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    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2

Use the following selected information from Wheeler, LLC to determine the 2017
and 2016 trend percentages for cost of goods sold using 2016 as the base.
 
                                                                2017                                                      2016       
Net sales              $                             284,200                                $             233,000                 
Cost of goods sold                            150,300                                                131,190                 
Operating expenses                        53,640                                                 51,640  
Net earnings                                       29,620                                                 21,420  
 
122.0% for 2017 and 100.0% for 2016.
35.7% for 2017 and 39.4% for 2016.
114.6% for 2017 and 100.0% for 2016.
67.7% for 2017 and 64.6% for 2016.
52.9% for 2017 and 56.3% for 2016
   
Refer to the following selected financial information from McCormik, LLC.
Compute the company's inventory turnover for Year 2.
 
                                                                Year 2                                   Year 1    
Cash                                      $             37,800                 $             32,550  
Short-term investments                  93,000                                61,500  
Accounts receivable, net               87,000                                 81,000  
Merchandise inventory                 122,500                                126,500                 
Prepaid expenses                            12,400                                 10,000  
Plant assets                                        389,500                                339,500                 
Accounts payable                             111,900                                109,300                 
Net sales                                              712,500                                677,500                 
Cost of goods sold                            391,500                                376,500                 
 
3.20.
3.54.
3.09.
3.14
5.82.
   
Zhang Company reported Cost of goods sold of $849,000, beginning Inventory of
$40,000 and ending Inventory of $47,700. The average Inventory amount is:
 
$7,700.
$43,850
$87,700.
$40,000.
$47,700.
   
Refer to the following selected financial information from Shakley's Incorporated.
Compute the company's times interest earned for Year 2.
 
                                                                Year 2   Year 1    
Net sales                              $             488,000                                $ 428,150             
Cost of goods sold                            278,200                                252,020                 
Interest expense                              11,600                                 2,600      
Net income before tax                   69,150                                 54,580  
Net income after tax                       47,950                                 41,800  
Total assets                                        320,900                                299,400                 
Total liabilities                                   171,900                                169,200                 
Total equity                                        149,000                                130,200                 
 
6.0.
12.8.
4.1.
5.1.
7.0
   
A corporation reports the following year-end balance sheet data. The company's equity ratio equals:
                                                                                                                 
Cash      $                             49,000                                                 Current liabilities              $             84,000  
Accounts receivable        64,000                                                 Long-term liabilities                        20,000  
Inventory                            69,000                                                 Common stock                                 109,000                 
Equipment                          154,000                                                Retained earnings                            123,000                 
Total assets        $             336,000                                                Total liabilities and equity $         336,000                 
 
0.45
0.69
2.17
0.31
1.35
   
A corporation reported cash of $29,000 and total assets of $471,000 on its balance sheet. Its common-size percent for cash equals:
 
61.60%.
6.16%
100.00%.
16.24%.
1624%
   
Refer to the following selected financial information from McCormik, LLC.
Compute the company's days' sales in inventory for Year 2. (Use 365 days a year.)
 
                                                                                Year 2                                   Year 1    
Cash                      $                                             38,800                 $             33,550  
Short-term investments                                103,000                                66,500  
Accounts receivable, net                               92,000                                 86,000  
Merchandise inventory                                 127,500                                131,500                 
Prepaid expenses                                            13,400                                 11,000  
Plant assets                                                        394,500                                 344,500                
Accounts payable                                             106,900                                 114,300                
Net sales                                                              717,500                                 682,500                
Cost of goods sold                                            396,500                                 381,500                
 
45.2.
46.8.
117.4
84.7.
52.4
   
Martinez Corporation reported Net sales of $781,000 and Net income of $126,000. The Profit margin is:
 
1.61%.
620.0%.
83.87%.
6.20%.
16.13%
   
Use the following selected information from Wheeler, LLC to determine the 2017 and 2016
common size percentages for operating expenses using Net sales as the base. 
 
                                                                2017                                                      2016       
Net sales                              $             505,800                                $             410,600                 
Cost of goods sold                            214,900                                                135,050                 
Operating expenses                        78,340                                                 75,500  
Net earnings                                       39,580                                                 28,080  
 
27.0% for 2017 and 14.5% for 2016.
15.5% for 2017 and 18.4% for 2016.
123.2% for 2017 and 100.0% for 2016.
42.5% for 2017 and 32.9% for 2016
19.1% for 2017 and 20.8% for 2016.
   
Refer to the following selected financial information from McCormik, LLC.
Compute the company's current ratio for Year 2.
 
