1. In Garland Company, land decreased $140,000 because of a cash sale for $140,000, the equipment account increased $40,000 as a result of a cash purchase, and Bonds Payable increased $130,000 from issuance for cash at face value. The net cash provided by investing activities is

A. $100,000.
B. $140,000.
C. $230,000.
D. $110,000.

6 points   


1. Carrot Company issued common stock for proceeds of $381,000 during 2012. The company paid dividends of $90,000 and issued a long-term note payable for $95,000 in exchange for equipment during the year. The company also purchased treasury stock that had a cost of $18,000. The financing section of the statement of cash flows will report net cash inflows of

A. $489,000.
B. $273,000.
C. $363,000.
D. $183,000.

6 points   


1. Plough Company reported net income of $180,000 for the current year. Depreciation recorded on buildings and equipment amounted to $80,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

    End of Year Beginning of Year


  Cash $20,000 $15,000
  Accounts receivable 24,000 32,000
  Inventories 50,000 65,000
  Prepaid expenses 9,500 5,000
  Accounts payable 12,000 18,000
  Income taxes payable 1,600 1,200

3. Instructions Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

16 points   


1. Which one of the following is not a tool in financial statement analysis?

A. Circular analysis
B. Ratio analysis
C. Horizontal analysis
D. Vertical analysis

6 points   


1. In performing a vertical analysis, the base for cost of goods sold is

A. total selling expenses.
B. net sales.
C. total revenues.
D. total expenses.

6 points   


1. A liquidity ratio measures the

A. income or operating success of an enterprise over a period of time.
B. ability of the enterprise to survive over a long period of time.
C. number of times interest is earned.
D. short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash.

6 points   


1. A successful grocery store would probably have

A. low volume.
B. a low inventory turnover.
C. a high inventory turnover.
D. zero profit margin.

6 points   


1. West Company had $375,000 of current assets and $150,000 of current liabilities before borrowing $75,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on West Company’s current ratio?

A. The change in the current ratio cannot be determined.
B. The ratio decreased.
C. The ratio increased.
D. The ratio remained unchanged.

6 points   


1. Harvey Clothing Store had a balance in the Accounts Receivable account of $390,000 at the beginning of the year and a balance of $410,000 at the end of the year. Net credit sales during the year amounted to $3,000,000. The average collection period of the receivables in terms of days was

A. 48.7 days.
B. 365 days.
C. 30 days.
D. 274 days.

6 points   


1. Assume the following sales data for a company:

  2013 $945,000
  2012 877,500
  2011 650,000

2. If 2011 is the base year, what is the percentage increase in sales from 2011 to 2012?

A. 135%
B. 35%
C. 76%
D. 24%

6 points   


1. Star Corporation had net income of $300,000 and paid dividends to common stockholders of $40,000 in 2012. The weighted average number of shares outstanding in 2012 was 50,000 shares. Star Corporation’s common stock is selling for $36 per share on the New York Stock Exchange.   Star Corporation’s price-earnings ratio is

A. 5.2 times.
B. 6.9 times.
C. 18 times.
D. 6 times.

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