When preparing a direct method statement of cash flows, the calculation of equity financing cash flows requires analysis of the change in stockholders' equity, separating all of the following except
Answer(s): A
Cash flows from investments in joint ventures and affiliates and long-term investments in securities are components of cash flows from investing activities.
The Basic EPS represents which of the following?
For a simple capital structure, Basic EPS = (Net Income - Preferred dividends)/weighted # of common shares = The amount of net income available for distribution to common stock holders, per share. Net income after preferred dividends divided by total equity is not true since total equity includes preferred equity whereas the denominator of Basic EPS consists only of common shares.
Which of the following would affect the comparability of accounting information for a given company from one accounting period to the next?
Answer(s): C
A change in the representation by an accounting firm has no material effect on the accounting information.
A firm has purchased a building with a useful life of 7 years. It cost $35,000 and its salvage value is estimated at $5,000. If the firm uses double declining method, what's the depreciation expense recognized in Year 2?
Answer(s): B
In Double Declining method, depreciation = (2/n)*book value. In Year 1, depreciation = (2/7)*35,000 = 10,000.Hence, in Year 2, depreciation = (2/7)*(35,000-10,000) = $7,143.
Book value of a company is equal to all of the following except
The book value of a company is its value based on the balance sheet. The balance sheet is historical and after day 1 of operations the book value of a company is almost never equal to the market value of the company.
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