                                                                                                Year 2                                                   Year 1    
Cash                                                                      $             39,200                                 $             33,950  
Short-term investments                                                107,000                                                68,500  
Accounts receivable, net                                               94,000                                                 88,000  
Merchandise inventory                                                 129,500                                                133,500                 
Prepaid expenses                                                            13,800                                                 11,400  
Plant assets                                                                        396,500                                                346,500                 
Accounts payable                                                             104,900                                                116,300                 
Net sales                                                                              719,500                                                684,500                 
Cost of goods sold                                                            398,500                                                383,500                 
 
3.66
2.64.
2.29.
3.52.
2.42.
   
A company had a market price of $38.50 per share, earnings per share of $1.75,
and dividends per share of $0.90. Its price-earnings ratio equals:
 
20.2.
25.2.
22.0
28.0.
24.0.
   
Refer to the following selected financial information from McCormik, LLC.
Compute the company's accounts receivable turnover for Year 2.
 
                                                                                                Year 2                   Year 1    
Cash      $             38,000                 $                             32,750  
Short-term investments                                                95,000                 62,500  
Accounts receivable, net                                               88,000                 82,000  
Merchandise inventory                                                 123,500                127,500                 
Prepaid expenses                                                            12,600                 10,200  
Plant assets                                                                        390,500                340,500                 
Accounts payable                                                             110,900                110,300                 
Net sales                                                                              713,500                678,500                 
Cost of goods sold                                                            392,500                377,500                 
 
8.39
8.70.
7.51.
8.11.
5.78
   
Jones Corp. reported current assets of $203,500 and current liabilities of $146,000 on its
most recent balance sheet. The current assets consisted of $59,800 Cash; $40,000
Accounts Receivable; and $103,700 of Inventory. The acid-test (quick) ratio is:
 
1.4:1.
0.68:1
0.49:1.
0.59:1.
1:1.
   
Rajan Company's most recent balance sheet reported total assets of $1.78 million,
total liabilities of $0.86 million, and total equity of $0.92 million. Its Debt-to-equity ratio is:
 
0.48
1.07
0.52
1.00
0.93
   
A corporation reports the following year-end balance sheet data. The company's acid-test ratio equals:
 
                                                                                                                 
Cash                      $             49,000                 Current liabilities              $             84,000  
Accounts receivable        64,000                 Long-term liabilities                        20,000  
Inventory                            69,000                 Common stock                                 109,000                 
Equipment                          154,000                Retained earnings                            123,000                 
Total assets        $             336,000                Total liabilities and equity             $ 336,000             
 
0.45
0.31
0.69
2.17
1.35
   
Refer to the following selected financial information from Shakley's Incorporated.
Compute the company's return on total assets for Year 2.
 
                                                                                                Year 2                                   Year 1    
Net sales                                                              $             484,500                                $ 427,450             
Cost of goods sold                                                            277,500                                251,320                 
Interest expense                                                              10,900                                 11,900  
Net income before tax                                                   68,450                                 53,880  
Net income after tax                                                       47,250                                 41,100  
Total assets                                                                        319,500                                295,200                 
Total liabilities                                                                   175,400                                168,500                 
Total equity                                                                        144,100                                126,700                 
 
9.8%.
22.3%.
15.4%
14.8%.
2.8%.
   
Carducci Corporation reported Net sales of $3.47 million and beginning Total assets
of $1.03 million and ending Total assets of $1.43 million.
The average Total asset amount is:
 
$2.04 million.
$0.30 million.
$2.44 million.
$1.23 million
$0.35 million.
   
A corporation reports the following year-end balance sheet data. The company's working capital equals:
                                                                                                                 
Cash                                      $             47,000                 Current liabilities                              $             82,000  
Accounts receivable                        62,000                 Long-term liabilities                                        42,000  
Inventory                                            67,000                 Common stock                                                 107,000                 
Equipment                                          152,000                Retained earnings                                            97,000  
Total assets                        $             328,000                Total liabilities and equity             $             328,000                 
 
Multiple Choice
 
$204,000
$328,000
$176,000
$94,000
$82,000
   
Powers Company reported Net sales of $1,260,000 and average Accounts
Receivable, net of $72,500. The accounts receivable turnover ratio is:
 
18.4 times.
0.58 times.
32.8 times.
17.4 times
16.4 times.
   
Use the following selected information from Wheeler, LLC to determine the 2017
and 2016 common size percentages for cost of goods sold using Net sales as the base.
 
