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 discount 2,000Dividends 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 provided by financing activities?
Answer(s): B
Financing activities include the issuance and repurchase of shares, dividends paid and changes in long-term liabilities. In this case, there were dividends paid of $38,000 and proceeds from sale of treasury stock of $75,000. Therefore, the net cash provided from financing activities is $37,000 ($75,000-38,000).
Under a periodic inventory system, how is COGS determined?
Answer(s): A
Under the periodic inventory system, only the ending inventory is counted and priced. Cost of goods sold is determined by deducting the cost of the ending inventory from the cost of goods available for sale.
The accrual basis of accounting:
Answer(s): E
Accrual accounting principles are the decision rules that state when to recognize the revenue and expense consequences of cash flows and other events.
The following account is affected when recording a return of inventory to the vendor under a perpetual inventory system.
Answer(s): D
When inventory is purchased, Merchandise Inventory is debited, and credited when returned. The periodic system records purchases in an account called Purchases and returns are booked to Purchases Returns and Allowances.
Which of the following would not be reported as an extraordinary item?
An item must be both unusual and infrequent (and material in amount) to be classified as extraordinary.
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