QUESTION: 1541

The following financial data on CashCow, Inc. have been taken from its financial statements for 1996:

Dividends paid$25,000
Sale of land$64,000
Inventory purchases$29,000
Purchase of a warehouse$208,000
Bonds issued$90,000
Dividends received from investments$17,000
Interest paid on bonds$2,400
Salaries paid$107,400
Cash collection from customers$28,400
Loss on land sale$18,000
Beginning cash balance$312,000
In the above question, the financing cash flow is ________.
$79,600
$90,000
N. $82,000
O. $65,000

Answer(s): D

Explanation:

Items a and e are the financing cash flows.

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QUESTION: 1542

A defined contribution pension plan:

disburses benefits based on the returns on the fund's investments.
none of these answers.
promises to pay retirees a specific income stream.
pays defined benefits for a certain period after retirement.

Answer(s): A

Explanation:

In a defined benefit contribution plan, the employee makes definite contributions to the pension plan from the regular salary. Investment of these contributions is at the discretion of the employee and the size of the benefits paid out depends upon the total contributions made and the fund performance. Thus, in this plan, the risk of pension plan performance is borne by the employee and not the employer.

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QUESTION: 1543

Which of the following would not normally be found in the footnotes that accompany financial statements?

significant legal proceedings
list of officers and directors of company
details of business acquisitions
significant accounting principles used

Answer(s): B

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QUESTION: 1544

Proctor Ltd. sells major household appliance service contracts for cash. The service contracts are for a 1-year, 2-year, or 3-year period. Cash receipts from contracts are recorded as unearned contract revenues. This account had a balance of $720,000 at December 31, 1996. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $180,000 at December 31, 1996. Outstanding service contracts at December 31, 1996 expire as follows:

During 1997 $150,000
During 1998 $225,000
During 1999 $100,000

What amount should be reported as unearned service contract revenues in Proctor's December 31, 1996 balance sheet?

$475,000
None of these answers
$295,000
$245,000
$540,000

Answer(s): A

Explanation:

Unearned service contract revenues relate to outstanding contracts for which the agreed service has not yet been provided. Thus, the amount to be reported as unearned service contract revenues covers all contracts that are outstanding at December 31, 1996 which totals $475,000 (150,000 + 225,000 + 100,000)

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Free CFA-Level-I Exam Braindumps (page: 386)

QUESTION: 1541

Explanation:

QUESTION: 1542

Explanation:

QUESTION: 1543

QUESTION: 1544

Explanation: