1. Operating activities include activities that affect long-term liabilities and stockholders' equity. (Points : 1)
True
False
2. Peartree Company provides the following income statement for the year 2014:
Sales revenue $240,000
Cost of goods sold 110,000
Gross profit $130,000
Operating expenses
Salary expense 45,000
Depreciation expense 12,000
Other operating expenses 23,000
Total operating expenses 80,000
Operating income 50,000
Gain on sale of plant assets 5,000
Interest expense (1,000)
Net income before income tax $54,000
Income tax expense 5,000
Net income (loss) $49,000
How much is the times-interest-earned ratio? (Points : 1)
0.02
49.0
50.0
0.25
None of these is correct
3. Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014.
Net cash flows from operating activities: $32,000 positive
Net cash flows from investing activities: $38,000 negative
Net cash flows from financing activities: $ 9,000 positive
If the beginning cash balance is $18,000, what would the ending cash balance be? (Points : 1)
$21,000
$18,000
$ 3,000
$15,000
None of these is correct
4. Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014.
Net cash flows from operating activities: $32,000 positive
Net cash flows from investing activities: $38,000 negative
Net cash flows from financing activities: $ 9,000 positive
How much was the net change in cash during the year? (Points : 1)
$ 3,000 negative
$79,000 positive
$ 3,000 positive
$61,000 negative
None of these is correct
5. Avatar Company uses the indirect method to prepare the statement of cash flows. Please refer to the following section of the comparative balance sheet:
2014 2013 Increase/decrease
Accounts payable $ 4,000 $ 6,000 $(2,000)
Accrued liabilities 2,000 1,000 1,000
Long-term notes payable 84,000 90,000 (6,000)
Total liabilities $90,000 $97,000 $(7,000)
The change in accounts payable will be shown as a positive cash flow in the adjustments to Net income. (Points : 1)
True
False
6. Peartree Company provides the following data:
BALANCE SHEET Dec 31, 2014 Dec 31, 2013
Cash $ 21,000 $ 18,000
Accounts receivable, net 31,000 35,000
Inventory 53,000 25,000
PP&E, net 120,000 90,000
Total assets $225,000 $168,000
Accounts payable $4,000 $ 6,000
Accrued liabilities 2,000 1,000
Long-term notes payable 84,000 90,000
Total liabilities $ 90,000 $ 97,000
Common stock $ 30,000 $ 2,000
Retained earnings 113,000 74,000
Treasury stock (8,000) (5,000)
Total stockholders’ equity $135,000 $71,000
Total liabilities and stockholders’
equity $225,000 $168,000
How much is the current ratio at year-end 2014? (Points : 1)
17.5
16.1
3.5
0.5
None of these is correct
7. Which of the following signifies that a company may be unable to pay its current liabilities if they suddenly come due? (Points : 1)
Low current ratio
High current ratio
High earnings per share
Low gross profit percentage
8. A company has $510,000 in Average common stockholders’ equity, Net income of $312,000, and Preferred dividends paid of $15,000. What is the rate of return on common stockholders’ equity? (Points : 1)
58.2%
61.2%
59.3%
62.0%
9. The net income for the year ended was $300,000. The company has no preferred stock. Common stockholders’ equity was $1,400,000 at the beginning of the year and $1,600,000 at the end of the year. The return on common stockholders’ equity would be: (Points : 1)
18.75%.
20.00%.
21.43%.
87.5%
None of these is correct.
10. Harrison Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014:
Retained earnings, beginning balance: $125,000
Retained earnings, ending balance: $117,000
Company reported net loss of $8,000 for the year.
What was the amount of dividends paid during the year? (Points : 1)
$5,000
$2,000
Zero
$3,000
None of these is correct
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