...Purpose of the Statement of Cash Flow Cash flow is used in businesses to have a greater knowledge and understanding of how companies are using their earnings and liquidations, as they evaluate their finances periodically. During certain periods of a company’s year the accountant sets beginning and ending dates purposely to check the company’s statement of cash flow. According to Accounting Coach, statement of cash flows (SCF) is defined as” reports the sources and uses of cash by operating activities, investing activities, financing activities, and certain supplemental information for the period specified in the heading of the statement. The statement of cash flows is also known as the cash flow statement” (Averkamp). The purpose of the statement of cash flow and the information it provides is cash flow statements are divided into three sections and two methods. The sections are described as reports of how the cash flow is operated. These sections are operating activities, investing activities, and financing activities and each section are responsible for different reports. Operating activities reports the accounting to cash, investing activities reports the purchase and sales of long-term investment, property and equipment, and Financing activities reports insurance, stocks, bonds and the payment of dividends. Direct and Indirect methods are explained how cash flow is operated and how the net income is converted (Bank. 2015). The purpose of statement of cash flow starts is...
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...owner maximize net income given the resources of the firm CORRECT maximize the market value of the equity minimize the tax impact on the proprietor minimize costs and increase production Instructor Explanation: Chapter 1, Page 11 Points Received: 3 of 3 Comments: 2. Question : (TCO 1) When analyzing alternative capital structures for a firm, a financial manager must consider which of the following? Student Answer: INCORRECT type of loan amount of funds needed cost of funds mix of debt and equity CORRECT all of the above Instructor Explanation: Chapter 1, Page 5, Week 1 Lecture Points Received: 0 of 3 Comments: 3. Question : (TCO 1) Book values are different from market values because: Student Answer: INCORRECT Book values reflect the value of the asset based on generally-accepted accounting principles. Book values are used in the company’s balance sheet. Book values do not reflect the amount someone is willing to pay today for an asset. CORRECT All of the above None of the above Instructor Explanation: Chapter 2, Page...
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...Answer: B 3) Which of the following organization forms has the most revenue? A) "S" Corporation B) Limited Partnership C) "C" Corporation D) Limited Liability Company Answer: C 4) Which of the following organization forms accounts for the greatest number of firms? A) "S" Corporation B) Limited Partnership C) Sole Proprietorship D) "C" Corporation Answer: C 5) Which of the following is NOT an advantage of a sole proprietorship? A) Single taxation B) Ease of setup C) Limited liability D) No separation of ownership and control Answer: C 6) Which of the following statements regarding limited partnerships is true? A) There is no limit on a limited...
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...balance sheet for Cornell Corp. based on the following information: cash = $143,000; patents and copyrights = $630,000; accounts payable = $220,500; accounts receivable = $115,000; tangible net fixed assets = $1,660,000; inventory = $301,000; notes payable = $120,000; accumulated retained earnings = $1,246,000; long-term debt = $861,000. (Be sure to list the accounts in order of their liquidity.) CORNELL COP. Balance Sheet Assets Cash Accounts receivable Inventory Current assets Tangible net fixed assets Intangible net fixed assets Total assets Liabilities Accounts payable Notes payable Current liabilities Long-term debt Total liabilities Common stock Accumulated retained earnings Total liabilities & owners' equity $ 220,500 120,000 $ 340,500 861,000 $ 1,201,500 401,500 1,246,000 $ 2,849,000 $ 143,000 115,000 301,000 $ 559,000 1,660,000 630,000 $ 2,849,000 Worksheet Learning Objective: 02-01 The difference between accounting value (or “book” value) and market value. Prepare a 2011 balance sheet for Cornell Corp. based on the following information: cash = $143,000; patents and copyrights = $630,000; accounts payable = $220,500; accounts receivable = $115,000; tangible net fixed assets = $1,660,000; inventory = $301,000; notes payable = $120,000; accumulated retained earnings = $1,246,000; long-term debt = $861,000. (Be sure to list the accounts in order of their liquidity.) CORNELL COP. Balance Sheet Assets Cash Accounts receivable Inventory Current assets Tangible net fixed...
