Question 1

Dozier Corporation's Retained Earnings balance at the end of 2009 and 2010 was $220,000 and $370,000, respectively. During 2010, Dozier's net income was $170,000. All dividends declared and paid during 2010 were cash dividends. During 2010, how much cash did Dozier use for dividends?
A) $ 20,000
B) $150,000
C) $170,000
D) $300,000
E) $320,000

Accepted Answer

The cash used for dividends is calculated by adding the net income to the initial retained earnings, then subtracting the final retained earnings. So, $220,000 (initial retained earnings) + $170,000 (net income) - $370,000 (final retained earnings) = $20,000 used for dividends.

Question 2

Butler Corp.'s Retained Earnings balance at the end of 2009 and 2010 was $435,000 and $573,000, respectively. During 2010, Butler's net income was $295,000. Both cash and stock dividends were declared and settled during 2010. The total stock dividend was $28,000. During 2010, how much cash did Butler use for dividends?
A) $28,000
B) $129,000
C) $157,000
D) $267,000
E) none of the above

Accepted Answer

The change in Retained Earnings (RE) from 2009 to 2010 is the net income minus the total dividends paid. The change in RE is $573,000 - $435,000 = $138,000. The net income is $295,000, so the total dividends paid (cash + stock) is $295,000 - $138,000 = $157,000. Since the stock dividends are $28,000, the cash dividends are $157,000 - $28,000 = $129,000.

Question 3

Powell Corp.'s Inventory balance at the end of 2009 and 20102 was $500,000 and $540,000, respectively. During 2010, Powell's cost of goods sold was $2,000,000. How much inventory did Powell buy during 2010?
A) $1,460,000
B) $1,540,000
C) $1,960,000
D) $2,000,000
E) $2,040,000

Accepted Answer

To find the inventory purchased, use the formula: Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory. Rearranging gives Purchases = Ending Inventory - Beginning Inventory + Cost of Goods Sold. Substituting the given values: $540,000 - $500,000 + $2,000,000 = $2,040,000.

Question 4

Dalton Corp.'s Accounts Payable balance at the end of 2009 and 2010 was $200,000 and $300,000, respectively. During 2010, Dalton bought $1,200,000 of inventory. How much cash did Dalton pay its vendors for inventory in 2010?
A) $1,100,000
B) $1,200,000
C) $1,300,000
D) $1,400,000
E) $1,500,000

Accepted Answer

The cash paid to vendors can be calculated by adding the purchases to the beginning accounts payable, then subtracting the ending accounts payable: $1,200,000 + $200,000 - $300,000 = $1,100,000.

Question 5

Rutledge Co.'s had the following account balances at the end of 2009 and 2010.

The company's Cost of Goods Sold for 2010 was $798,000. How much cash did Rutledge pay its vendors for inventory in 2010?
A) $ 22,900
B) $808,400
C) $810,500
D) $820,900
E) Cannot be determined from the information given

Accepted Answer

The answer of Rutledge Co.'s had the following account balances...

Question 6

At the beginning of 2010, Angelo Inc. owed $500 of taxes payable. Angelo's tax expense for 2010 was $15,600. Angelo's 2010 year-end balance in Income Taxes Payable is $2,300. What amount of taxes were paid by Angelo in 2010?
A) $13,300
B) $13,800
C) $15,600
D) $17,400
E) $17,900

Accepted Answer

The answer of At the beginning of 2010, Angelo Inc....

Question 7

Use the following information to answer questions  :Sami Co. had the following account balances at the beginning and end of 2010:
  
During 2010, Sami Co. sold a building that originally cost $200,000 for $22,000. The building had a book value of $25,000.
-What was the cost of the buildings purchased during 2010?
A) $560,000
B) $585,000
C) $598,000
D) $760,000
E) none of the above

Accepted Answer

The answer of Use the following information to answer questions...

Question 8

Use the following information to answer questions  :Sami Co. had the following account balances at the beginning and end of 2010:
  
During 2010, Sami Co. sold a building that originally cost $200,000 for $22,000. The building had a book value of $25,000.
-How much depreciation expense was taken by Sami Co. during 2010?
A) $162,000
B) $137,000
C) $ 38,000
D) $ 13,000
E) Cannot be determined from the information provided

Accepted Answer

The answer of Use the following information to answer questions...

Question 9

Significant non-cash transactions are
A) shown in the statement of cash flows when the direct method of presentation is used.
B) included as part of the investing section of the statement of cash flows as equal cash inflows and outflows.
C) are included as part of the financing section of the statement of cash flows as equal cash inflows and outflows.
D) disclosed when the indirect method of preparing a statement of cash flows is used.
E) disclosed in a schedule that follows the statement of cash flows.

Accepted Answer

Significant non-cash transactions are not reported in the statement of cash flows itself because they do not involve cash flows. Instead, they are disclosed in a separate schedule or note that accompanies the financial statements, providing details about these transactions to users of the financial statements.

Question 10

The operating cash flow ratio is calculated as
A) change in cash balance divided by weighted average number of common shares.
B) cash flow from operating activities divided by current liabilities.
C) cash flow from operating activities divided by weighted average number of common shares.
D) cash inflows from operating activities divided by capital expenditures.
E) (cash inflows from operating activities plus interest expense plus tax expense) divided by interest expense.

Accepted Answer

The operating cash flow ratio is calculated as cash flow from operating activities divided by current liabilities. This ratio measures a company's ability to cover its short-term liabilities with the cash flow generated from its core business operations.