                                                                2017                                                      2016       
Net sales                              $             555,000                                $             449,000                 
Cost of goods sold                            228,400                                                136,220                 
Operating expenses                        83,290                                                 80,270  
Net earnings                                       42,100                                                 29,850  
 
7.6% for 2017 and 6.7% for 2016.
56.2% for 2017 and 48.2% for 2016.
41.1% for 2017 and 30.3% for 2016
178.1% for 2017 and 207.4% for 2016.
123.6% for 2017 and 100.0% for 2016.
   
Which of the following should be subtracted from net income in calculating net cash flow from operating activities using
the indirect method?
 
A. An increase in accrued expenses payable
B. A decrease in inventory
C. A decrease in prepaid expenses
D. An increase in inventory
   
Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows?
 
A. Cash received from stock issued
B. Cash received from bonds payable
C. Depreciation expense on equipment
D. Cash paid for equipment
   
In preparing the Cash Flows from Investing Activities section of the statement of cash flows, which type of account
is analyzed for changes?
 
A. Stockholders' equity
B. Current assets
C. Current liabilities
D. Long-term assets
   
In preparing the Cash Flows from Operating Activities section of the statement of cash flows, which type of
account is analyzed for changes?
 
A. Stockholders' equity
B. Current assets
C. Current liabilities
D. Long-term assets
   
Which of the following should be added to net income in calculating net cash flow from operating activities
using the indirect method?
 
A. A decrease in inventory
B. An increase in accounts receivable
C. Common stock dividends declared and paid
D. A decrease in accounts payable
   
In preparing the Cash Flows from Financing Activities section of the statement of cash flows, which type of
account is analyzed for changes?
 
A. Stockholders' equity
B. Current assets
C. Current liabilities
D. Long-term assets
   
Which of the following should be subtracted from net income in calculating net cash flow from operating
activities using the indirect method?
 
A. Depreciation expense for the period
B. An increase in accounts receivable
C. An increase in accounts payable
D. An increase in income taxes payable
   
Which of the following is not included in the Investing Activities section of the statement of cash flows?
 
A. The sale of a building for cash
B. The purchase of equipment for cash
C. Depreciation on equipment
D. The purchase of land for cash
   
The ending figure on the statement of cash flows should match what figure on the balance sheet?
 
A. Cash balance
B. Retained earnings balance
C. Total stockholders' equity
D. Total assets
   
If a gain of $7,000 results from selling (for cash) office equipment having a book value of $55,000, the total
amount reported in the Cash Flows from Investing Activities section of the statement of cash flows is:
 
A $55,000.
B. $48,000.
C. $7,000.
D. $62,000
   
Which of the following should be subtracted from net income in calculating net cash flow from operating
activities using the indirect method?
 
A. A gain on a sale of a building
B. A decrease in accounts receivable
C. A loss on a sale of equipment
D. An increase in accounts payable
   
Which of the following would appear in the Cash Flows from Investing Activities section of the statement
of cash flows?
 
A. Discard of fully depreciated equipment with no salvage value
B. Purchase of inventory
C. Purchase of land for cash
D. Payment of bond interest
   
Which of the following is not included in the Financing Activities section of the statement of cash flows?
 
A. A stock split
B. The purchase of treasury stock
C. The payment of dividends
D. The retirement of bonds
   
Which of the following would indicate a cash inflow to appear in the Financing Activities section of the statement of cash flows?
 
A. Decrease in dividends payable account
B. Increase in common stock account
C. Decrease in retained earnings account
D. Increase in treasury stock account
   
Which of the following should be subtracted from net income in calculating net cash flow from operating activities
using the indirect method?
 
A. A decrease in inventory
B. An increase in accrued expenses payable
C. A decrease in prepaid expenses
D. An increase in inventory
   
Items in the Investing Activities section of the statement of cash flows should include:
 
A. loss from land transactions, $(50,000).
B. cash received from sale of land, $170,000.
C. gain on sale of land, $30,000.
D. cash received from sale of land, $200,000
   
The Longbow-Miller Company uses the direct method to prepare its statement of cash flows. When calculating
the net cash provided (used) by operations, which of the following items would be deducted from net income?
 
a. gain on sale of land
b. cash paid for income taxes
c. depreciation expense
d. cash paid for dividends
b. cash paid for income taxes
   
Which of the following would appear in the Cash Flows from Investing Activities section of the statement of cash flows?
 
