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All Practice Set Solutions

Financial Accounting (Emory University)

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1) The beginning Cash account balance is $38,700. During the period, cash disbursements
(outflows) totaled $144,600. If ending Cash is $51,200, then cash receipts must have been:
A. $105,900
B. $234,500
C. $132,100
D. $157,100
E. none of the above

Use the following information to answer question 2:

The Prep Company was started by a group of investors on January 1, 20X1, where the initial
balance sheet consisted of total assets of $10,000 and total liabilities of $6,000. Partial financial
data for the first year of operation is as follows:

Total assets (Dec. 31, 20X1) $15,000

Total liabilities (Dec. 31, 20X1) 4,000
Additional investments by owners during 20X1 5,000
Cash dividends paid during 20X1 2,000

2) What was the net income for the year 20X1?

A. $4,000 B. ($2,000)
C. $5,000 D. ($5,000) E. $6,000

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1) Dobson Corporation paid $1,200 for supplies previously purchased on account. The effect of
D
A.
B. decrease assets and decrease liabilities.
C. have no effect on total assets.
D.

2) Notes Payable has a normal beginning balance of $40,200. During the period, new borrowings
(notes) total $100,000 and payments on loans (notes) total $20,600. What is the correct ending
balance in Notes Payable?
A. $39,200, debit
B. $119,600, credit
C. $39,200, credit
D. $160,800, credit

3) The journal entry to record the performance of services on account for $1,200 is:
A. Accounts Payable 1,200
Service Revenue 1,200
B. Accounts Receivable 1,200
Service Revenue 1,200
C. Cash 1,200
Service Revenue 1,200
D. Service Revenue 1,200
Accounts Payable 1,200

4) Which of the following transactions would increase total assets?

I. Borrowed cash on a note payable, $50,000
II. Provided services on account, $6,000
III. Received cash from a customer as payment on account, $2,000
IV. Received a utility bill, $500
A. I and II
B. I and III
C. I, II, and III
D. All of these answers are correct.

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1) Which of the following is true?

a. Owners’ Equity – Assets = Liabilities

b. Assets – Owners’ Equity = Liabilities
c. Assets + Liabilities = Owners’ Equity
d. Liabilities = Owners’ Equity + Assets

2) An investor wants to find the amount of cash and land that a company has. Where will the
investor look?

a. Statement of shareholders’ equity

b. Income statement
c. Balance sheet
d. Statement of cash flows

3) Which of the following best describes assets paid to owners of a company as a return for their
initial investment?

a. payables
b. compensation contracts
c. dividends
d. interest

4) GAAP is an acronym for

a. General Asset Accounting Procedures.
b. Government Agency Accounting Procedures.
c. Generally Accepted Accounting Principles.
d. Global Accounting Activity Principles.

5) Which one of the following appears on the income statement?

a. Inventory.
b. Retained earnings.
c. Dividends.
d. Interest revenue.

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1) Which of the following statements is true?

A. T
of the business during the period.
B. Revenues and expenses are reported only on the balance sheet.
C. The statement of cash flows reports cash flows from three types of business activities
cash receipts, cash payments, and investing.
D. On the statement of retained earnings, the net income for the period is added to the
beginning balance of retained earnings.

Table 1-1 use the information to answer Questions 2, 3 and 4

The following information is taken from the accounting records after the first period of operation:

Accounts payable 9 Service Revenue 38

Cash 25 Equipment 10
Common stock 200 Retained earnings (ending) ?
Dividends 15 Accounts Receivable 4
Land 100 Office Supplies 5
Utilities expense 2 Salary expense 8

Cash receipts: Cash payments:

Collections from customers 34 Acquisition of land 60
Issuance of stock to owners 70 Dividends 15
To suppliers 6
Sale of equipment 5

2) Total assets are:

A. $150
B. $181
C. $144
D. $158

3) Net income is:

A. $28
B. $13
C. $120
D. $38

4) Cash flow from financing activities is:

