Below is an example of an incorrectly prepared statement of cash flows. The descriptions of activities are correct.Cash from operating activities$60,000Net Income(4,000)Depreciation(2,000)Increase in accounts receivable(1,000)Increase in deferred tax liability$53,000Cash from investing activities($48,000)Purchase of marketable securities2,500Dividends received1,500Dividends paid($44,000)Cash from financing activities(500)Increase in Short-term debt(2,500)Increase in Long-term debt($3,000)Increase in cash$6,000The correct change in cash for the year is ________
Answer(s): B
$60,000 + $4,000 - $2,000 + $1,000 - $48,000 + $2,500 - $1,500 + $500 + $2,500 = $19,000.
Which of the following is/are true about potentially dilutive securities?
In Diluted EPS, all potentially dilutive securities are assumed converted to common stock and appropriate adjustments made to the income number. If this process serves to increase Diluted EPS, then the anti-dilutive security is left out of the calculations.The conversion assumptions for options and warrants are as follows:1. They are assumed to be exercised at the beginning of the period or at the time of issuance, whichever is later.2. They enter into the Diluted EPS calculations only if the average stock price during the period exceeds the exercise price.Convertible bonds, regardless of their historical or current yield, are included in Diluted EPS calculations unless they are anti-dilutive.
Which of the following are operating cash flows?
Answer(s): D
It is very important to remember the following points about dividends and interests:1. Dividends received from stock investments are considered operating cash flows.2. Dividends paid on equity are considered financing cash flows.3. Interest payments on debt are considered operating cash flows.4. Interest received from debt investments are considered operating cash flows.
Which of the following is not a current asset?
Answer(s): A
Accumulated Depreciation is a contra account to the fixed asset account(s), which are reported in the ling-term asset section of the balance sheet.
Which of the following is not an example of a cash flow from operations?
Operating activities include the cash effects of transactions and other events that enter into the determination of net income. All of the responses apply.
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