Question :
81. Eight Corporation declared and paid $90,000 of dividends to its : 1230432
81. Eight Corporation declared and paid $90,000 of dividends to its shareholders during Year 3. The statement of cash flows classifies the transaction as a(n)
A. investing activity.
B. financing activity.
C. operating activity
D. exchange transaction.
E. equity activity.
82. During Year 7, Seven Corporation wrote down marketable equity securities to their market value. The journal entry made for this write-down is as follows:
Unrealized Holding Loss on Marketable Equity Securities
Available for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.000
Marketable Equity Securities Available for Sale . . . . . . . . . . . . . . . . . 7,000
This entry
A. does affect cash but does not appear in the statement of cash flows.
B. does not affect cash but does appear in the statement of cash flows.
C. does affect cash and does appear in the statement of cash flows.
D. does not affect cash and does not appear in the statement of cash flows.
E. none of the above
83. During Year 5, Five Corporation signed a long-term lease for a building. It classified the lease as a capital lease and recorded it in the accounts as follows:
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Capitalized Lease Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
The transaction requires
A. inclusion in the statement of cash flows as an operating activity, only.
B. inclusion in the statement of cash flows as an investing activity, only.
C. inclusion in the statement of cash flows as a financing activity, only
D. disclosure in a supplementary schedule or notes to the financial statements.
E. disclosure in managements’ discussion and analysis.
84. During Year 3, investors in bonds of Three Corporation exercised their option to convert their debt securities into shares of common stock. The entry made in the accounting records to record the conversion is as follows:
Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
Additional Paid-in Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,000
The transaction requires
A. inclusion in the statement of cash flows as an operating activity, only.
B. inclusion in the statement of cash flows as an investing activity, only.
C. inclusion in the statement of cash flows as a financing activity, only
D. disclosure in a supplementary schedule or notes to the financial statements.
E. disclosure in managements’ discussion and analysis.
85. The extent to which a firm adjusts net income for changes in noncurrent assets and noncurrent liabilities in deriving cash flow from operations under the indirect method depends on the nature of its operations. Capital-intensive firms will likely show a substantial
A. addback to net income for depreciation expense.
B. subtraction from net income for depreciation expense.
C. addback to net income for capital expenditures.
D. subtraction from net income for capital expenditures.
E. subtraction from retained earnings for depreciation expense.
86. The extent to which a firm adjusts net income for changes in noncurrent assets and noncurrent liabilities in deriving cash flow from operations under the indirect method depends on the nature of its operations. Service firms will likely show a small amount of
A. subtraction from net income for capital expenditures.
B. addback to net income for capital expenditures.
C. subtraction from net income for depreciation expense.
D. addback to net income for depreciation expense.
E. addback to retained earnings for depreciation expense.
87. The extent to which a firm adjusts net income for changes in noncurrent assets and noncurrent liabilities in deriving cash flow from operations under the indirect method depends on the nature of its operations. Rapidly growing firms usually
A. show an addback for deferred tax expense.
B. show a subtraction for deferred tax expense.
C. show no adjustments for deferred tax expense.
D. disclose such changes in a supplementary schedule or notes to the financial statements.
E. disclose such changes in managements’ discussion and analysis.
88. The extent to which a firm adjusts net income for changes in noncurrent assets and noncurrent liabilities in deriving cash flow from operations under the indirect method depends on the nature of its operations. Firms that stop growing or that shrink usually
A. show an addback for deferred tax expense.
B. show a subtraction for deferred tax expense.
C. show no adjustments for deferred tax expense.
D. disclose such changes in a supplementary schedule or notes to the financial statements.
E. disclose such changes in managements’ discussion and analysis.
89. The extent to which a firm adjusts net income for changes in noncurrent assets and noncurrent liabilities in deriving cash flow from operations under the indirect method depends on the nature of its operations Firms that grow or diversify by acquiring minority ownership positions in other businesses will often show
A. an addition to net income for equity in undistributed earnings.
B. a subtraction from net income for equity in undistributed earnings.
C. an addition to net income for equity in distributed earnings.
D. a subtraction from net income for equity in distributed earnings.
E. a subtraction from retained earnings for equity in undistributed earnings.
90. The extent to which a firm adjusts net income for changes in noncurrent assets and noncurrent liabilities in deriving cash flow from operations under the indirect method depends on the nature of its operations. Firms that decrease in size will usually show
A. additions or subtractions for losses and gains on the disposal of assets.
B. additions, only for gains on the disposal of assets.
C. subtractions, only for losses on the disposal of assets.
D. no adjustment for losses and gains on the disposal of assets.
E. none of the above
