Question

1. If Clip, Inc. sold $500,000 worth of merchandise, had $50,000 returned, and then the balance paid during the 2% discount period, how much was Clip's net sales?

Select one:

a. $500,000

b. $450,000

c. $441,000

d. $510,000

2. A sales invoice included the following information: merchandise price, $5,000; transportation, $300; terms 1/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned of $600 is granted prior to payment, that the transportation is paid by the buyer, and that the invoice is paid within the discount period, what is the amount of cash received by the seller?

Select one:

a. $4,656

b. $4,400

c. $4,356

d. $4,950

3. Assume that beginning accounts receivable are $30,000, that there are sales on account of $20,000 during the period, and customers paid $10,000 on their accounts. Under the indirect method of preparing the statement of cash flows, what is the adjustment to net income from these transactions?

Select one:

a. Subtract $10,000 from net income

b. Add $10,000 to net income

c. Subtract $20,000 from net income

d. Add $20,000 to net income

4. Using the indirect method on preparing the statement of cash flows, what is the net cash flow from operating activities if Net Income is $22,000; depreciation expense is $7,000; and the increase in inventories is $5,000.

Select one:

a. $15,000

b. $22,000

c. $24,000

d. $29,000

5. UNI, Inc. purchased $50,000 of equipment for cash. How does this transaction impact the cash flow from investing activities section on the statement of cash flows?

Select one:

a. Decreases operating activities by $50,000

b. Decreases equipment by $50,000

c. Decreases the investing activities section by $50,000

d. There is no change as it was a cash transaction

Answer 1