IFR2

Question	Answer
A company borrows $10,000 and signs a 90-day nontrade note payable. In preparing a statement of cash flows (indirect method) this event would be reflected as a(n)	cash inflow from financing activities
A statement of cash flows typically would not disclose the effects of.	stock dividends declared
When preparing a statement of cash flows (indirect method) which of the following is not an adjustment to reconcile NI to net cash provided by operating activities?	A change in dividends payable. (dividends are financing)
Declaration of a cash dividend on common stock affects cash flows from operating activities under the direct and indirect methods as flows:	Direct Method: No effect Indirect Method: No effect (since its just a declaration)
Xanthe Corp had the following transactions occur in the current years. Which ones were investing activities?	3 items: Sale of delivery truck at book value. Sale of a security held as an available-for-sale investment. Collection of loan receivable.
Which of the following would be classified as a financing activity on a statement of cash flows?	Deposit to a bond sinking fund
The amortization of bond premium on long term debt should be presented in a statement of cash flows (indirect method for operating activities) as a(n)	deduction from net income
Crabbe company reported 80,000 of selling and admin expesnes on its income. Company had depreciation expesne and an increase in prepaid expense. Assume use of the direct method. How would these be handled when converting the accrual based selling to cash basis?	Depreciation: Deducted from Increase in prepaid expense: Added to
When preparing a statement of cash flows, a decrease in accounts receivable during a period would cause which one of the following adjustments in determining cash flows from operating activities?	Direct Method: Increase Indirect: Increase
When preparing a statement of cash flows, an increase in accounts payable during a period would require which of the following adjustments in determining cash flows from operating activities?	Indirect Method: Increase Direct Method: Decrease
Which of the following statements is correct?	The direct method is more consistent with the primary purpose of the statement of cash flows.
When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash provided by/used by operating activities?	Amortization of patent
Dolan Company reports its income from investments under the equity method and recognized income of $25,000 from its investment in Moss Co. during the current year, even though no dividends were declared or paid by Moss during the year. On Dolan's statement of cash flows (indirect method) the $25,000 should?	be shown as a deduction from net income in the cash flows from operating activities section
Which of the following is shown on a statement of cash flows?	None of these.
How should the FASB Statement No. 95	These noncash transactions are not to be incorporated in the statement of cash flows. They may be summarized in a separate schedule at the bottom of the statement or appear in a separate supplementary schedule to the financials.
when the cash proceeds from a bond issued with detachable stock warrants exceed the sum of the par value of the bonds and the fair market value of the warrants, the excess should be credited to	premium on bonds payable
Proceeds from an issue of debt securities having stock warrants should not be allocated between debt and equity features when	the warrants issued with the debt securities are nondetachable
A corporation issues bonds with detachable warrants. The amount to be recorded as paid-in-capital is preferably	based on the relative market values of the two securities involved
The major difference between convertible debt and stock warrants is that upon exercise of the warrants	the holder has to pay a certain amount of cash to obtain the shares
Which of the following is not a characteristic of a noncompensatory stock option plan?	Unlimited time period permitted for exercise of an option as long as the holder is still employed by the company
Lang Co. issued bonds with detachable common stock warrants. Only the warrants had a known market value. The sum of the fair value of the warrants and the face amount of the bonds exceeds the cash proceeds. This excess is reported as...	Discount on Bonds Payable
In computing earnings per share for a simple capital structure, if the preferred stock is cumulative, the amount that should be deducted as an adjustment to the numerator (earnings) is the...	none of these.
What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?	Decrease and Increase
When applying the treasury stock method for diluted earnings per share, the market price of the common stock used for the repurchase is the...	average market price.
A company changes from % of completion to completed-contract, which is the method used for tax purposes. The entry to record this change should include a...	debit to RE in the amount of the difference on prior years, net of tax.
Stone Company changed its method of pricing inventories from FIFO to LIFO, What type of accounting change does this represent?	A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported.
When a company decides to switch from the Double Declining balance method to the straight line method, this change should be handled as a...	change in accounting estimate
Est. life of a building has been depreciated 30 years from an estimated life of 50 years...has been revised to a remaining life of 10 years, The accountant should...	depreciate the remaining book value over the remaining life of the asset
Which of the following statements is correct?	A change from expensing certain costs to capitalizing these costs due to a change in the period benefited, should be handled as a change in accounting estimate.
Which of the following describes a change in reporting entity?	Changing the companies included in combined financial statements.
Presenting consolidated financial statements this year when statements of individual companies were presented last year is..	from the cash basis of accounting to the accrual basis of accounting
An example of a correction of an error in previously issued financial statements is a change...	from the cash basis of accounting to the accrual basis of accounting
A company using a perpetual inventory system neglected to record a purchase of merchandise. How will it affect assets, liabilities and SHE...	Assets: Understate Liabilities: Understate SHE: No Effect NI: No effect
If, at the end of a period, a company erroneiously excluded some goods from its ending inventory and also erroneously did not record the purchase of these goods in its accounting records, these errors would cause...	no effect on NI, working capital, and retained earnings
The primary purpose of the statement of cash flows is to provide information..	about the cash receipts and cash payments of an entity during a period
The conversion of bonds is most commonly recorded by the	Book value method
When a bond issuer offers some form of additional consideration (a sweetner) to induce conversion, the sweetner is accounted for as an	expense
Corporations issue convertible debt for two main reasons. One is the desire to raise equity capital that, assuming conversion, will arise when the original debt is converted. The other is...	that many corporations can obtain financing at lower rates
The conversion of preferred stock into common requires that any excess of the par value of the common shares issued over the carrying amount of the preferred being converted should be...	treated as a direct reduction of retained earnings

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	Created by steve1011w about 11 years ago