In preparing its cash flow statement for the year ended December 31, 1998, Roman Co. collected the following data:Gain on sale of equipment $6,000Proceeds from sale of equipment 10,000Purchase of A.S. Inc. bonds (par value $200,000)180,000Amortization of bond discount2,000Dividends declared 45,000Dividends paid 38,000Proceeds from sale of treasury stock(carrying amount of $65,000)75,000In its December 31, 1998 statement of cash flows, what amount should Roman report as net cash used in investing activities?
Answer(s): C
Investing activities include the acquisition and disposal of all long-term assets. Thus, the proceeds from sale of equipment of $10,000 and purchase of bonds of $180,000 result in a net use of cash of $170,000 from investing ($10,000-180,000).
The completed contract method
Answer(s): B
The completed contract method recognizes revenues and expenses only at the end of the contract. It must be used when any one of the conditions required for use of the percentage-of-completion method is not met.
All of the following are typically fixed expenses except for ________.
Answer(s): A
Fixed expenses are costs that are relatively constant and costs that would be difficult to match directly with units being sold.
An end-of-period adjustment for depreciation of fixed assets is necessary:
An adjustment for depreciation expense matches expenses with revenues for the period, thus contributing to correct statement of net income for the period.
A ratio that measures the average portion of each dollar of revenue that results in profit is
Profit margin, also called return on net sales, is calculated by dividing net income by net sales. This ratio measures the average portion of each dollar of revenue that ends up as profit.
Post your Comments and Discuss CFA CFA I exam prep with other Community members:
Our website is free, but we have to fight against AI bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the CFA I content, but please register or login to continue.