Question
In: Accounting
Indirect Method Instruction The following questions generally relate to the indirect method of preparing the statement...
Indirect Method Instruction
The following questions generally relate to the indirect method of preparing the statement of cash flows.
____ 30. Refer to Indirect Method Instruction. A company sells land with a carrying value of $50,000 for $75,000. What adjustment is made to net income on the statement of cash flows?
|
a. |
No adjustment this is part of investing activities |
|
b. |
Add $25,000 |
|
c. |
Add $75,000 |
|
d. |
Subtract $25,000 |
____ 31. The rate earned on stockholders' equity (leverage formula) is ____.
|
a. |
Net Income ´ Average Total Assets Average Stockholders' Equity Average Stockholders' Equity |
|
b. |
Net Income ´ Average Total Assets Average Total Assets Average Stockholders' Equity |
|
c. |
Net Income ´ Average Total Assets Average Stockholders' Equity Net Income |
|
d. |
None of the above, stockholders' have no equity |
____ 32. One way to summarize the relationship between the rate earned on total assets is the product of a firm's profit margins and the efficiency by which it uses its assets. This is called ____.
|
a. |
Return on capital |
|
b. |
Return on investment |
|
c. |
Dunlop formula |
|
d. |
DuPont formula |
____ 33. Which of the following inventory items would most likely have the highest inventory turnover?
|
a. |
Diablo Lamborghini |
|
b. |
Scented bar soap |
|
c. |
Cheese and milk |
|
d. |
Spaghetti sauce |
Solutions
Expert Solution
| 30 |
| Subtract $25,000, Gain on sale is deducted under indirect method |
| Option D is correct |
| 31 |
| The rate earned on stockholders' equity (leverage formula) is : |
| Net Income ´ Average Total Assets |
| Average Total Assets Average Stockholders' Equity |
| Option B is correct |
| 32 |
| Return on investment is the product of a firm's profit margins and the efficiency by which it uses its assets. |
| Option B is correct |
| 33 |
| Cheese and milk would most likely have the highest inventory turnover |
| Option C is correct |
ekkarill92 answered 2 years agoRelated Solutions
In preparing a company's statement of cash flows using the indirect method , the following information...
In preparing a company's statement of cash flows using the
indirect method , the following information is available:
Net income $76,000
Accounts payble increaded by 20,400
accounts receivable decreased by 27,400
inventories increased by 9,800
depreciation expense 37,200
Net cash provided by operating activities was?
Statement of Cash Flows—Indirect Method Glendive Corp. is in the process of preparing its statement of...
Statement of Cash Flows—Indirect Method
Glendive Corp. is in the process of preparing its statement of
cash flows for the year ended June 30, 2017. An income statement
for the year and comparative balance sheets are as
follows:
For the Year Ended
June 30, 2017
Sales revenue
$550,000
Cost of goods sold
350,000
Gross profit
$200,000
General and administrative expenses
$55,000
Depreciation expense
75,000
Loss on sale of plant assets
5,000
Total expenses and losses
$135,000
Income before interest and...
Statement of Cash Flows—Indirect Method Glendive Corp. is in the process of preparing its statement of...
Statement of Cash Flows—Indirect Method
Glendive Corp. is in the process of preparing its statement of
cash flows for the year ended June 30, 2017. An income statement
for the year and comparative balance sheets are as
follows:
For the Year Ended
June 30, 2017
Sales revenue
$550,000
Cost of goods sold
350,000
Gross profit
$200,000
General and administrative expenses
$55,000
Depreciation expense
75,000
Loss on sale of plant assets
5,000
Total expenses and losses
$135,000
Income before interest and...
Statement of Cash Flows—Indirect Method Glendive Corp. is in the process of preparing its statement of...
Statement of Cash Flows—Indirect Method
Glendive Corp. is in the process of preparing its statement of
cash flows for the year ended June 30, 2017. An income statement
for the year and comparative balance sheets are as
follows:
For the Year Ended
June 30, 2017
Sales revenue
$550,000
Cost of goods sold
350,000
Gross profit
$200,000
General and administrative expenses
$55,000
Depreciation expense
75,000
Loss on sale of plant assets
5,000
Total expenses and losses
$135,000
Income before interest and...
