Question

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 was also a loss on the sale of equipment of $4,968. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?

3.

The following information is available from the current period financial statements:

Net income	$ 127,754
Depreciation expense	25,209
Increase in accounts receivable	23,107
Decrease in accounts payable	16,232

3. The net cash flow from operating activities using the indirect method is

a.$192,302

b.$113,624

c.$127,754

d.$109,420

a.$302,283

b.$248,417

c.$258,353

d.$311,415

4.

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.

Assets
Cash and short-term investments	$30,000
Accounts receivable (net)	20,000
Inventory	15,000
Property, plant and equipment	185,000
Total Assets	$250,000
Liabilities and Stockholders' Equity
Current liabilities	$45,000
Long-term liabilities	70,000
Common stock	80,000
Retained earnings	55,000
Total liabilities and stockholders' equity	$250,000
Income Statement
Sales	$85,000
Cost of goods sold	45,000
Gross margin	$40,000
Operating expenses	(15,000)
Interest expense	(5,000)
Net income	$20,000
Number of shares of common stock outstanding	6,000
Market price of common stock	$20
Total dividends paid	$9,000
Cash provided by operations	$30,000

What is the dividend yield for Diane Company?

a.1.3%

b.0.75%

c.7.5%

d.13.3%

Answer 1

1	The gain on sale of fixed asset shall be deducted from the net income.
	So Option A is answer
2	Net Income	$2,80,452
	Add:Depreciation expenses	$25,995
	Less:Inrease in accounts receivable	-$18,291
	Less:Inrease in inventory	-$31,097
	Add:Decrease in prepaid expenses	$2,641
	Less:Decrease in Accounts payable	-$6,315
	Add:Loss on sale of equipment	$4,968
	Cash flow from operating activities	$2,58,353
	So Option C is answer
3	Net Income	$1,27,754
	Add:Depreciation expenses	$25,209
	Less:Inrease in accounts receivable	-$23,107
	Less:Decrease in Accounts payable	-$16,232
	Cash flow from operating activities	$1,13,624
	So Option B is answer
4	Dividend Yield =Dividend per share / Market price of share
	Dividend per share =$9,000 / 6,000 equity share =$1.50 per share
	Dividend Yield =$1.50 / $20 =7.5%
	So Option C is answer