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...FI515 midterms 1. | Question : | (TCO A) Which of the following statements is correct? | | | | | One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership. | | | Question 2. | Question : | (TCO G) Which of the following statements is correct? | | | | | In the statement of cash flows, a decrease in accounts payable is reported as a use of cash. | | | Question 3. | Question : | (TCO G) Beranek Corp. has $410,000 of assets, and it uses no debt—it is financed only with common equity. The new CFO wants to employ enough debt to bring the debt to assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio? | | | Student Answer: | | $155,800 | | | | $164,000 | | Instructor Explanation: | b: 40% × $410,000 = $164,000. | | | Question 4. | Question : | (TCO B) Suppose a State of New York bond will pay $1,000 10 years from now. If the going interest rate on these 10-year bonds is 5.5%, how much is the bond worth today? | | | Student Answer: | | $585.43 | | Instructor Explanation: | See Chapter 4. Using Excel or a calculator, your inputs and outputs are as follows. fv | 1,000 | n | 10 | r | 0.055 | pmt | 0 | beg/end | 0 | pv | ($585.43) | You can also use the financial tables to solve this problem. | | | Question 5...
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... The Statement of Cash Flows 12.1 Learning Objective 12-1 1) The statement of cash flows is presented for a period of time. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 2) The statement of cash flows is an optional statement that can be prepared along with the income statement, balance sheet, and statement of retained earnings. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 3) The statement of cash flows shows the relationship of assets to cash flows. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 4) For reporting purposes, a company must prepare both an income statement and a statement of cash flows. Answer: TRUE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 5) Cash equivalents do NOT include highly liquid short-term investments. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 6) A statement of cash flows indicates the sources and uses of cash at a point in time. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 7) The statement of cash flows will NOT help predict future cash flows. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 8) When preparing a statement of cash flows, cash equivalents...
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...Corporate Finance: The Core (Berk/DeMarzo) Chapter 8 - Valuing Bonds 8.1 Bond Cash Flows, Prices, and Yields 1) Which of the following statements is false? A) Bonds are a securities sold by governments and corporations to raise money from investors today in exchange for promised future payments. B) By convention the coupon rate is expressed as an effective annual rate. C) Bonds typically make two types of payments to their holders. D) The time remaining until the repayment date is known as the term of the bond. Answer: B Explanation: A) B) C) D) Diff: 1 Topic: 8.1 Bond Cash Flows, Prices, and Yields Skill: Definition 2) Which of the following formulas is incorrect? A) Yield to maturity for an n-period zero-coupon bond = [pic] B) Price of an n-period bond = [pic] + [pic] + ... + [pic] C) Price of an n-period bond = Coupon × [pic] + [pic] D) Coupon = [pic] Answer: A Explanation: A) B) C) D) Diff: 2 Topic: 8.1 Bond Cash Flows, Prices, and Yields Skill: Conceptual 3) Which of the following statements is false? A) The IRR of an investment in a zero-coupon bond is the rate of return that investors will earn on their money if they buy a default free bond at...
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...financial statements are the balance sheet, the income statement, the cash flow statements, and the statements of shareholder’s equity. Each statement can be used to give an insight to a company’s financial activities, and can provide valuable information on said company. The balance sheet provides detailed information on a company’s assets, liabilities, and their shareholder’s equity. A company’s balance sheet has to equal out, so the assets have to equal the sum of the liabilities and the shareholder’s equity. Assets are the things that a company owns that have value, and assets are usually listed on how quickly they can be converted to cash. Liabilities are usually listed based on their due dates which can be current or long term. The shareholder’s equity is the amount of money that owners have invested (www.sec.gov). The income statement show how much revenue that a company has earned over a period of time, and it shows the costs and expenses associated with earning that revenue. The statements also show whether or not the company made money or lost money. The income statement also shows the earning per share which is the amount of money the shareholder’s would make if the money was distributed. Most of this money is reinvested in the company. The income statement will list the total amount of sales at the beginning and then certain costs are deducted to end with how much a company made during a certain period (www.sec.gov). The statement of cash flow shows...