A. $(85)
B. $(55)
C. $55
D. $(15)

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1) Use the following selected information for the Perriman Company to calculate the correct credit
column total for a trial balance. Assume all given balances are normal (i.e. on the side where
increases are recorded):

Accounts Receivable $ 27,200

Accounts Payable 15,900
Building 359,600
Cash 55,600
Common Stock 155,000
Dividends 4,800
Insurance Expense 1,800
Retained Earnings 133,800
Salary Expense 52,500
Salary Payable 3,600
Service Revenue 193,200

The correct credit column total for a trial balance is:

A. $365,600
B. $304,700
C. $501,500
D. $506,300
E. none of the above.

2) Providing $5,000 of services to customers on account causes

a. assets and to decrease by $5,000.

b. assets and to increase by $5,000.
c. assets and liabilities to increase by $5,000.
d. assets and liabilities to decrease by $5,000.

3) In a trial balance, if total debits do not equal total credits when the accounts are totaled,

a. the bookkeeper must have made an error.

b. the expected inequality is corrected during the normal adjusting process.
c. no change is made because the amount of assets will typically exceed the amount of
liabilities.
d. the company will report a loss on its income statement because expenses are greater than
revenues.

4) Which of the following changes describes the distribution of $1,000 of dividends to owners?

a. Assets and net income decrease by $1,000.

b. Assets decreases and net income increases by $1,000.
c. Assets and decrease by $1,000.
d. Assets and liabilities decrease by $1,000.

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1) Williams Corporation had the following accounting error: recorded payment of a utility bill as a
debit to Utility Expense and a credit to Sales Revenue. Which of the following is true concerning
the impact of this error:
A. Revenue is overstated and Assets are understated;
B. Revenue is understated and Assets are overstated;
C. Both Revenue and Assets are overstated;
D. Both Revenue and Assets are understated;
E. None of the above are true.

2) The book value of an asset at the beginning of the year was $13,000. The equipment originally
cost $23,000. Depreciation expense for the year was $4,000. The book value of the asset at the
end of the year is:
A. $19,000
B. $17,000
C. $14,000
D. $9,000
E. none of the above

3) How does a prepaid expenses adjustment affect the financial statements?

A. The adjustment increases expenses and decreases assets.
B. The adjustment decreases expenses and increases assets.
C. The adjustment decreases expenses and increases liabilities.
D. The adjustment increases expenses and increases liabilities.
E. none of the above

4) A company debited interest expense and credited interest payable for $27,000 for the adjusting
journal entry for interest earned on money loaned. By what amount and in which direction (i.e.
overstated, understated or no effect) is net income misstated?
A. Understated $54,000
B. Understated $27,000
C. Overstated $54,000
D. Overstated $27,000
E. No misstatement of net income

5) How does an accrued revenues adjustment affect the financial statements?

A. The adjustment decreases revenue and decreases liabilities.
B. The adjustment increases revenue and increases liabilities.
C. The adjustment decreases revenue and increases liabilities.
D. The adjustment increases revenue and increases assets.
E. none of the above

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Use the following information to answer Questions 1 and 2:

On December 31, 20X1, Troy, Inc. had the following accounts and balances (before adjustment) on its
books:
Accounts Receivable $80,000
Allowance for Uncollectible Accounts 2,000 (credit balance)
Net Sales 500,000

1) Troy estimates that its Uncollectible-Account Expense is 2% of Net Sales. The Uncollectible-
Account (aka Bad Debt) Expense for 20X1 should be:
A. $10,000
B. $12,000
C. $8,000
D. $1,600
E. none of the above

2) Suppose instead that Troy uses an aging schedule to estimate its uncollectible accounts. The
aging schedule and the percentage of each category that is estimated to be uncollectible is given
below:
Current $40,000 2%
1-30 days past due 30,000 10%
Over 30 days past due 10,000 40%

The balance in the Allowance for Uncollectible Accounts after adjustment should be:

A. $2,000 B. $5,800 C. $7,800 D. $9,800

3) On January 2, Favre Co. made a $2,000 credit sale under the terms 3/10, n/30. If Favre uses
the gross method of accounting for cash discounts, the proper entry on January 2
includes
a. a debit to Accounts Receivable for $2,000, and a credit to Sales for $2,000.
b. a debit to Accounts Receivable for $2,000, a credit to Cash Discounts for $1,940, and a credit
to Sales for $60.
c. a debit to Accounts Receivable for $1,940, and a credit to Sales for $1,940.
d. a debit to Accounts Receivable for $1,940, a debit to Cash Discounts for $60, and a credit to
Sales for $2,000.

