Treasury stock is
Answer(s): B
Treasury stock is not an asset. It represents shares of a company's stock reacquired after having been previously issued and fully paid.
Which of the following best qualifies as a "cash equivalent?"
Answer(s): D
Only a firm's investment in U.S. treasury bills is correct because it is readily converted to cash. U.S. treasury bills have a maximum maturity of six months.
A long-term asset currently has a book value of $45,000 and a salvage value of $5,000. It was acquired 3 years ago at a cost of $75,000. If the firm uses straight-line depreciation, how many years is the asset expected to be in service?
In Straight-line method, depreciation = (1/n)*(acquisition cost - salvage value). The accumulated depreciation in 3 years = 75,000 - 45,000 = $30,000. Hence, per year depreciation equals $10,000 = (1/n)*(75,000-5,000).Thus, n = 7 years, implying the asset will be in service for another 4 years.
Unearned Revenue is classified as
Answer(s): A
Unearned revenue represents "services or product owed" and is reported as a liability on the balance sheet.
In 1998, firm A's financial statements showed the following:Net income = $23,000Operating cash flows = $10,000Financing cash flows = $24,000Non-cash expenses = $19,000Change in cash accounts = $6,500Cash spent on acquiring operating capacity = $19,000Then, the investing cash flow of the firm in 1998 was ________.
Operating + Financing + Investing cash flows = change in cash accounts. Hence, Investing cash flow = 6,500- 10,000-24,000 = -$27,500.
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