Question 11

The cash interest coverage ratio is calculated as
A) (cash inflows from operating activities plus interest expense) divided by tax expense.
B) cash flow from operating activities divided by current liabilities.
C) cash flow from operating activities divided by weighted average number of common shares.
D) cash inflows from operating activities divided by capital expenditures.
E) (cash inflows from operating activities plus interest expense plus tax expense) divided by interest expense.

Accepted Answer

The cash interest coverage ratio is calculated as (cash inflows from operating activities plus interest expense plus tax expense) divided by interest expense. This formula helps assess a company's ability to cover its interest obligations with its operating cash flow, providing a more accurate picture of financial health in terms of cash flow.

Question 12

Which of the following can be calculated for a given period as (net cash flow from operating activities minus preferred stock dividends) divided by the weighted average number of shares of common stock outstanding?
A) Cash burn rate
B) Earnings per share
C) Cash flow per share
D) Free cash flow
E) Earnings before income taxes

Accepted Answer

Cash flow per share is calculated by taking the net cash flow from operating activities, subtracting preferred stock dividends, and then dividing by the weighted average number of shares of common stock outstanding. This metric provides investors with a measure of how much cash flow the company generated per share of common stock, offering a perspective on the company's financial health and performance beyond what earnings per share can provide.

Question 13

Renz Corporation's 2010 net cash flows from operating activities are $120,000. Its 2010 common and preferred dividends were $30,000 and $25,000, respectively. On January 1, 2010, Renz's total number of outstanding common shares was 40,000 shares. On March 1, 2010, it issued another 12,000 shares. What is Renz's 2010 cash flow per share?
A) $1.73
B) $1.83
C) $1.90
D) $2.31
E) $2.38

Accepted Answer

The answer of Renz Corporation's 2010 net cash flows from...

Question 14

A measurement of the cash generated by a company's operations in excess of that needed to maintain current organizational productivity is called
A) cash burn rate.
B) earnings per share.
C) cash flow per share.
D) free cash flow.
E) earnings before income taxes.

Accepted Answer

Free cash flow is the cash generated by a company's operations after accounting for capital expenditures necessary to maintain or expand its asset base.

Question 15

Companies with a high level of free cash flow
A) have high debt to total asset ratios.
B) may not be making sufficient amounts of capital investments.
C) always report that number in financial statements.
D) have made comparable computations.
E) all of the above.

Accepted Answer

Companies with a high level of free cash flow may not be making sufficient amounts of capital investments, as free cash flow is the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. High free cash flow could indicate that a company is generating a lot of cash but may also suggest that it is not investing enough back into the business for growth or maintenance.

Question 16

Most companies should be generating
A) about an equal amount of net income and free cash flow.
B) free cash flow that is at least twice net income.
C) net income that is at least twice free cash flow.
D) cash flow from operating activities approximately equal to free cash flow.
E) cash flow from investing activities approximately twice free cash flow.

Accepted Answer

The answer of Most companies should be generating
A) about an...

Question 17

Business managers should be concerned with both generating revenues and properly managing their firms' cash resources.

Accepted Answer

Generating revenues is crucial for the survival and growth of a business, while proper cash management ensures that the firm can meet its short-term obligations and invest in opportunities for long-term success.

Question 18

The objective of the statement of cash flows is to account for the change in an organization's cash balance during a given accounting period.

Accepted Answer

The statement of cash flows is designed to provide information on how an organization's cash balance changes over a specific period due to operating, investing, and financing activities.

Question 19

Payments for purchasing debt and equity securities classified as short-term investments are investing cash flows.

Accepted Answer

The answer of Payments for purchasing debt and equity securities...

Question 20

Financial statement users tend to focus on cash flow provided by operating activities.

Accepted Answer

Cash flow from operating activities is a key indicator of a company's financial health, showing how much cash is generated from the company's regular business operations, which is crucial for assessing its ability to maintain and grow operations.

Quiz 10: Statement of Cash Flows

Dozier Corporation's Retained Earnings balance at the end of 2009 and 2010 was $220,000 and $370,000, respectively. During 2010, Dozier's net income was $170,000. All dividends declared and paid during 2010 were cash dividends. During 2010, how much cash did Dozier use for dividends?

Powell Corp.'s Inventory balance at the end of 2009 and 20102 was $500,000 and $540,000, respectively. During 2010, Powell's cost of goods sold was $2,000,000. How much inventory did Powell buy during 2010?

Dalton Corp.'s Accounts Payable balance at the end of 2009 and 2010 was $200,000 and $300,000, respectively. During 2010, Dalton bought $1,200,000 of inventory. How much cash did Dalton pay its vendors for inventory in 2010?

Rutledge Co.'s had the following account balances at the end of 2009 and 2010. The company's Cost of Goods Sold for 2010 was $798,000. How much cash did Rutledge pay its vendors for inventory in 2010?

At the beginning of 2010, Angelo Inc. owed $500 of taxes payable. Angelo's tax expense for 2010 was $15,600. Angelo's 2010 year-end balance in Income Taxes Payable is $2,300. What amount of taxes were paid by Angelo in 2010?

Significant non-cash transactions are

The operating cash flow ratio is calculated as

The cash interest coverage ratio is calculated as

Which of the following can be calculated for a given period as (net cash flow from operating activities minus preferred stock dividends) divided by the weighted average number of shares of common stock outstanding?

A measurement of the cash generated by a company's operations in excess of that needed to maintain current organizational productivity is called

Companies with a high level of free cash flow

Most companies should be generating

Business managers should be concerned with both generating revenues and properly managing their firms' cash resources.

The objective of the statement of cash flows is to account for the change in an organization's cash balance during a given accounting period.

Payments for purchasing debt and equity securities classified as short-term investments are investing cash flows.

Financial statement users tend to focus on cash flow provided by operating activities.