4) A company’s allowance for doubtful accounts is $4,000 and $3,000 on 1/1/11 and 1/1/10,
respectively. During 2015, bad debts expenses were estimated to be 6% on net credit sales of
$100,000. During 2015, the amount of accounts written off as uncollectible amounts to

a. $6,000.
b. $7,000.
c. $5,000.
d. $4,000.

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1) Martinez Co. paid Acme Co. for merchandise with a $2,000, 90-day, 8% note dated April 1. If
Martinez pays off the note at maturity, what entry should Acme make on its books at that time?

A. Cash 2,160
Notes Receivable 2,160

B. Notes Payable 2,000

Interest Expense 160
Cash 2,160

C. Cash 2,040
Notes Receivable 2,000
Interest Revenue 40

D. Cash 2,160
Notes Receivable 2,000
Interest Revenue 160

2) Accounts Receivable has a normal balance of $8,500 and the Allowance for Uncollectible
Account has a normal balance of $350. A specific account of $150 is written off. What is the
amount of net receivables (aka net realizable value) after the write-off?

A. $8,150
B. $8,350
C. $8,550
D. $8,500

Use the following information for questions 3 and 4:

A company has the following situation in 2014: Credit Sales = $600,000; Beginning A/R balance =
$50,000; Ending A/R balance = $42,000; Beginning balance in Allowance for Uncollectible Accounts =
$1,200 credit; write-offs during the period = $2,000.

3) If the company uses the Percentage-of-Sales method and estimates uncollectible accounts
based on one-half percent of credit sales, what is the ending Allowance balance?

A. $3,000
B. $2,200
C. $2,000
D. $2,500

4) If, instead, the company uses the aging method and the ending allowance balance is determined
to be $2,500, what is the Bad Debt Expense?

A. $4,500
B. $2,000
C. $2,500
D. $3,300

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1) Given the following data, calculate the cost of ending inventory using the FIFO costing method.
1/1 Beginning inventory 35 units at $10 per unit
2/25 Purchase of inventory 10 units at $12 per unit
5/20 Purchase of inventory 20 units at $13 per unit
8/15 Purchase of inventory 30 units at $14 per unit
10/17 Purchase of inventory 25 units at $15 per unit
12/31 Ending inventory 50 units

A. $500
B. $750
C. $725
D. $535

2) Given the following data, calculate the cost of ending inventory using the Weighted-Average
costing method, rounding to the nearest dollar. (Do not round in the process of your
calculations; only round your final answer)
1/1 Beginning inventory 30 units at $10 per unit
3/5 Purchases 20 units at $14 per unit
5/30 Purchases 30 units at $15 per unit
12/31 Ending inventory 20 units

A. $200
B. $258
C. $260
D. $300

3) Given the following data, by how much would taxable income change if LIFO is used rather than
FIFO?
Beginning inventory 4,000 units at $55
Purchases 6,800 units at $60
Units sold 7,800

A. decrease by $15,000
B. decrease by $39,000
C. increase by $15,000
D. increase by $39,000

4) Holloway Corporation reported net income of $675,000 for the current year. After the financial
statements had been prepared, it was discovered that ending inventory had been understated
by $25,000. The correct net income was:
A. $625,000
B. $650,000
C. $675,000
D. $700,000

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Use the following information to answer questions 1) and 2):

On January 1, 2015, Shandley Corporation acquired equipment for $120,000. The estimated life of the
equipment is 5 years or 20,000 hours. The estimated residual value is $20,000.

