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Exam 16: Understanding Corporate Annual Reports: Basic Financial Statements

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Question 41

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Convertible bonds allow a bondholder to exchange ________.

A) unsecured bonds for secured bonds
B) unsubordinated bonds for subordinated bonds
C) common stock for bonds
D) bonds for mortgage bonds

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Question 42

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Georgia Company has the following data available: $\begin{array}{lll}&\text { December } & \text { December } \\&31,2011 & 31,2012\\\text { Fixed Assets } & \$ 125 & \$ 125 \\\text { Accumulated Depreciation } & \$ 110 & \$ 117 \\\text { Long-term debt } & \$ 125 & \$ 5 \\\text { Commonstock } & \$ 300 & \$ 400 \\\text { Retained earnings } & \$ 100 & \$ 120\end{array}$ No dividends were declared or paid for the year ending December 31,2012.What is the net cash flow from financing activities for the year ended December 31,2012?

A) $20 cash inflow
B) $20 cash outflow
C) $100 cash inflow
D) $120 cash outflow

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Question 43

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Lantern Company reported sales of $200,000,an increase in accounts receivable of $5,000,and a decrease in cash of $20,000.How much cash was collected from customers?

For the year ended December 31,2015,the following information is available for the Kansas Company: $\begin{array}{ll}\text { Sales }&&\$891,000\\\text { Cost of goods sold } & 662,000 \\\text { Depreciation expense } & 16,000 \\\text { Amortization expense } & 3,000 \\\text { Wage expense } & 91,000 \\\text { Rent expense } & 4,000 \\\text { Loss on sale of fixed assets } & 2,000 \\\text { Interest expense } & 13,000 \\\text { Income taxexpense } & \underline{38,000}\\\text { Total expenses }&&829,000\\\text { Net income }&&\$62,000\\\end{array}$ $\begin{array}{lll}&\text { December 31,2014 }&\text { December 31,2015}\\\text { Cash } & \$ 10,000 & \$ 12,800 \\\text { Accounts receivable } & \$ 10,000 & \$ 19,200 \\\text { Inventory } & \$ 20,000 & \$ 14,100 \\\text { Prepaid rent } & \$ 2,000 & \$ 1,700 \\\text { Accounts payable } & \$ 22,000 & \$ 24,400 \\\text { Wages payable } & \$ 12,000 & \$ 11,300 \\\text { Taxes payable } & \$ 2,000 & \$ 3,100\end{array}$ Required: Prepare the operating activities section of the statement of cash flows for the year ending December 31,2015.Use the indirect method.

Treasury stock is shown on the balance sheets as a deduction from ________.

On a classified balance sheet,the Equipment account is reduced by ________.

Freight and installation costs are added to the cost of equipment.

Leasehold improvements are amortized annually.

Goodwill is amortized for financial statement purposes.

Cash dividends declared are an addition to Retained Earnings on the Retained Earnings Statement.

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

Leasehold Improvements do NOT include ________.

Preferred stockholders receive cash dividends before common stockholders.

The cash paid for taxes is included in the ________ section of the statement of cash flows.Assume the direct method is used.

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

The cash paid for employees' wages is included in the ________ section of the statement of cash flows.Assume the direct method is used.

The cash paid to settle a long-term note payable is included in the ________ section of the statement of cash flows.

What is Other Comprehensive Income?

An example of an investing activity on the statement of cash flows is the purchase of equipment for cash.

During a period of inflation,the LIFO method reports a lower ending inventory amount than FIFO.