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Moor Leatherwood

Price: $11.99


1. Lenders who rely on collateral as the security for a loan tend to focus their attention on the borrower’s:
A. balance sheet.
B. income statement.
C. statement of cash flows.
D. statement of changes in stockholders' equity.

2. Balance sheets prepared in compliance with GAAP reflect a mixture of:
A. current value and discounted future cash flows.
B. discounted cash flows and future values.
C. historical cost and future cash values.
D. historical cost, fair value, net realizable value, and discounted present values.

Answer Questions 3-5, refer to the following information for Moor Sales Corporation.
Moor Sales recorded sales of $540,000 for the current year. It was determined that in the past approximately 2% of sales prove to be uncollectible. Having made the proper adjusting entry recognizing bad debt expense, the year-end balances are:

Accounts Receivable $74,000
Allowance for Doubtful Accounts 8,000

3. What is the net amount of Accounts Receivable that will appear on Moor’s balance sheet at year end?
A. $63,200
B. $66,000
C. $74,000
D. $82,000

4. What is the amount of bad debt expense that appears on the Moor income statement?
A. $2,800
B. $8,000
C. $10,800
D. $18,800

5. What type of account is Allowance for Doubtful Accounts?
A. Contra-asset
B. Contra-equity
C. Current asset
D. Expense

6. Inventories are reported on the balance sheet at:
A. current market value.
B. historical cost.
C. net realizable value.
D. the lower of cost or market.

7. Property, plant, and equipment are reported on the balance sheet at:
A. current market value.
B. historical cost.
C. historical cost minus accumulated depreciation.
D. net realizable value.

8. Long-term debt is reported on the balance sheet at:
A. current market value.
B. discounted present value.
C. future value.
D. net realizable value.

9. The amount of income taxes recognized on the income statement but not yet payable to the government is found on the:
A. balance sheet in the account Deferred Income Taxes.
B. balance sheet in the account Income Taxes Payable.
C. income statement in the account Income Tax Expense—Current.
D. income statement in the computation of comprehensive income.

10. The retained earnings account is comprised of:
A. cash reinvested in the business by the shareholders.
B. cash retained in the business.
C. the cumulative earnings less dividends since the inception of the corporation.
D. the earnings of the corporation for the current year.

11. Operating activities on the statement of cash flows result from the cash effects of:
A. borrowing and repaying loans used in the production of revenue.
B. producing and delivering goods and services.
C. purchasing and disposing of fixed (plant) assets used in production of revenue.
D. selling stocks and bonds to raise capital for the production of revenue.

12. Investing activities on the statement of cash flows result from the cash effects of:
A. borrowing and repaying loans used in the production of revenue.
B. producing and delivering goods and services.
C. purchasing and disposing of fixed (plant) assets used in production of revenue.
D. selling stocks and bonds to raise capital for the production of revenue.

13. Financing activities on the statement of cash flows result from the cash effects of:
A. paying amounts owed to suppliers.
B. payment of dividends.
C. purchasing and disposing of debt securities.
D. receipt of dividends from equity investments.


The Leatherwood Corporation comparative balance sheets for Year 1
and year 2 are as follows selected data:
Assets  Year 1   Year 2 
Cash  -    (50,000)
Accounts receivables  50,000  100,000
Inventory  200,000  250,000
Equipment (net)  300,000  350,000
Total Assets  550,000  650,000
Liabilities and Equity
Accounts payable  150,000  100,000
Income taxes payable  80,000  30,000
Bonds payable  100,000  80,000
Common stock  100,000  200,000
Retained earnings  120,000  240,000
Total liabilities and equity  550,000  650,000
A brief income statement for Year 2 shows the following:
Sales  900,000
Cost of goods sold  500,000
Operating expenses  100,000
Depreciation  50,000
Income tax expense  100,000  (750,000)
Net income  150,000

14. How much cash did Leatherwood collect from customers during Year 2?
a. $150,000
b. $750,000
c. $850,000
d. $900,000

15. How much cash did Leatherwood pay to suppliers for inventory during Year 2?
a. $150,000
b. $400,000
c. $500,000
d. $600,000

16. How much did Leatherwood pay in dividends to shareholders in Year 2?
a. $ 30,000
b. $ 120,000
c. $ 150,000
d. $ 330,000

17. How much did Leatherwood pay in income taxes to the government in Year 2?
a. $ 30,000
b. $ 80,000
c. $ 110,000
d. $ 150,000

18. What are Leatherwood’s cash flows from operating activities for Year 2?
a. $ 0
b. $ 50,000 outflow
c. $ 150,000 outflow
d. $ 400,000 inflow

19. What are Leatherwood’s cash flows from investing activities for Year 2?
a. $ 0
b. $ 100,000 inflow
c. $ 100,000 outflow
d. $ 350,000 outflow

20. What are Leatherwood’s cash flows from financing activities for Year 2?
a. $ 0
b. $ 50,000 inflow
c. $ 50,000 outflow
d. $ 150,000 outflow



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