Answer

A) True 
 B)False

Question 8

Operating and financial flexibility refers to a company's ability to

Accepted Answer

A)  adjust to unexpected downturns in the economic environment in which it operates or to take advantage of profitable investment opportunities as they arise.
B)  generate sufficient cash flows to maintain its productive capacity and still meet interest and principal payments on long-term debt.
C)  readily convert assets to cash relative to how soon liabilities will have to paid in cash.
D)  increase sales.

Question 9

Net property,plant and equipment are reported on the balance sheet at

Accepted Answer

A)  current market value.
B)  historical cost.
C)  historical cost minus accumulated depreciation.
D)  net realizable value.

Question 10

The sale of fixed assets represents an investing activity.

Accepted Answer

A) True 
 B)False

Question 11

Paying dividends to stockholders represents a financing activity.

Accepted Answer

A) True 
 B)False

Question 12

The cash flow statement explains why a firm's cash position has changed between successive balance sheet dates while simultaneously explaining the changes that have taken place in the firm's noncash asset,liability,and stockholders' equity accounts over the same period.

Accepted Answer

A) True 
 B)False

Question 13

Common-size balance sheets may be used for all of the following except

Accepted Answer

A)  gaining insights into the nature of a company's operations.
B)  analyzing a company's asset and financial structure.
C)  determining how management assesses the risks a company faces.
D)  learning about the underlying economics of an industry.

Question 14

On balance sheets prepared in accordance with U.S.GAAP items are generally disclosed in ascending order of liquidity.

Accepted Answer

A) True 
 B)False

Question 15

The value of Accounts Receivable is adjusted on the balance sheet by the contra-asset account

Accepted Answer

A)  Allowance for Amortization.
B)  Allowance for Doubtful Accounts.
C)  Bad Debt Expense.
D)  Doubtful Accounts Expense.

Question 16

Investing activities include the cash effects of

Accepted Answer

A)  producing and delivering goods and services.
B)  purchasing and disposing of fixed assets used in production of revenue.
C)  borrowing and repaying loans used to purchase fixed assets.
D)  selling stocks and bonds to raise capital to purchase fixed assets.

Question 17

Subsequent events are required to be disclosed if they are material and likely to influence investors' appraisal of the risk and return prospects of the reporting entity.

Accepted Answer

A) True 
 B)False

Question 18

The Retained Earnings account is comprised of

Accepted Answer

A)  cash retained in the business.
B)  cash reinvested in the business by shareholders.
C)  the cumulative earnings less dividends since the inception of the corporation.
D)  the earnings of the corporation for the current year.

Question 19

A firm with most of its assets invested in manufacturing facilities has considerable operating flexibility.

Accepted Answer

A) True 
 B)False

Question 20

Retained earnings are reported on the balance sheet at

Accepted Answer

A)  historical cost.
B)  current market value.
C)  net realizable value.
D)  a mixture of different measurement bases.

Exam 4: Structure of the Balance Sheet and Statement of Cash Flows

Cash paid to suppliers can be derived by adjusting costs of goods sold for changes in inventory.

The Additional Paid-In Capital account is reported on the balance sheet at the

The elapsed time beginning with the initiation of production and ending with the cash collection of the receivables from the sale of the product refers to the company's production cycle.

The Retained Earnings account is comprised of the cumulative earnings less dividends since the inception of the corporation.

Below are the condensed balance sheet and income statement for the Beltway Company,Inc.Assuming there were no disposals of fixed assets during the year 2014,provide a statement of cash flows using the indirect method for the year ended December 31,2014. Condensed balance sheet December 31,2014

Cash collected from customers can be derived by appropriately adjusting revenue for changes in accounts receivable.

The balance sheet provides critical information for understanding an entity's profitability.

Operating and financial flexibility refers to a company's ability to

Net property,plant and equipment are reported on the balance sheet at

The sale of fixed assets represents an investing activity.

Paying dividends to stockholders represents a financing activity.

The cash flow statement explains why a firm's cash position has changed between successive balance sheet dates while simultaneously explaining the changes that have taken place in the firm's noncash asset,liability,and stockholders' equity accounts over the same period.

Common-size balance sheets may be used for all of the following except

On balance sheets prepared in accordance with U.S.GAAP items are generally disclosed in ascending order of liquidity.

The value of Accounts Receivable is adjusted on the balance sheet by the contra-asset account

Investing activities include the cash effects of

Subsequent events are required to be disclosed if they are material and likely to influence investors' appraisal of the risk and return prospects of the reporting entity.

The Retained Earnings account is comprised of

A firm with most of its assets invested in manufacturing facilities has considerable operating flexibility.

Retained earnings are reported on the balance sheet at