Question :
38.The amount of cash flow from operating activities that would : 1254543
38.The amount of cash flow from operating activities that would appear on the 2014 statement of cash flows would be:
A. $385 inflow
B. $700 inflow
C. $560 outflow
D. $18,245 outflow
39.The amount of total liabilities that would appear on Ramon’s December 31 balance sheets for 2013 and 2014 would be
A. $18,945; $0.
B. $18,000; $0.
C. $18,945; $19,260.
D. $945; $315.
40.Issuing a note payable is a(n)
A. claims exchange transaction.
B. asset source transaction.
C. asset use transaction.
D. asset exchange transaction.
41.Which of the following is a claims exchange transaction?
A. Paid interest on a note payable.
B. Issued a note to purchase equipment.
C. Repaid principal on a note payable.
D. Accrued interest on a note payable.
42.Selling $65 of merchandise to a customer for $100 in a state where the sales tax rate is 4%:
A. Increases cash flow from operating activities by $104.
B. Increases total assets by $39.
C. Increases equity by $35.
D. All of the above.
43.Which of the following represents the correct journal entry to record a taxable cash sale of $800 if the sales tax rate is 5%?
A. A debit to cash for $840, a debit to sales tax expense for $40, and a credit to sales revenue for $800.
B. A debit to cash for $840, a credit to sales tax payable for $40, and a credit to sales revenue for $800.
C. A debit to cash for $800, a credit to sales tax payable for $40, and a credit to sales revenue for $760.
D. None of the above.
44.Monthly remittance of sales tax:
A. Reduces stockholders’ equity.
B. Is a claims exchange transaction.
C. Reduces liabilities.
D. All of the above.
45.Under what condition should a pending lawsuit be recognized as a liability on a company’s balance sheet?
A. The outcome is reasonably possible.
B. The outcome is probable.
C. The amount can be reasonably estimated.
D. Both B and C.
46.Mighty Burger has been named as a plaintiff in a $5 million lawsuit filed by a customer over the addictive nature of the company’s french fries. Mighty Burger’s attorneys have advised them that the likelihood of a future obligation from the suit is remote. As a result of the lawsuit, Mighty Burger should:
A. Disclose the lawsuit in the footnotes to the financial statements.
B. Recognize a $5 million liability on its balance sheet for the contingency.
C. Ignore the lawsuit in its financial statements.
D. Settle with the customer immediately for $5 million to avoid harmful publicity.
In December 2013, Lucky Corporation sold merchandise for $5,000 cash. Lucky estimated that $350 of warranty claims might be filed in regard to these sales. On February 12, 2014, warranty work amounting to $275 was performed for one of the customers ($215 labor paid in cash and $60 from the materials inventory).
47.Which of the following answers correctly shows the effect of the recognition of the warranty obligation at the end of 2013 on the financial statements of Lucky?
A. Option A
B. Option B
C. Option C
D. Option D