A. Payment of bond interest
B. Purchase of inventory
C. Discard of fully depreciated equipment with no salvage value
D. Purchase of land for cash
   
Dividends paid to a company's stockholders would appear on the statement of cash flows as a(n)
 
a. increase in the financing section.
b. decrease in the financing section.
c. increase in the investing section.
d. decrease in the investing section
   
What does a slicer do when used in a pivot table in Excel?
 
a. the slicer will filter results that are shown in the pivot table based on user choice
b. the slicer will remove results from the data
c. the slicer will duplicate certain cells based on user choice
d. the slicer will sort results alphabetically or chronologically based on user choice
   
Which of the following would be classified as a decrease in the financing section of the statement of cash flows?
 
a. purchase of new equipment
b. issuance of common stock
c. payoff of a long-term mortgage loan
d. sale of a building
   
When preparing the cash provided by operations section of the statement of cash flows using the indirect
method, which of the following would provide cash?
 
a. an increase in accounts receivable
b. a decrease in long-term investments
c. a decrease in salaries payable
d. an increase in accounts payable
   
Medallion Star Corporation prepares its statement of cash flows using the indirect method. Which of the
following items would be deducted from net income when calculating the net cash from operations?
 
a. a gain on sale of property, plant, and equipment
b. an increase in salaries payable
c. a loss on sale of land
d. a decrease in accounts receivable
   
An increase in the Taxes Payable account from the beginning of the year to the end of the year would be
what type of adjustment to "net cash provided by operations" if the company uses the indirect method
when preparing its statement of cash flows?
 
a. an increase to "net cash provided by operations"
b. a decrease to "net cash provided by operations"
c. would not affect "net cash provided by operations"
a. an increase to "net cash provided by operations"
   
When preparing the cash provided by operations section of the statement of cash flows using the indirect
method, which of the following would be shown as a use of cash?
 
a. an increase in salaries payable
b. a decrease in property, plant, and equipment
c. a decrease in prepaid insurance
d. an increase in accounts receivable
   
Which of the following sections will be prepared differently if the direct method is used to prepare the statement
of cash flows instead of the indirect method?
 
a. operating activities
b. investing activities
c. financing activities
d. all of the sections will be different
   
Step 1 of reconciling net income to net cash flow from operating activities is to:
 
A. Subtract depreciation expense
B. Subtract gains or add losses from investing activities.
C. Add depreciation expense.
D. Add gains or subtract losses from investing activities.
   
A mortgage incurred in the purchase of an office building would be reported on the statement of cash flows in:
 
A. Operating
B. Investing
C. Financing
D. Separate section
   
Cash received through the sale of long-term investments would be reported in the statement of cash flows as a:
 
A. Operating
B. Investing
C. Financing
   
The cash proceeds from the sale of a plant asset would appear on the statement of cash flows as a(n)
 
a. increase in the financing section.
b. decrease in the financing section.
c. increase in the investing section.
d. decrease in the investing section.
   
Which of the following is reported on the statement of cash flows?
 
A. Changes in retained earnings
B. Cash flows from investing activities
C. Total changes in stockholders' equity
D. Total assets
   
The statement of cash flows is designed to show
 
a. the revenues the company has earned during the period.
b. how profits were generated during the period.
c. the inflow and outflow of cash during the time period.
d. the expenses the company incurred during the period.
   
Analysts often use free cash flow, rather than cash flows from _________ activities,
to measure the financial strength of a business.
 
operating
   
If the free cash flow changed from $50,000 to $40,000, the change
 
If the free cash flow decreases, the change indicates an unfavorable trend.
   
Which of the following should be shown on a statement of cash flows under the financing activity section?
 
Dividends paid are a financing activity, whether on common or preferred stock.
   
How is this to be reported on the statement of cash flows?
 
increase in financing activities
   
Cash received for preferred stock dividends should be shown on the statement of cash flows under __________ activities.
 
operating
   
Beta Electronics issued common stock of $30,000 to pay off long-term
 
notes payable of $30,000.
   
In which section should this be recorded?
 
non-cash investing and financing activities
   
Which of the following does NOT appear on the statement of cash flows when prepared by indirect method?
 
cash collections from customers
   
Which of the following is an example of a financing activity on the
statement of cash flows?
 
payment of dividends
   
Cash flows are defined as ________.
 
cash received by the business and the cash payments made by the business
   
If merchandise inventory decrease during the year, which of the
following is correct when using a spreadsheet to complete the statement
of cash flows by the indirect method?
 
Decrease in a current asset would be a debit.
   
What is the statement of cash flows?
 
One of the four basis financial statements, shows how the company generated  and used cash during
the period, reports the overall increase or decrease in cash
   
How is the statement of cash flows laid out (condensed version)?
 
Cash provided (or used) by operating activities, cash provided (or used) by  investing activities,
cash provided (or used) by financing activities, net  increase (or decrease) in cash, beginning cash, ending cash.
   