1) What is the amount of depreciation expense for 2017, if Shandley Corporation uses the asset
3,800 hours and uses the double-declining-balance method of depreciation?
A. $17,280
B. $10,368
C. $20,000
D. $25,920
E. $19,000

2) What is the amount of depreciation expense for 2017, if Shandley Corporation uses the asset
3,800 hours and uses the units of production method of depreciation?
A. $17,280
B. $10,368
C. $20,000
D. $25,920
E. $19,000

3) Olmec Company purchased equipment on May 1, 2014, for $140,000. The residual value is
$20,000 and the estimated life is 6 years or 60,000 hours. Compute depreciation expense for the
year ending December 31, 2014, if Olmec Company uses the straight-line method of
depreciation.
A. $13,333
B. $20,000
C. $15,555
D. $23,333

4) Equipment costing $35,000 with a book value of $12,000 is sold for $11,500. The journal entry
will involve a:
A. credit to Accumulated Depreciation for $23,000
B. debit to Accumulated Depreciation for $12,000
C. debit to Accumulated Depreciation for $23,000
D. credit to Accumulated Depreciation for $12,000
E. none of the above

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1. Ed Company purchased a building by paying $8,000 cash on the purchase date and agreeing to pay
$15,000 for each of the next ten years beginning one-year from the purchase date. Ed’s incremental
borrowing rate is 10%. The building value reported on the balance sheet is:

Answer: the building purchase involves a couple components…an $8,000 payment today, and a 10-
year annuity payment of $15,000 each year. So, the cost of the building reported on the balance sheet
is the present value of these payments.

The present value of $8,000 today is simply $8,000

The present value of the annuity is calculated using the PV Annuity factor for n = 10 (i.e., 10 years),
and r = 10%....looking in the factor table, you’ll get a factor of 6.14457. So, the present value of the
annuity is 15,000 x 6.14457 = 92,169 (rounded).

So, the building value is $8,000 + $92,169 = $100,169.

As an aside, the journal entry would look like this:

Building (+A) 100,169

Cash (-A) 8,000
Notes Payable (+L) 92,169

2. Ed Corporation purchased a building by paying $100,000 cash on the purchase date, agreeing to pay
$80,000 every year for the next nine years and $125,000 ten years from the purchase date. The first
payment is due one year after the purchase date. Ed’s incremental borrowing rate is 10%. The liability
reported on the balance sheet as of the purchase date, after the initial $100,000 payment was made, is:

Answer: similar to above, but this purchase has three components…a cash payment today, 9 year
annuity, and another lump sum payment 10 years from today. So, the value of the building is the sum
of these payments:

Present value of $100,000 paid today is $100,000

To compute the present value of the 9-year annuity, you need the annuity factor for n = 9 and r = 10%,
which is 5.75902. So, the present value of the annuity is $80,000 x 5.75902 = $460,722

To compute the present value of the lump sum payment in year 10, you need the lump sum factor for
n = 10 and r = 10%, which is 0.38554. So, the present value of that lump sum is $125,000 x 0.38554 =
$48,193

So, the value of the building is $100,000 + 460,722 + 48,193 = $608,915

However, the question asks for the value of the liability, which doesn’t include today’s payment of
$100,000…so, the liability reported is $508,915.

The journal entry would look like this:

Building (+A) 608,915

Cash (-A) 100,000
Notes Payable (+L) 508,915

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BUS 210, Spr 2015, ICP 17 (04/06/15) Name + ID ____________________________________________

1) On January 1, a 3-year, $8,000, non-interest-bearing note payable was issued when the
market rate of interest was 11%. To determine the amount at which the note will be
valued on the balance sheet on the issue date, use the
a. present value of $1 table.
b. future value of an annuity due table.
c. present value of an annuity table.
d. future value of an annuity table.

2) On January 1, a 6-year, $5,000, non-interest-bearing note payable was issued when the
market rate of interest was 8%. The present value of the note is
a. $3,151.
b. $2,080.
c. $865.
d. $5,000.

