Question

1. Eagle Ridge, Inc. issued 40 shares of $20 par value stock to its accountant in full payment for her $900 fee for assisting in setting up the new company. The entry for the issuance of the stock is a

A. debit to Paid-in Capital in Excess of Par–Common for $100. B. credit to Common Stock for $900. C. debit to Common Stock for $800. D. credit to Common Stock for $800. 2. Tucker Enterprises' Accounts Receivable increased by $48,000, and its Accounts Payable increased by $27,000. What is the net effect on cash from operations under the indirect method?      A. +$21,000 B. –$75,000 C. –$21,000 D. +$75,000 3. A/ An _______ is added back to net income in the operating section of an indirect cash flow statement.      A. depreciation B. increase in accounts receivable C. decrease in accounts payable D. increase in inventory 4. A business's Accounts Payable balance has decreased during the year. How would this affect the statement of cash flows operations section under the indirect method?      A. It would be subtracted from net income. B. It does not affect the cash flow from operations. C. It would be added back to net income. D. It is already included in the net income. 5. For the years 2012, 2013, and 2014, the sales of Red Line, Inc. are $40,000, $60,000 and $80,000, respectively. If 2012 is the base year, the trend percentage for 2013 was      A. 200%. B. 0%. C. 133%. D. 150%. 6. The following information is available for Allsport Company: Cost of goods sold $545,000 Merchandise inventory, 12/31/13 $105,000 Merchandise inventory, 12/31/14 $112,000 Accounts payable, 12/31/13 $98,500 Accounts payable, 12/31/14 $101,300 What amount was paid for merchandise during 2014?      A. $540,800 B. $545,000 C. $554,800 D. $549,200 7. Tucker, Inc.'s net sales decreased from $90,000 in year one to $45,000 in year two, and its cost of goods sold decreased from $30,000 in year one to $20,000 in year two. The vertical analysis based on sales for cost of goods sold for the two periods (rounded to nearest tenth of a percent) is      A. 300% and 225%. B. 44.4% and 33.3%. C. 225% and 300%. D. 33.3% and 44.4%. 8. On the income statement, extraordinary items are reported      A. net of income tax or net of income tax savings. B. immediately before the discontinued operations section. C. before the operating income section. D. immediately after the continuing operations section. 9. Of the following, which is not classified as an investing activity on the statement of cash flows?      A. Collecting the principal on loans B. Purchasing land C. Sale of equipment for cash D. Selling goods and services 10. An example of a cash outflow from investing activities is      A. the purchase of treasury stock. B. making a loan to another company. C. issuance of a note payable. D. paying cash dividends.

Answer 1

	Q1)	option d
		credit to common stock for $800
	Q2)	option C
		($21,000)
	Q3)	option A
		Depreciation
	Q4)	option A
		it would be subtracted from Net income
	Q5)	60000/40000
		1.5
		option D
		150%
	Q6)	Amount paid for merchandise
		cost of goods sold					545,000
		Add: increase in merchandise					7,000
		less:increase in accounts payable					2800
		Amount paid for merchandise					549,200
		option D	549,200
	Q7)	30,000/90000   ;		20000/45000
		0.333333		0.444444
		option D	33.3% and 44.4%
	Q8)	option A
		net of income tax or net of income tax savings
	Q9)	option D
		selling goods and services
	Q10)	option B
		making a loan to another company