What is cash paid for merchandise?
 
Cash paid for merchandise inventory = Cost of Goods Sold - Beginning
Merchandise Inventory + Ending Merchandise Inventory + Beginning
Accounts Payable - Ending Accounts Payable. (- + + -)
   
What question does cash provided (or used) by operating activities answer?
 
Answers are we operating within our means?
   
When completing the spreadsheet to prepare the statement of cash flows, a decrease in retained
earnings due to cash dividend declared would require an entry involving:
 
a debit to Retained Earnings
  What question does cash provided (or used) by investing activities answer?
Answers are we able to reinvest in our company?
   
What questions does cash provided (or used) by financing activities answer?
 
Are we able to pay down/off long term debt and are we able to pay cash dividends?
   
Beta Electronics earned net income of $29,000. Included in the net income was $3,000 of
depreciation expense. Current assets decreased by $2,000 and current liabilities increased
by 4,000. There was also a loss on the sale of a plant asset of $8,000.
How much cash is provided by operating activities?
 
$46,000
   
Beta Electronics earned net income of $20,000.
Included in the net income was $2,000 of depreciation expense. Current assets
increased by $2,000 and current liabilities increased by 1,000.
How much cash is provided by operating activities?
 
$21,000
   
Beta Electronics the following data for the year ended December 31, 2019:
 
Beginning Cash balance                                                 $              14,000
Cash flows provided by operating activities                           12,000
Cash flows used by investing activities                                    (8,000)
Cash flows provided by financing activities                            9,000
 
What is the ending cash balance?
 
$27,000
 
14,000 + 12,000 + 9,000 – 8,000 = 27,000
   
Smith Company has the following information on the financial statements:
 
Accounts Receivable at beginning of the year $50,000
Accounts Receivable at end of the year 30,000
Revenues for the year 180,000
Salaries Payable 2,000
Bonds Payable 50,000
Sales Tax Payable 2,000
 
What is the amount of cash collected from customers?
 
$200,000
   
Which of the following is an example of an investing activity on the statement of cash flows?
 
sold land for cash
   
When does a cash dividend become a legal liability?
 
on date of declaration
   
When do dividends increase stockholders' equity? (Assume the dividends are distributions to corporate stockholders)
 
Never
   
Which of the following classifications represents the most shares of common stock?
 
Authorized shares
   
Which is a purpose of the Statement of Cash Flows?
to evaluate management decisions, to predict ability to pay debt and dividends, and to predict future cash flows
   
The stockholder's equity section of a corporation's balance sheet reports?
 
Discount on Bonds payable         No
Treasury stock                                  Yes
   
The purchase of treasury stock
 
decreases total assets and decreases stockholder's equity
   
The two formats of the operating activities cash flow are ________.
 
indirect and direct
   
Which of the following is NOT true about a 10% stock dividend?
 
Par value decreases
   
A company declares a 5% stock dividend. The debit to Retained Earnings is an amount equal to
 
the market value of the shares to be issued
   
Which of the following statements is NOT true about a 3-for-1 stock split?
 
Total stockholders' equity increases
   
The numerator for computing the rate of return on total assets is
 
net income minus preferred dividends
   
Beta Electronics expects net cash flow from operating activities to be $100,000, and the company plans
cash purchases of equipment of $55,000 and repurchases of stock of $4,000.
What is Beta's free cash flow?
 
$45,000
 
100,000 – 55,000 = 45,000
 
Which is NOT one of the three basic types of cash flow activities?
retained earnings
   
Baker Electronics reported the following data for the year ended
 
December 31, 2019:
 
Cash receipt from sale of equipment                                       $40,000
Depreciation Expense                                                                    15,000
Cash payment of Dividends                                                          7,000
Cash receipt from issuance of Common Stock                      21,000
Net Income                                                                                         50,000
Cash purchase of Land                                                                   20,000
Increase in Current Liabilities                                                      11,000
Decrease in Current Assets other than Cash                          10,000
 
What is the cash flow from investing activities?
 
$20,000
   
When treasury stock is sold for less than its cost, the entry should include a debit to
 
retained earnings
   
Which of the following companies would be best served by a plantwide overhead rate?
 
A company that manufactures few products and whose operations are labor intensive.
   
From an ABC perspective, what causes costs to be incurred?
 
Activities
   
A method of assigning overhead costs to a product using a single overhead rate is:
 
Plantwide overhead rate method.
   
Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?
 
Departmental overhead rate method and activity-based costing.
   
In cost-volume-profit analysis, the unit contribution margin is:
 
Sales price per unit less total variable cost per unit.

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