All True and False question 1. Inventory and accounts receivable are both carried at net realizable...
All True and False question
1. Inventory and accounts receivable are both carried at net realizable value.
2.Restricted cash should be reported on the balance sheet as part of cash and cash equivalents.
3.Investing activities include the cash effects of selling stocks and bonds to raise capital to purchase fixed assets.
4. When adjusting accrual earnings to obtain cash flows from operations, an increase in Prepaid Rent Expense is subtracted to arrive at cash flow from operations.
5. Under the direct method for cash flow statement preparation, net cash flows from operating activities is calculated by adjusting net income for the differences between accrual-basis revenues and expenses and cash inflows and outflows during the period.
6.Stanley is considering investing in a fast-growing toy manufacturing company—Spiele Inc. Stanley is aware of recent lawsuits involving the safety of trendy new toys manufactured by one of Spiele’s primary competitors. He reviews Spiele’s comparative balance sheet and discovers that the company did not report any estimated loss liabilities for the current and previous fiscal years. Based on this information, Stanley should feel confident that Spiele Inc. has no pending loss litigation.
7. A common-size balance sheet presents each item as a percentage of total assets.
Homework Answers
1. Answer: True
Inventory is carried at cost or the net realizable value where the same is lower than the cost. Accounts receivable are carried net of the allowance for doubtful accounts if any. Thus, both inventory and accounts receivable are carried at their net realizable value. Hence, the statement is true.
2. Answer: False
Restricted cash is the cash that is held for a specific purpose and is not available for any other business purposes. It is hence reported on the balance sheet as an item separate from cash and cash equivalents. Thus, the statement is false.
3. Answer: False
Selling of stocks and bonds are included under financing activities and not investing activities and hence the statement is false.
4. Answer: True
An increase in Prepaid Rent Expense is an increase in an asset that signifies a cash outflow. It is thus deducted from the accrual basis net income in order to arrive at the cash flow from operations. Hence, the statement is true.
Per Chegg guidelines the first 4 questions have been answered. Please post the remaining separately. Thank you.
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All True and False question
1. Inventory and accounts receivable are both carried at net
realizable...
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Complete the cash flow from Operating Activities Additions to Net Income Decrease in accounts receivable Decrease...
Complete the cash flow from Operating Activities
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Bensen Company began operations when it acquired $26,400 cash
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that had a $3,600 salvage value and an expected useful life of four
years. The equipment was used to produce the following revenue
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Question 1 Gutierrez Company reported net income of $190,400 for 2020. Gutierrez also reported depreciation expense...
Question 1
Gutierrez Company reported net income of $190,400 for 2020.
Gutierrez also reported depreciation expense of $41,900 and a loss
of $4,600 on the disposal of plant assets. The comparative balance
sheet shows a decrease in accounts receivable of $14,400 for the
year, a $16,400 increase in accounts payable, and a $4,100 decrease
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Prepare the operating activities section of the statement of cash
flows for 2020. Use the indirect method. (Show amounts
that decrease cash flow...
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Complete the cash flow from Operating Activities
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Leach Inc. experienced the following events for the first two years of its operations: Year 1: 1. Issued $10,000 of common stock for cash. 2. Provided $100,000 of services on account. 3. Provided $31,000 of services and received cash. 4. Collected $69,000 cash from accounts receivable. 5. Paid $16,000 of salaries expense for the year. 6. Adjusted the accounting records to reflect uncollectible accounts expense for the year. Leach estimates that 7 percent of the ending accounts receivable balance will...
Bensen Company began operations when it acquired $26,400 cash
from the issue of common stock on January 1, 2018. The cash
acquired was immediately used to purchase equipment for $26,400
that had a $3,600 salvage value and an expected useful life of four
years. The equipment was used to produce the following revenue
stream (assume all revenue transactions are for cash). At the
beginning of the fifth year, the equipment was sold for $3,100
cash. Bensen uses straight-line depreciation.
2018...
Question 1
Gutierrez Company reported net income of $190,400 for 2020.
Gutierrez also reported depreciation expense of $41,900 and a loss
of $4,600 on the disposal of plant assets. The comparative balance
sheet shows a decrease in accounts receivable of $14,400 for the
year, a $16,400 increase in accounts payable, and a $4,100 decrease
in prepaid expenses.
Prepare the operating activities section of the statement of cash
flows for 2020. Use the indirect method. (Show amounts
that decrease cash flow...
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