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...described a financial statement that seeks to show the financial position of an organization. It shows the assets, liabilities and the equities of an organization at any given time. The assets of an organization can be described as the resources owned and/or controlled by the organization arising from past transaction and for which the organization can expect future benefits. The liabilities of an organization can be described as the obligations arising from past transaction that the company is expected to forgo future economic benefits to satisfy. Equities of an organization refer to the owners’ contribution to the organization. Equities are composed of owner’s contribution if form of stock contribution and retained earnings (Brigham, 2014). 2. Explain what is meant by a liquidity ratio. Liquidity ratio can be described a ratio that seeks to determine the ability of an organization to repay meet its short –term obligations when they fall due. It shows the ability of a company to turn its current assets into cash to repay of the short –term debts and thus compares the current assets against current liabilities. Current assets refers to the assets that can be converted into cash or cash equivalent within a period of twelve months and include cash, accounts receivable and inventory, while current liabilities are obligations that fall due within one year such as accounts payable and notes payable . Various forms of liquidity ratios exist such as current ratio, cash ratio, acid test...
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...Financial Statements in Business Bethany Herman ACC/561 July 13, 2015 Tom Myers Financial Statements in Business Businesses review and use four primary types of financial statements to reflect their financial position. The four primary types of financial statements businesses use are the balance sheet, income statements, statements of equity, and the statement of cash flow. The financial statements used to display financial information to the public are all incorporated with showing a full financial picture of a company. Each of the four financial statements interacts with one another to give investors and the public a good insight into the overall finances of a company. “Financial statements, which are accounting reports, serve as the principal method of communicating financial information about a business entity or an individual to outside parties such as banks and investors. In a technical sense, financial statements summarize the accounting process and provide a tabulation of account titles and amounts of money. Furthermore, financial statements report the financial position or financial status of a business or an individual as well as financial changes at a particular time or during a period of time. The basic purpose of financial statements is to communicate to external and internal parties information about financial decisions that have been made.” According to Referenceforbusiness.com (2015). The balance sheet is used to show a company’s financial standing...
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... accurate and truthful. audited and complete. Instructor Explanation: Chapter 1 Points Received: 0 of 4 Comments: 2. Question : (TCO1) The largest organization of professional accountants in the United States is the: Student Answer: Financial Accounting Standards Board. Securities and Exchange Commission. American Institute of Certified Public Accountants. Auditing Standards Board. Instructor Explanation: Chapter 1 Points Received: 4 of 4 Comments: 3. Question : (TCO 1) The acronym GAAP stands for: Student Answer: generally acceptable authorized pronouncements. government authorized accountant principles. generally accepted accounting principles. government audited accounting pronouncements. Instructor Explanation: Chapter 1 Points Received: 4 of 4 Comments: 4. Question : (TCO1) The going-concern concept of accounting: Student Answer: enables accountants to ignore the effect of inflation in the accounting records. holds that the entity will remain in operation for the foreseeable future. maintains that each organization or section of an organization stands apart from other organizations and individuals. ensures that accounting records and statements are based on the most reliable data available. Instructor Explanation: Chapter 1 Points Received: 4 of 4 Comments: 5. Question...
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...2011 ACCOUNTING Written examination 1 Number of questions Number of questions to be answered Number of marks 2 2 90 $ $ Date 2011 9 600 2 000 Date 2011 8 000 12 000 1 200 Total Date 2011 600 6 200 1 800 600 Date 2011 not Total 5 2011 ACCNT EXAM 1A Fantastic Footwear sent the following Statement of Account to one of its debtors, Jets Little Aths. Fantastic Footwear STATEMENT OF ACCOUNT To: Jets Little Aths 30 June 2011 Debit 1 June 11 June 19 June 24 June 27 June 30 June Balance Payment received – Rec. No. 601 Inv. No. 59 Inv. No. 64 Payment received/disc – Rec. No. 623 Balance owing 2 200 990 2 200 3 200 Credit Balance 3 200 Dr Nil 2 200 Dr 3 190 Dr 990 Dr $990 1.2.3 Show how Jets Little Aths’ account in the Debtors Subsidiary Ledger would appear at 30 June after all June transactions have been posted. You are not required to balance the account. 3 marks The GST Clearing account had a debit balance of $1 250 at 31 May 2011. Required 1.2.4 Show the GST Clearing account as it would appear in the General Ledger at 30 June 2011. You are not required to balance the account. 4 marks 1.2.5 Explain why it would be necessary to make a balance day adjustment at 30 June as a result of the information provided on 26 June relating to rent. 2 marks 1.2.6 Show how the rent would be reported at 30 June after all adjusting entries had been recorded. 3 marks Question 1 – continued TURN OVER Date 2011 IN $ Total $ OUT $ Total...
