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Exam 16: Understanding Corporate Annual Reports: Basic Financial Statements

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Question 1

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For the year ending December 31,2012,Magadena Company reports net income of $23,000 and depreciation expense of $17,000.The income tax expense for the year ending December 31,2012 is $20,000.The following data is available: What is the net cash provided(used) by operating activities for the year ended December 31,2012? Assume the indirect method is used.

A) $(20,000)
B) $23,000
C) $40,000
D) $69,000

E) All of the above
F) C) and D)

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Question 2

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Goodwill is a tangible asset.

A) True
B) False

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Question 3

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Fred Company had the following data available: What is the balance in Retained Earnings on December 31,2015?

The cash received from the sale of equipment is included in the ________ section of the statement of cash flows.

Unsecured debt holders are creditors who have ________.

A company does not pay cash dividends on treasury stock.

In accounting terms,what is goodwill?

The liabilities of Becky Company are listed below: Becky Company liquidated its assets,and received $150,000 cash.The unsubordinated debenture holders will receive ________.

Which of the following is NOT a cash equivalent?

Leasehold improvements are amortized annually.

Beginning retained earnings was $34,000.Ending retained earnings was $61,600 and net income was $36,000.What amount of dividends was declared?

Free cash flow equals net cash from operating activities minus capital expenditures.

Convertible bonds allow a bondholder to exchange ________.

Cash dividends are reported as an expense on the Income Statement.

Tommy Company's income statement showed rent expense of $16,000.The beginning balance in Prepaid Rent was $5,000.The ending balance in Prepaid Rent was $3,000.The cash paid for rent was ________.

Operating income summarizes the results of basic operating activities of a company.

Hope Company reported sales on account of $250,000,an increase in inventory of $70,000,and a decrease in accounts receivable of $40,000.How much cash was collected from customers?

Some intangible assets are depreciated.

An example of a financing activity on the statement of cash flows is the payment of cash dividends.

The liabilities of Sam Company are listed below: Sam Company liquidated its assets,and received $140,000 cash.The subordinated debenture holders will receive ________.