Question : 51. Which statement regarding the indirect method false? A. Depreciation expense added to : 1228463

51. Which statement regarding the indirect method is false? 
A. Depreciation expense is added to net income.
B. An increase in accounts receivable is added to net income.
C. An increase in accounts payable is added to net income.
D. An increase in merchandise inventory is subtracted from net income.

52. Which of the following statements about the quality of income ratio is correct? 
A. When sales are growing, receivables and inventory normally increase faster than accounts payable so the ratio increases.
B. Seasonal variations in sales have no impact on the quality of income ratio.
C. Failure to accrue appropriate expenses will inflate net income and reduce the quality of income ratio.
D. The quality of income ratio is computed by dividing net income by cash flow from operating activities.

53. Which of the following statements about the quality of income ratio is incorrect? 
A. An increase in operating assets and a decrease in liabilities will reduce operating cash flows, thereby reducing the ratio.
B. Seasonal variations in sales and purchases of inventory can cause wide deviations in the quality of income ratio.
C. When sales are growing, receivables and inventory normally increase at a faster rate than accounts payable often causing operating cash flows to be less than income.
D. Aggressive revenue recognition tends to increase the ratio.

54. During 2010, Boogle reported net income of $785 million and net cash inflow from operations of $1,196 million. During 2009, their net income was $563 million and net cash inflow from operations was $1,237 million. Which of the following is incorrect about their quality of income ratios? 
A. In 2009 the ratio was 2.2 and in 2010 it was 1.5.
B. Their ratio in 2009 was better than their ratio in 2010.
C. Boogle’s quality of income ratios indicates poor performance because net income is less than cash flow.
D. The ratio in both years shows the company’s ability to generate good cash flow from its operating activities.

55. Which of the following is not reported as a cash flow from investing activities? 
A. Sale of a depreciable asset for cash.
B. Purchasing land in exchange for common stock.
C. Selling a long-term investment at a loss for cash.
D. Purchase of a patent in exchange for cash.

56. Which of the following is reported as a cash flow from investing activities? 
A. Cash received from dividends earned.
B. Purchasing land in exchange for common stock.
C. Selling a long-term investment at a loss for cash.
D. Cash received from interest earned.

57. KAJ Incorporated purchased a machine costing $100,000 by paying $20,000 and signing an $80,000 note payable. How would this transaction be reported within the cash flow from investing activities section of the cash flow statement? 
A. An outflow of $100,000.
B. An outflow of $80,000.
C. An outflow of $20,000.
D. It would have no effect.

58. KAJ Incorporated purchased a machine costing $100,000 by paying $20,000 cash and signing an $80,000 note payable. How would this transaction be reported within the cash flow from financing activities section of the cash flow statement? 
A. An outflow of $100,000.
B. An outflow of $80,000.
C. An outflow of $20,000.
D. It would have no effect.

59. Flow Company has provided the following information for the year ended December 31, 2010:
? Cash paid for interest, $20,000;
? Cash paid for dividends, $6,000;
? Cash dividends received, $4,000;
? Cash proceeds from bank loan, $29,000;
? Cash purchase of treasury stock, $11,000;
? Cash paid for equipment purchase, $27,000;
? Cash received from common stock sale, $37,000;
? Cash received from sale of land with a $32,000 book value, $25,000;
? Acquisition of land costing $51,000 in exchange for preferred stock issuance.
? Paid a $100,000 note payable by exchanging used machinery with a $77,000 book value.
How much was Flow’s net cash flow from investing activities? 
A. A net outflow of $2,000.
B. A net inflow of $2,000.
C. A net outflow of $53,000
D. A net inflow of $49,000

60. Flow Company has provided the following information for the year ended December 31, 2010:
? Cash paid for interest, $20,000;
? Cash paid for dividends, $6,000;
? Cash dividends received, $4,000;
? Cash proceeds from bank loan, $29,000;
? Cash purchase of treasury stock, $11,000;
? Cash paid for equipment purchase, $27,000;
? Cash received from common stock sale, $37,000;
? Cash received from sale of land with a $32,000 book value, $25,000;
? Acquisition of land costing $51,000 in exchange for preferred stock issuance.
? Paid a $100,000 note payable by exchanging used machinery with a $77,000 book value.
How much was Flow’s net cash flow from financing activities? 
A. A net outflow of $51,000.
B. A net inflow of $29,000.
C. A net outflow of $53,000.
D. A net inflow of $49,000.