An example of a cash outflow from investing activities is

1. An example of a cash outflow from investing activities is

A. the purchase of treasury stock.

B. paying cash dividends.

C. making a loan to another company.

D. issuance of a note payable.

2. 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 is already included in the net income.

B. It does not affect the cash flow from operations.

C. It would be added back to net income.

D. It would be subtracted from net income.

3. A journal entry for the sale of $10 par-common stock for $18 per share would include a

A. debit to Common Stock.

B. debit to Paid-In Capital in Excess of Par–Common Stock.

C. credit to Paid-In Capital in Excess of Par–Common Stock.

D. credit to Cash.

4. The 2013 and 2014 balance sheets for Newport Industrial showed Cash of $8,000 and $9,500, respectively; Accounts Receivable of $14, 000 and $16,000, respectively; Inventory of $11,000 and $8,000, respectively; and Accounts Payable of $5,000 and $7,000, respectively. Its 2014 income statement showed Net Sales of $108,000, Cost of Goods Sold of $62,000, and Net Income of $27,000. The cash conversion cycle for 2014 (round calculations to two decimal places) is _______ days.

A. 141.94

B. 71.30

C. 40.56

D. 30.08

5. Frank's Taxidermy has a cash conversion cycle of _______ days, which means the business may be facing a cash flow crunch.

A. 10

B. 70

C. 100

D. 40

Is there any other information? If not then I will guess it to be 70 or 100

6. Knutson Company reacquired 5,000 shares of its $15-par common stock for $13/share. The debit to Treasury Stock is

A. $10,000.

B. $8,000.

C. $65,000.

D. $75,000.

7. A business wanting to incorporate must file articles of incorporation with

A. the local government.

B. the state office dealing with incorporation.

C. the federal government.

D. any state in which they will do business.

8. Fine Furniture Company had a net income of $50,000. Accounts receivable increased by $30,000; inventory decreased by $20,000; amounts payable increased by $4,000; and salaries payable decreased by $1,000. The amount of cash flow from continuing operating activities under the indirect method is

A. $65,000.

B. $43,000.

C. $37,000.

D. $55,000.

9. The following information applied to Advanced Industries, Inc. for 2014:

What is the dividend yield for Advanced Industries, Inc. (to the nearest tenth of a percent)?

Earnings/share $17.68

Market price per share of common stock $52

Number of shares of common stock outstanding 52,000

Net income $48,000

Dividends/share $7.14

A. 13.7%

B. 40.4%

C. 34.0%

D. 92.3%

10. A/ An _______ is added back to net income in the operating section of an indirect cash flow statement.

A. increase in accounts receivable

B. depreciation

C. decrease in accounts payable

D. increase in inventory

11. The debt ratio is the relationship between

A. current assets and current liabilities.

B. current assets and total liabilities.

C. total assets and total liabilities.

D. total assets and current liabilities.

12. Hallett Industries, Inc. reported net sales of $306,000, cost of goods sold of $192,600, operating expenses of $58,900, and income tax expense of 12,300. What is Hallett Industries' net income percentage?

A. 62.94

B. 13.79

C. 17.81

D. 37.06

13. The Coulter Corporation Stockholders' Equity section includes the following information: What is the total selling price of the common stock?

Preferred Stock $12,000

Paid-in Capital in Excess of Par-Preferred $2,700

Common Stock $15,000

Paid-in Capital in Excess of Par-Common $4,100

Retained Earnings $8,200

A. $19,100

B. $14,700

C. $15,000

D. $27,300

14. Cherry Corporation's outstanding stock is 100 shares of $100 par, 11% cumulative preferred stock, and 2,000 shares of $12 par common stock. Cherry paid $1,600 in cash dividends during the year. No dividends are in arrears. Common stockholders received

A. $0.

B. $500.

C. $2,500.

D. $1,100.

15. A company sold an asset with a book value of $56,000 for $35,000 cash. Which of the following is a

true statement?

A. Loss on sale equals $21,000 and Cash inflow equals $35,000.

B. Loss on sale equals $35,000 and Cash inflow equals $21,000.

C. Loss on sale equals $56,000 and Cash inflow equals $56,000.

D. Loss on sale equals $35,000 and Cash inflow equals $35,000.

End of exam

16. R&R Heating, Inc. has 350,000 shares of $3-par common stock outstanding. They have declared a 5% stock dividend. The current market price of the common stock is $7.50 per share. The amount that will be credited to common stock on the date of declaration is

A. $131,250.

B. $78,750.

C. $52,500.

D. $183,750.

17. Choose the correct formula to determine a trend percentage.

A. An item from any year divided by the same item from a base year, multiplied by 100.

B. The total income of the current year, minus the total income from a base year.

C. An item from the base year multiplied by the same item from the current year.

D. Net profit of the current year divided by net profit of a base year.

18. On the _______ of a cash dividend, no journal entry is required.

A. date of record

B. preferred date

C. payment date

D. declaration date

19. 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. credit to Common Stock for $800.

B. debit to Paid-in Capital in Excess of Par–Common for $100.

C. credit to Common Stock for $900.

D. debit to Common Stock for $800.

20. Allied Industrial has net sales of $1,200,000, net income of $85,000, average current assets of $53,000,

average fixed assets of $184,000, and average total assets of $237,000. What is Allied Industrial's total

asset turnover ratio?

A. 22.64

B. 6.52

C. 0.20

D. 5.06

21. On January 1, Bestway, Inc. signed a $175,000, 8%, 30-year mortgage that requires semiannual
payments of $7,735 on June 30 and December 31 of each year. The journal entry for the first semiannual
payment (with interest rounded to the nearest dollar) is
A. debit Interest expense, $735; debit Mortgage payable, $7,000; credit Cash, $7,735.
B. debit Interest expense, $7,000; debit Mortgage expense, $735; credit Cash, $7,735.
C. debit Interest expense, $7,000; debit Mortgage payable, $735; credit Cash, $7,735.
D. debit Mortgage payable, $7,735; credit Cash, $7,735.

22. Which of the following accounts is credited in a journal entry for a like-kind asset exchange?
A. Loss on Exchange of Assets
B. Tires (new)
C. Truck (old)
D. Accumulated Depreciation for truck (old)

23. If an asset produces more revenue in its early years, the depreciation method best suited for this asset is the
A. double-declining balance method.
B. units-of-production method.

C. expense method.
D. straight-line method.

24. Skymaster, Inc. has cash of $33,000, net accounts receivable of $41,000, short-term investments of
$15,000, and inventory of $25,000. It also has $30,000 in current liabilities and $50,000 in long-term
liabilities. What is the current ratio for Skymaster, Inc.?
A. 1.48
B. 3.80
C. 2.47
D. 1.43


25. The maturity value equals
A. the principal plus interest paid.
B. the interest due by the maturity date.
C. the interest due minus interest paid.
D. the principal plus all interest due.


26. Fixed assets are also called _______ assets, or tangible assets.
A. property
B. plant
C. natural
D. saleable


27. The Premium on Bonds Payable account is added to the Bonds Payable account, so it's called a/ an
_______ account.
A. premium
B. adjunct
C. contra
D. aspect

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