Question

1. Issuance of common stock for cash is reported in which section of the cash flow statement?

		Financing activities
		Operating activities
		None of the other choices. This is not reported in the Cash Flow statement.
		Investing activities

2. Smith Company reported a net income of $7,000 for the year ended December 31, 2019. During 2019, accounts receivable decreased by $5,000, merchandise inventory increased by $8,000, accounts payable increased by $10,000, and depreciation expense of $5,000 was recorded. During 2019, operating activities:

		used net cash of $12,000
		used net cash of $19,000
		provided net cash of $12,000
		provided net cash of $19,000

3. A company's overhead rate is based on direct labor hours. Estimated overhead and direct labor hours for the year were $110,000 and 125,000, respectively. During the year, actual overhead was $96,000 and actual direct labor hours were 120,000. The amount of overhead applied is:

		$96,000
		$105,600
		$92,160
		$100,000

4. When a corportion has only one class of stock, the stock is called

		Stated value Stock
		Preferred Stock
		Par value Stock
		Common Stock

5. A company pays $4,000 for a $0.50 per share cash dividend. The company has 20,000 shares authorized and 9,000 shares have been issued. How many shares are in the treasury?

		1,000 shares
		8,000 shares
		500 shares
		None

Answer 1

1.

Issuance of common stock for cash is reported in Financing activities section of the cash flow statement

First option is the correct option.

2.

Statement of cash flow (Operating activities)

Net income	7,000
Depreciation expense	5,000
Accounts receivable decreased	5,000
merchandise inventory increased	-8,000
Accounts payable increased	10,000
Net cash flow from operating activities	$19,000

Fourth option is the correct option

3.

Estimated overhead = $110,000

Estimated direct labor hour = 125,000

Predetermined overhead rate = Estimated overhead/Estimated direct labor hour

= 110,000/125,000

= $0.88 per direct labor hour

Actual direct labor hour used = 120,000

Overhead applied = Actual direct labor hour used x Predetermined overhead rate

= 120,000 x 0.88

= $105,600

Second option is the correct option

4.

When a corportion has only one class of stock, the stock is called common stock.

Fourth option is the correct option

5.

Number of shares issued = 9,000

Dividend per share = $0.50

Total dividend = $4,000

Number of outstanding share x Dividend per share = Total dividend

Number of outstanding share x 0.50 = 4,000

Number of outstanding share = 4,000/0.50

= 8,000

Treasury share = Number of shares issued - Number of outstanding share

= 9,000 - 8,000

= 1,000 shares

First option is the correct option

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