ADM 1340 Chapter Notes - Chapter 13: Retained Earnings, Deferral, Free Cash Flow

42 views6 pages

ultramarinecheetah338

17 Feb 2017

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

ceruleanclam927 and 54 others unlocked

ADM 1340 Full Course Notes

Verified Note

42 documents

Document Summary

Main purpose is to provide information that enables users to assess a company"s ability to generate cash and a company"s needs in using cash individual inflows of cash provided by investing and financing activities. Difference between profit and cash provided by operating activities. Often prepared based on cash and cash equivalents compare with other companies investing/financing transactions, effect upon capital structure affect income statement accounts and current asset/liabilities. Investing activities: purchasing and disposing of long-term investments and long- Cash equivalents: short-term, highly liquid investments that are readily convertible to cash within a short period of time. Operating activities: include transactions that create revenues and expenses. Company must generate positive cash in operating activities to stay in business lived assets, extending/collecting loans non-current asset accounts shareholders and paying them dividends non-current liability accounts and equity. Ifrs interest and dividends received may be operating or investing and. Aspe interest received/paid and dividends received are operating and dividends.

Related Questions

36. The best measure of a company's ability to generate sufficientcash to continue as a going concern is net cash provided by
A) financing activities.
B) investing activities.
C) operating activities.
D) processing activities.

37. Using the indirect method, if equipment is sold at a gain,the
A) sale proceeds received are deducted in the operating activitiessection.
B) sale proceeds received are added in the operating activitiessection.
C) amount of the gain is added in the operating activitiessection.
D) amount of the gain is deducted in the operating activitiessection.

38. The statement of cash flows
A) is prepared instead of an income statement under generallyaccepted accounting principles.
B) is used to assess an entity's ability to pay dividends and meetobligations.
C) is prepared from comparative income statements.
D) reflects earnings per share figures on a cash basis and on anaccrual basis in the body of the statement.

39. In the bottom portion of the statement of cash flowsworksheet,
A) inflows of cash are debits in the reconciling columns.
B) outflows of cash are debits in the reconciling columns.
C) information pertaining to investing and financing activitiesonly is entered.
D) only significant noncash transactions are entered.

40. Which of the following characteristics does not apply to cashequivalents?
A) Short-term
B) Highly-liquid
C) Readily convertible into cash
D) Sensitive to interest rate changes

ceruleanoyster399

Choose the correction answer

15. The statement of cash flowsprovides information to help investors and creditors assess thecash and noncash investing and financing transactions during theperiod.

T F

16. The net increase(decrease) in cash reported on the statement of cash flows shouldreconcile the beginning and ending cash balances reported in thecomparative balance sheets.

T F

17. Anobjective of the statement of cash flows is to

a. disclose changes during the period in all assetand all equity accounts.

b. disclose the change in working capital during theperiod.

c. provide information about the operating,investing, and financing activities of an entity during aperiod.

d. None of these answers are correct.

18. Theprimary purpose of the statement of cash flows is to provideinformation

a. about the operating, investing, and financingactivities of an entity during a period.

b. that is useful in assessing future cash flowprospects.

c. about the cash receipts and cash payments of anentity during a period.

d. about the entity's ability to meet itsobligations and to pay dividends.

19. Cash equivalents are

a. treasury bills, commercial paper, and moneymarket funds purchased with excess cash.

b. investments with original maturities of threemonths or less.

c. readily convertible into known amounts ofcash.

d. All of these answers are correct.

20. Xanthe Corporation had the following transactions occur in thecurrent year:

1. Cash sale of merchandise inventory.

2. Sale of delivery truck at book value.

3. Sale of Xanthe common stock for cash.

4. Issuance of a note payable to a bank forcash.

5. Sale of a security held as anavailable-for-sale investment.

6. Collection of loan receivable.

How many of the above items willappear as a cash inflow from investing activities on a statement ofcash flows for the current year?

a. Five items

b. Four items

c. Three items

d. Two items

erinchimpanzee626

The independent auditor is allowed to use a specialist for evaluating a complicated financial transaction provided the specialist is

knowledgeable and independent of the audit client.

approved by the client's board of directors.

all of the above.

acceptable to the PCAOB.

Inappropriately dating transfers of funds between bank accounts to cover shortages of cash is properly referred to as

Cash equivalents

represent current assets that can be converted to cash within a year or an operating cycle, whichever is shorter.

include only cash and highly liquid investments that are virtually free of risk.

should be reported as investments and not be included as cash on the balance sheet.

typically exclude money market funds and treasury bills.

A cut-off bank statement primarily is used to

determine whether reconciling items on the year-end bank reconciliation have cleared the bank.

prepare a year-end bank reconciliation.

test for kiting.

confirm the year-end balance of cash.

An imprest cash account

typically is used for many large miscellaneous disbursements.

typically earns large amounts of interest.

is another name for the general cash account of an organization.

is an account containing a stipulated amount of money to be used for a specific purpose.

An auditor may estimate the appropriate amount of interest expense to be recorded by an audit client by multiplying the average debt by the average interest rate. If the auditor's estimate is considerably larger than the client's recorded interest expense this would be evidence of a potential

failure of the client to accrue interest expense at year end.

the violation of significant loan covenants.

overstatement of recorded interest expense.

understatement of long-term debt.

Internal controls over fixed assets in a smaller entity

usually include authorization by the board of directors.

typically will be very similar to internal controls over other assets within the entity.

must be the same as in larger entities.

are of little importance since fixed assets are not subject to theft or misuse.

A change in depreciation methods employed by an audit client resulting in a material change in depreciation expense

is not necessarily a violation of generally accepted accounting principles.

requires disclosure by the audit client in the footnotes to the financial statements.

must be noted in the audit opinion due to lack of consistency.

is properly described by all of the listed statements.

Auditors typically assess inherent risk for material accounts requiring significant estimates as

Which of the following loans from an audit client, which is a financial institution, made in accordance with the normal lending practices of the financial institution would impair the CPA's independence?

A loan fully secured by certificates of deposit from the same financial institution.

A credit card loan in which the balance carried forward each month does not exceed $9,000.

An automobile loan secured by the automobile.

A home loan equal to less than 50% of the home's value and collateralized by the home.

A CPA has obtained some original records from a client during the course of an audit engagement. At the completion of her audit according to the proper professional standards the client fired the CPA and demanded that the CPA return all of his original records immediately. Under these circumstances which of the following statements is most correct according to the AICPA Code of Professional Conduct?

The CPA may hold the original records she obtained until the client pays for the services she has completed.

The CPA must return only the original records of the client upon demand regardless of the circumstances.

The CPA must return all original records and all copies of original records of the client upon demand regardless of the circumstances.

This is a matter of state law and not a matter covered by the AICPA Code of Professional Conduct.

ADM 1340 Chapter Notes - Chapter 13: Retained Earnings, Deferral, Free Cash Flow

ADM 1340 Full Course Notes

Document Summary

Get access

Related Documents

ADM 1340 Lecture : Chapter 13 Lecture Notes

ADM 1340 Lecture Notes - Lecture 11: Retained Earnings, Working Capital, Gross Margin

ADM 1340 Lecture Notes - Lecture 13: Current Asset, Deferral, Inventory Turnover

Related Questions