3) Woodsman Company issued $400,000 of 6-year, 6% bonds with interest payments

occurring annually at the end of each year. What additional information is needed in
order to determine the selling price of these bonds?
a. The face amount of the bonds
b. The bond covenants
c. The market rate of interest
d. The stated rate of interest

4) Stevens Company is about to issue $400,000 of 10-year bonds paying an 8% interest

rate with interest payable semiannually. The effective interest rate for such securities is
10%. To the closest dollar, how much can Stevens expect to receive for the sale of these
bonds?
a. $350,151
b. $292,637
c. $800,000
d. $1,405,503

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BUS 210, Spr 2015, ICP 18 (04/08/15) Name + ID ____________________________________________

1) Bonds with a 7% interest rate were issued when the market rate of interest was 8%. This bond
was issued at:
A. par value
B. a discount
C. a premium
D. face value

2) A $10,000, 6% bond is quoted at 102½. How much cash will be received when the bond is
issued?
A. $9,662
B. $9,897
C. $10,104
D. $10,250

3) Amortizing the discount on a bond payable:

A. increases the face value of the bonds
B. decreases the face value of the bonds
C. increases the carrying amount of the bonds
D. decreases the carrying amount of the bonds

4) A $100,000, 6%, bond is issued at a $2,500 premium. On the issue date, the carrying value of
the bond is:
A. $100,000
B. $102,500
C. $107,500
D. $110,000

5) On July 1 the ZackMore Corporation issues $900,000 of 10-year, 7%, bonds dated July 1 at
$838,843.57 when the market rate of interest is 8%. ZackMore Corporation uses the effective-
interest method of amortization. Interest is paid each June 30 and December 31. The interest
expense recognized for the first semiannual interest payment on December 31 is:
A. $29,359.24
B. $31,500.00
C. $33,553.74
D. $36,000

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BUS 210, Spr 2015, ICP 19 (04/13/15) Name + ID ____________________________________________

1) If English Company issues their $5,000,000, 8% bonds payable at a premium,

A. the debit to Cash is greater than the credit to Bonds Payable;
B. the maturity value is greater than the present value of the interest and principal
payments;
C. the market rate of interest must be less than the contract rate of interest.
D. both A and C are true.

2) A bond issue with a face value of $100,000 and a carrying amount of $104,000 is paid off at
101½ and retired. The gain or loss on this transaction is
A. $2,500 loss
B. $2,500 gain
C. $1,500 gain
D. $1,500 loss
E. $4,000 gain

3) Hornbeck Company issued $200,000 bonds payable with an 8% interest rate at a price of 96. The
journal entry to record the issue of the bond included a:
A. debit to Discount on Bonds Payable, $8,000
B. debit to Bonds Payable, $200,000
C. credit to Cash, $192,000
D. All of these answers are correct

4) On January 1, Dupuy Company issued $800,000, 10-year, 9% bonds at 85, to yield an 11%
effective annual return. The bonds pay interest on June 30 and December 31 each year. What is
the amount of discount amortized for the 6-month period ending December 31 in the first year,
assuming the effective interest method of amortization?
A. $5,157
B. $1,477
C. $13,400
D. $6,523

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BUS 210, Spr 2015, ICP 14 (03/25/15) Name + ID ____________________________________________

1) I
A. par value and no-par value stock
B. paid-in capital and retained earnings
C. donated capital and contributed capital
D. preferred stock and common stock

2) A corporation issued common stock instead of debt to finance the purchase of non-
depreciable property. Which statement is true?
a. Ownership by existing shareholders will be diluted.
b. T
c. Income tax expense will be lower because expenses increase.
d. Net income will be lower.

3) Simon C Simon C

Common stock $800,000

Additional paid-in capital 200,000
Retained earnings 400,000

How many shares of common stock are outstanding?

a. 30,000
b. 600,000
c. 800,000
d. Not enough information to determine.

