Question :
61. Rice Corporation’s attorney has provided the following summaries of three : 1228553
61. Rice Corporation’s attorney has provided the following summaries of three lawsuits against Rice:
? Lawsuit A: The loss is probable, but the loss can’t be reasonably estimated.
? Lawsuit B: The loss is reasonably possible, but the loss can’t be reasonably estimated.
? Lawsuit C: The loss is reasonably possible and can be reasonably estimated.
Which of the following statements is correct?
A. A disclosure note is required for each of the three lawsuits.
B. A disclosure note is required only for lawsuits A & C.
C. A disclosure note is required only for lawsuit A.
D. A disclosure note is required only for lawsuits B & C.
62. Rice Corporation’s attorney has provided the following summaries of three lawsuits against Rice:
? lawsuit A: The loss is probable, but the loss can’t be reasonably estimated.
? lawsuit B: The loss is reasonably possible, but the loss can’t be reasonably estimated.
? lawsuit C: The loss is reasonably possible and can be reasonably estimated.
Which of the following statements is incorrect?
A. A disclosure note is required for Lawsuit A.
B. A disclosure note is required for lawsuit B.
C. A disclosure note is required for lawsuit C.
D. Lawsuit A is reported on the balance sheet as a liability.
63. Darwin Corporation’s attorney has provided the following summaries of three lawsuits against Darwin:
? lawsuit A: The loss is probable and the loss can be reasonably estimated.
? lawsuit B: The loss is reasonably possible and the loss can’t be reasonably estimated.
? lawsuit C: The loss is reasonably possible and the loss can be reasonably estimated.
Which of the following statements is incorrect?
A. A disclosure note is required for lawsuit A.
B. A disclosure note is required for lawsuit C.
C. A disclosure note is not required for lawsuit B.
D. Lawsuit A is reported on the balance sheet as a liability.
64. Smith Corporation entered into the following transactions:
? Purchased inventory on account.
? Collected an account receivable.
? Purchased equipment using cash.
Which of the following statements is correct?
A. The inventory purchase on account increased working capital.
B. Collecting an account receivable increases working capital.
C. The equipment purchase decreases working capital.
D. The inventory purchase on account increased the quick ratio.
65. Smith Corporation entered into the following transactions:
? Purchased inventory on account.
? Collected an account receivable.
? Purchased equipment using cash.
Which of the above transactions resulted in an increase in working capital?
A. The inventory purchase on account.
B. Collecting an account receivable.
C. The purchase of equipment using cash.
D. None of the transactions resulted in an increase in working capital.
66. SRJ Corporation entered into the following transactions:
? The accrual of interest expense on a six-month note payable.
? Collected cash for services to be provided within the next six months.
? The accrual of revenue.
Which of the above transactions resulted in a decrease in working capital?
A. The accrual of interest expense.
B. Collecting cash for services to be provided in the future.
C. The accrual of revenue.
D. Both the accrual of interest expense and the accrual of revenue.
67. SRJ Corporation entered into the following transactions:
? The accrual of interest expense on a six-month note payable.
? Collected cash for services to be provided within the next six months.
? The accrual of revenue.
Which of the above transactions resulted in an increase in working capital?
A. The accrual of interest expense.
B. Collecting cash for services to be provided in the future.
C. The accrual of revenue.
D. Both the accrual of revenue and the collection of cash for future services.
68. SRJ Corporation entered into the following transactions:
? The accrual of interest expense on a six-month note payable.
? Collected cash for services to be provided within the next six months.
? The accrual of revenue.
Which of the following statements is correct with respect to determining the net cash flow from operating activities on a statement of cash flows?
A. The accrual of interest expense is added to net income.
B. Collecting cash for services to be provided in the future is deducted from net income.
C. The accrual of revenue is added to net income.
D. Collecting cash for services to be provided in the future doesn’t require an adjustment to net income.
69. Rocket Corporation entered into the following transactions:
? The accrual of wages and salaries expense.
? The cash payment of a six-month note payable.
? The cash payment in advance for a one-year insurance policy.
Which of the following statements is correct with respect to determining Rocket’s working capital? Assume that Rocket’s operating cycle is four months.
A. The accrual of wages and salaries expense decreases working capital.
B. The cash payment of the note payable decreases working capital.
C. The purchase of the insurance policy increases working capital.
D. The cash payments for the note and insurance both decrease working capital.
70. Rocket Corporation entered into the following transactions:
? The accrual of wages and salaries expense.
? The cash sale of equipment for a loss.
? The cash payment in advance for a one-year insurance policy.
Which of the following statements is correct with respect to determining Rocket’s cash flows from operating activities on the statement of cash flows?
A. The accrual of wages and salaries expense is deducted from net income.
B. The loss on the equipment sale is deducted from net income.
C. The cash payment to purchase the insurance policy is deducted from net income.
D. The accrual of wages and the equipment loss are both deducted from net income.