1. A corporation uses the indirect method for preparing the statement of cash flows. A fixed...
1. A corporation uses the indirect method for preparing the
statement of cash flows. A fixed asset has been sold for $23,649
representing a gain of $3,881. The value in the operating
activities section regarding this event would be
a$(3,881)
b$23,649
c$27,530
d$19,768
2. A company had net income of $280,452. Depreciation expense is
$25,995. During the year, Accounts Receivable and Inventory
increased by $18,291 and $31,097, respectively. Prepaid Expenses
and Accounts Payable decreased by $2,641 and $6,315, respectively.
There...
Preparing a Statement of Cash Flows (Indirect Method) Rainbow Company's income statement and comparative balance sheets...
Preparing a Statement of Cash Flows (Indirect
Method)
Rainbow Company's income statement and comparative balance
sheets follow.
RAINBOW COMPANY
Income Statement
For Year Ended December 31, 2016
Sales
$1,500,000
Dividend Income
30,000
Total Revenue
1,530,000
Cost of Goods Sold
$880,000
Wages and Other Operating Expenses
260,000
Depreciation Expense
78,000
Patent Amortization Expense
14,000
Interest Expense
26,000
Income Tax Expense
88,000
Loss on Sale of Equipment
10,000
Gain on Sale of Investments
(6,000)
1,350,000
Net Income
$180,000
RAINBOW COMPANY
Balance Sheets...
Preparing a Statement of Cash Flows (Indirect Method) Rainbow Company's income statement and comparative balance sheets...
Preparing a Statement of Cash Flows (Indirect
Method)
Rainbow Company's income statement and comparative balance
sheets follow.
RAINBOW COMPANY
Income Statement
For Year Ended December 31, 2016
Sales
$1,500,000
Dividend Income
30,000
Total Revenue
1,530,000
Cost of Goods Sold
$880,000
Wages and Other Operating Expenses
260,000
Depreciation Expense
78,000
Patent Amortization Expense
14,000
Interest Expense
26,000
Income Tax Expense
88,000
Loss on Sale of Equipment
10,000
Gain on Sale of Investments
(6,000)
1,350,000
Net Income
$180,000
RAINBOW COMPANY
Balance Sheets...
Preparing a Statement of Cash Flows (Indirect Method) Rainbow Company’s income statement and comparative balance sheets...
Preparing a Statement of Cash Flows (Indirect Method)
Rainbow Company’s income statement and comparative balance
sheets follow.
RAINBOW COMPANY
Income Statement
For Year Ended December 31, 2016
Sales
$750,000
Dividend Income
15,000
Total Revenue
765,000
Cost of Goods Sold
$440,000
Wages and Other Operating Expenses
130,000
Depreciation Expense
39,000
Patent Amortization Expense
7,000
Interest Expense
13,000
Income Tax Expense
44,000
Loss on Sale of Equipment
5,000
Gain on Sale of Investments
(3,000)
675,000
Net Income
$90,000
RAINBOW COMPANY
Balance Sheets...
Preparing a Statement of Cash Flows (Indirect Method) Rainbow Company's income statement and comparative balance sheets...
Preparing a Statement of Cash Flows (Indirect Method)
Rainbow Company's income statement and comparative balance
sheets follow.
RAINBOW COMPANY
Income Statement
For Year Ended December 31, 2016
Sales
$3,375,000
Dividend Income
67,500
Total Revenue
3,442,500
Cost of Goods Sold
$1,980,000
Wages and Other Operating Expenses
585,000
Depreciation Expense
175,500
Patent Amortization Expense
31,500
Interest Expense
58,500
Income Tax Expense
198,000
Loss on Sale of Equipment
22,500
Gain on Sale of Investments
(13,500)
3,037,500
Net Income
$405,000
RAINBOW COMPANY
Balance Sheets...
Preparing a Statement of Cash Flows (Indirect Method) Rainbow Company’s income statement and comparative balance sheets...
Preparing a Statement of Cash
Flows (Indirect Method)
Rainbow Company’s income statement and comparative balance
sheets follow.
RAINBOW
COMPANY
Income Statement
For Year Ended December 31, 2016
Sales
$750,000
Dividend Income
15,000
Total Revenue
765,000
Cost of Goods Sold
$440,000
Wages and Other Operating Expenses
130,000
Depreciation Expense
39,000
Patent Amortization Expense
7,000
Interest Expense
13,000
Income Tax Expense
44,000
Loss on Sale of Equipment
5,000
Gain on Sale of Investments
(3,000)
675,000
Net Income
$90,000
RAINBOW
COMPANY
Balance Sheets...
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