QUESTION: 1977

The following information was obtained from the financial statements of Firm A:

Current assets = $4,500
Current liabilities = $3,000

Long-range assets = $150,000
Long-term liabilities = $42,000
Contributed capital = $31,000

Then, the retained earnings of the firm equal ________.

$39,000
$31,000
$78,500
$123,500

Answer(s): C

Explanation:

Total assets = Total liabilities + Total Equity
Total Equity = Retained earnings + contributed capital.
Total assets = $4,500+$150,000 = $154,500.
Total liabilities = $42,000+$3,000 = $45,000, hence,
Total equity = $154,500-$45,000 = $109,500
Retained earnings = $109,500-$31,000 = $78,500

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QUESTION: 1978

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 investing cash flow is ________.
-$208,000
-$126,000
N. -$144,000
O. -$162,000

Answer(s): C

Explanation:

Items b and d are the investing cash flows. Note that item j is a non-cash event.

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QUESTION: 1979

Intraperiod income tax allocation arises because

certain revenues and expenses appear in the financial statements but are excluded from taxable income.
items included in the determination of taxable income may be presented in different sections of the financial statements.
income taxes must be allocated between current and future periods.
certain revenues and expenses appear in the financial statements either before or after they are included in taxable income.
none of these answers.

Answer(s): B

Explanation:

To provide a fair presentation of the results of operations, accounting rules require that income tax expense for the period be allocated among income from continuing operations, discontinued operations, extraordinary items, and items charged or credited to shareholders' equity.

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QUESTION: 1980

Which of the following would not be considered an intangible asset?

Customer lists
All of these answers represent intangible assets
Mineral rights
Patents, copyrights, and trademarks
Goodwill

Answer(s): C

Explanation:

Intangibles represent rights, privileges, and benefits of possession. Two common characteristics are high uncertainty regarding future benefits and lack of physical existence. All of the above are examples thatmeet this definition except mineral rights which are not an intangible but a natural resource that has physical properties.

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QUESTION: 1977

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QUESTION: 1978

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QUESTION: 1979

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