4) What effect will the acquisition of treasury stock have on shareholders' equity?

a. No effect
b. Increase
c. Depends on whether it cost more or less than the par value of the stock
d. Decrease

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BUS 210, Spr 2015, ICP 15 (03/30/15) Name + ID ____________________________________________

1) A cash dividend becomes a legal liability of the corporation on the:

A. payment date
B. declaration date
C. record date
D. distribution date

2) Stock dividends:
A. are distributions of cash to the stockholders
B. reduce the total assets of the corporation
C.
D.
equity

3) Monteverde Company repurchased 1,000 shares of its $10 par value common stock at $15 per
share. The entry to record this transaction includes a:
A. debit to Treasury Stock for $15,000
B. debit to Treasury Stock for $10,000
C. debit to Common Stock for $15,000
D. debit to Common Stock for $10,000

4) The entry to record the issuance of 8,000 shares of $5 par value common stock at $9 per share
includes a:
A. credit to Common Stock for $72,000
B. credit to Common Stock for $40,000
C. credit to Paid-in Capital in Excess of Par Value-Common for $40,000
D. debit to Paid-in Capital in Excess of Par Value-Common for $32,000

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BUS 210, Spr 2015, ICP 16 (04/01/15) Name + ID ____________________________________________

1) Chambers Corporation has total assets of $800,000 as of December 31, 2015 and total
liabilities of $400,000. Contributed capital as of December 31, 2014 and December 31,
2015 is $150,000. Chambers Corporation incurred a $50,000 net loss for the year
ended December 31, 2015. If Chambers declared and paid $80,000 in dividends in
2015, their retained earnings at the beginning of 2015 would have been.

a. $220,000.
b. $280,000
c. $380,000.
d. $440,000.

2) Choice Corporation had 100,000 shares of commons stock outstanding on January 1,

2000. On January 1, 2015 Choice purchased 5,000 shares of its own common stock to
fund a stock option plan for its executives. On December 31, 2015 Choice announced a
3 to 1 stock split. Choice’s net income for 2015 was $400,000. How much should Choice
report as earnings per share for 2015?

a. $1.33.
b. $1.40.
c. $4.00
d. $4.21

3) The shareholders’ equity section of Manning Company as of December 31, 2015

follows:

Common stock (11,000 shares issued @ $6 par) $66,000

Additional paid-in capital (Common stock) 100,000
Retained earnings 60,000
Less: Treasury stock (1,000 share @ $12) (12,000)
Total shareholders’ equity $214,000

The company declares a 12 percent stock dividend on the outstanding shares. The
market price of the stock is $90. The journal entry to record the stock dividend would
include:
a. a credit to Additional Paid-In Capital, Common Stock for $100,800.
b. a debit to Common Stock for $7,200.
c. a credit to Stock Dividend for $108,000.
d. a debit to Additional Paid-In Capital, Common Stock for $108,000.

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BUS 210, Spr 2015, ICP 20 (04/15/15) Name + ID ____________________________________________

1) A company that owns between 20% and 50% of the common stock of another business
recognizes revenue from the investment when:
a. the investee company recognizes net income
b. the company receives a cash dividend from the investee company
c. the company sells the shares in the investee company
d. All of these answers are correct.

2) Abler Company owns 40% of Saporo Company. Saporo Company paid $50,000 cash dividends
A C
a. credit to Dividend Revenue for $50,000
b. credit to Dividend Revenue for $20,000
c. credit to Long-Term Investment for $50,000
d. credit to Long-Term Investment for $20,000

3) Amortizing a discount on a held-to-maturity investment will cause the Investment account and
interest revenue to respectively:
a. decrease and increase
b. increase and decrease
c. increase and increase
d. decrease and decrease

4) Torborg Corp. purchased available-for-sale securities from Hensley Company on December 23

for $3,000. On December 31, the market value of those securities is $3,600. Which one of the
following journal entries is appropriate on December 31?

a. Available-for-Sale Securities 3,600

Unrealized Gain on Available-for-Sale Securities 3,600
b. Available-for-Sale Securities 600
Unrealized Gain on Available-for-Sale Securities 600
c. Available-for-Sale Securities 600
Unrealized Price Increase on Available-for-Sale Securities 600
d. No entry is required.

