fame10

fame_10.docx

Home >Business & Finance homework help >Accounting homework help >fame10

Question 1

Under the direct method, what is the net cash collected from customers given

Sales	$77,000
Cost of goods sold	46,000
Returns and allowances	6,000
Decrease in inventory	10,000
Increase in accounts receivables	11,000
Increase in accounts payable for
goods held for resale	5,000
Decrease in accounts payable
for overhead services	4,000
Net income	26,000
Depreciation	3,000

$31,000

$50,000

$60,000

$66,000

Question 2

Under the direct method, what is the cash paid for goods held for resale?

Sales	$77,000
Cost of goods sold	46,000
Returns and allowances	6,000
Decrease in inventory	10,000
Increase in accounts receivables	11,000
Increase in accounts payable for
goods held for resale	5,000
Decrease in accounts payable for
for administrative services	4,000
Net income	26,000
Depreciation	3,000

$31,000

$35,000

$36,000

$41,000

Question 3

What is the cash provided by operations under the indirect method?

Sales	$77,000
Cost of goods sold	46,000
Returns and allowances	6,000
Decrease in inventory	10,000
Increase in accounts receivables	11,000
Increase in accounts payable for
goods held for resale	5,000
Decrease in accounts payable for
for overhead services	4,000
Net income	26,000
Depreciation	3,000

$23,000

$29,000

$31,000

$25,000

Question 4

Under the indirect method, increases to all of the following accounts are added back to net income EXCEPT

Accounts Payable

Interest Payable

Accounts Receivable

Deferred Tax Liability

Question 5

Which of these Statement of Cash Flows line titles might you find included in an indirect method preparation?

1. I. Interest paid.

2. II. Proceeds from current debt.

3. III. Cash dividend received.

4. IV. Increase in inventories.

5. V. Purchases of plant assets.

I, II, IV, V

II, IV, V

I, III, V

III, IV, V

Question 6

The indirect method would consider which of the following to be operating activities?

1. I. Purchases of current investments.

2. II. Decrease in deferred tax liability.

3. III. Proceeds from current debt.

4. IV. Depreciation expense.

5. V. Gain on sale of investments.

I & III

IV & V

I & II

III & IV

Question 7

Undistributed earnings of equity-method investments are ______ when using the indirect method.

Recorded in the supplementary section of noncash activities.

Added back in the financing section.

Subtracted from in the operating section.

Ignored when preparing the statement of cash flows.

Question 8

Which rule is incorrect regarding the indirect method?

An increase in current operating liabilities is subtracted from net income.

A decrease in current operating assets is added to net income.

An increase in current operating assets is subtracted from new income.

A decrease in current operating liabilities is subtracted from net income.

Question 9

The equation for figuring cash collected from sales when using the direct method is

Sales – Cost of Goods Sold + Decrease in Inventory.

Sales + Decrease (or – Increase) in Accounts Receivable.

Net Income – Cost of Goods Sold + Decrease (or – Increase) in Accounts Receivable.

Revenue – Dividends paid + Retained Earnings.

Question 10

When computing cash payments for operating activities, all of the following are considered except

Administrative expenses.

Decrease or increase in accrued liabilities.

Amortization of a bond.

Selling expenses.