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...Category Below Financial Statements Balance Sheet Income Statement Cash Flow Statement Stockholders’ Equity Financial Ratios Accounting Principles Bookkeeping, Debits and Credits Accounting Equation Adjusting Entries Bank Reconciliation Petty Cash Accounts Receivable and Bad Debts Expense Inventory and Cost of Goods Sold Depreciation Accounts Payable Cost Behavior and Break-even Point Payroll Accounting Standard Costing Accounting Pronouncements Organizations Pages 1 1-2 2-3 3 4 4-5 5-6 7-8 8 9 9-10 10-11 11 12 12-13 13 14 14-15 15-16 16-17 17 For personal use by the original purchaser only. Copyright © 2011 AccountingCoach®.com. AccountingCoach.com’s Accounting Cheat Sheet is a quick reference and overview of accounting concepts. You should consult a professional accountant and/or the accounting profession’s official pronouncements for specific situations and for more complete information. FINANCIAL STATEMENTS Financial statements are general purpose, external financial statements prepared according to generally accepted accounting principles. Some terms that apply to the financial statements include: balance sheet reports the amounts of assets, liabilities, and stockholders’ equity at a specified moment, such as midnight of December 31; also known as the statement of financial position. income statement reports revenues, expenses, gains, losses, and net income during the period of time stated in its heading; also known as the statement of operations and as...
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...equipment $2,049.3; buildings $939; goodwill (at cost) $190.3; accumulated amortization $53.8; and accumulated depreciation $2,151. Prepare a partial balance sheet for Nike for these items. (List Property, Plant and Equipment in order of Land, Buildings and Equipment.) NIKE, INC. Partial Balance Sheet As of May 31, 2014 (in millions) | | | | | | | | | | | | | $ | | | | | $ | | | | | | | | | | | | | | | | | | : | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | | | | | | : | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Question 2 | | Match the statement with the term most directly associated with it. 1. | | | | Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance. | | | | | | 2. | | | | The allocation of the cost of an intangible asset to expense in a rational and systematic manner. | | | | | | 3. | | | | A right to sell certain products or services, or use certain trademarks or trade names within a designated geographic area. | | | | | | 4. | | | | Costs incurred by a company that often lead to patents or new products. These costs must be expensed as incurred. | | |...
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...1. | Question : | (TCO D) Which of the following statements concerning common stock and the investment banking process is NOT CORRECT? (a) The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue. (b) If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market. (c) Listing a large firm's stock is often considered to be beneficial to stockholders because the increases in liquidity and reputation probably outweigh the additional costs to the firm. (d) Stockholders have the right to elect the firm's directors, who in turn select the officers who manage the business. If stockholders are dissatisfied with management's performance, an outside group may ask the stockholders to vote for it in an effort to take control of the business. This action is called a tender offer. (e) The announcement of a large issue of new stock could cause the stock price to fall. This loss is called "market pressure," and it is treated as a flotation cost because it is a cost to stockholders that is associated with the new issue. | | | Student Answer: | | | Instructor Explanation: | Answer is: d Chapter 20, pp. 791 - 798, 800 - 803 | | | | Points Received: | 20 of 20 | | Comments: | | | | 2. | Question : | (TCO D) Europa Corporation is financing an ongoing construction project. The firm will need $5,000,000 of new capital during each of...
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