5) Trading securities were purchased on April 1 for $900. On December 31, the market value of
those securities is $700. Which of the following is part of the adjusting entry necessary on
December 31?

a. Debit Unrealized Loss on Trading Securities for $700

b. Debit Realized Loss on Trading Securities for $200
c. Credit Trading Securities for $200
d. Credit Unrealized Loss on Trading Securities for $200

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BUS 210, Spr 2015, ICP 21 (04/20/15) Name + ID ____________________________________________

1) Cash sales and sales on account were $200,000 and $680,000, respectively. During the year
Accounts Receivable increased by $20,000. Cash received from customers was:
a. $220,000
b. $860,000
c. $880,000
d. $900,000

2) Kelsey Sales Co. reports the following information related to its most recent year. What is the
correct amount of net cash flow from operating activities (hint: use the direct method)?
Credit Sales 489,000
Collections from Customers 480,000
Interest received on investments 1,100
Dividends paid to common stockholders 9,000
Cost of goods sold 334,000
Payments to inventory suppliers 335,500
Depreciation expense 9,800
Operating expenses 68,700
Payments for operating expenses 66,500
Interest and taxes paid 12,200

A. $56,400 C. $48,100
B. $75,200 D. $66,900

Use the following information to answer Questions 3 and 4:

1/1/X6 12/31/X6
Unearned rent revenue $6,000 $ 6,200
Rent payable $3,200 $ 3,500
Rent receivable $4,000 $ 4,400
Prepaid rent $1,500 $ 1,400
Accrual basis rent expense $ 68,000
Accrual basis rent revenue $ 70,000

3. How much cash was received for rent during the year?
A. $69,400
B. $69,800
C. $70,000
D. $70,200
E. $70,600

4. How much cash was paid for rent during the year?
A. $67,300
B. $67,600
C. $67,800
D. $68,200
E. $68,400

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BUS 210, Spr 2015, ICP 22 (04/22/15) Name + ID ____________________________________________

1) On an indirect method statement of cash flows, a gain on the sale of plant assets is:
a. reported in the investing activities section
b. reported in the financing activities section
c. added to net income
d. deducted from net income

2) Under the indirect method of preparing a statement of cash flows, depreciation expense for the
current period is:
a. reported in the investing activities section
b. added in the operating activities section
c. subtracted in the operating activities section
d. not reported

3) On a statement of cash flows prepared using the indirect method, an increase in Accounts
Receivable during the period is:
a. added to net income to determine net cash provided by operating activities
b. deducted from net income to determine net cash provided by operating activities
c. added to net income to determine net cash provided by investing activities
d. deducted from net income to determine net cash provided by investing activities

4) On a statement of cash flows prepared using the indirect method, an increase in Accounts
Payable during the period is:
a. added to net income to determine net cash provided by operating activities
b. deducted from net income to determine net cash provided by operating activities
c. added to net income to determine net cash provided by financing activities
d. deducted from net income to determine net cash provided by financing activities

5) Which of the following would be reported on a statement of cash flows as a financing activity?
a. purchase of treasury stock
b. interest paid on bonds payable
c. distribution of stock dividend
d. All of these answers are cash flows from financing activities.

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1) Use the information below to answer the following question:

1/1/X1 12/31/X1
Salary payable $3,500 $ 1,900
Accrual basis salary expense $ 98,000

What is cash paid for salaries for the year?

A. $ 94,500 B. $ 96,100
C. $ 96,400 D. $ 99,600
E. $101,500

2) T X X S
Payable decreased (from 1/1/X1 to 12/31/X1) by $650, and cash paid related to salary during
the period was $44,650. How much was Salary Expense for the period?

Use the following information to answer questions 3 and 4:

Cash received for rent = $40,000
Cash paid for rent = $23,000
Prepaid rent decrease = $800
Rent receivable increase = $630
Rent payable decrease = $780
Unearned rent increase = $400

3) What is accrual basis rent revenue?

A. $40,000
B. $40,230
C. $40,630
D. $38,970
E. none of the above

4) What is accrual basis rent expense?

A. $21,420
B. $23,000
C. $24,580
D. $23,020
E. none of the above

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