Mod 17 Wrong Answers

Question 0

Direct method operating activities: interest received

What item is used on the income statement and what change in accounts on the balance sheet are used to calculate this?

Answer 0

Income statement: interest revenue

BS: interest receivable

Question 1

Direct method operating activities: cash collected from customers

What item is used on the income statement and what change in accounts on the balance sheet are used to calculate this?

Answer 1

Income statement: sales

BS: A/R gross

Question 2

Direct method operating activities: dividends received

What item is used on the income statement and what change in accounts on the balance sheet are used to calculate this?

Answer 2

Income statement: dividend revenue

BS: dividend receivable

Question 3

Direct method operating activities: cash paid to suppliers

What item is used on the income statement and what change in accounts on the balance sheet are used to calculate this?

Answer 3

Income statement: COGS

BS: inventory and accounts payable

Question 4

Direct method operating activities: cash paid to employees

What item is used on the income statement and what change in accounts on the balance sheet are used to calculate this?

Answer 4

Income statement: salaries and wage exp.

BS: salaries and wages payable

Question 5

Direct method operating activities: interest paid

What item is used on the income statement and what change in accounts on the balance sheet are used to calculate this?

Answer 5

Income statement: interest exp.

BS: interest payable, premium on B/P, discount on B/P

Question 6

Direct method operating activities: income taxes paid

What item is used on the income statement and what change in accounts on the balance sheet are used to calculate this?

Answer 6

Income statement: income tax expense

BS: income taxes payable, deferred tax liability, deferred tax asset

Question 7

Direct method operating activities: other cash paid

What item is used on the income statement and what change in accounts on the balance sheet are used to calculate this?

Answer 7

Income statement: supplies exp., rent expense

BS: supplies, prepaid rent

Question 8

Under the indirect method in the operating activities section, what 6 items are added back into net income?

Answer 8

1 decrease in current assets
2 increase in current liabilities
3 depreciation
4 amortization of intangible assets
5 bond discount amortization
6 losses

Question 9

Under the indirect method of operating activities section, what 4 items are subtracted from net income?

Answer 9

1 increase in current assets
2 decrease in current liabilities
3 bond premium amortization
4 gains

Question 10

When a current years premium for on bonds payable is amortized for $79,000 in the current year, what happens on the statement of cashflows if the related premium is redeemed for $75,000 in the current year?

Answer 10

Amortization of premium bonds is reduced to $4,000

Question 11

Where does decrease in income taxes payable go on the statement of cashflows?

Answer 11

Operating activities

Question 12

Where does increase in deferred taxes payable go on the statement of cashflows?

Answer 12

Operating activities

Question 13

Where does sale of equipment go on the statement of cashflows?

Answer 13

Investing activities

Question 14

Where does purchase of equipment go on the statement of cashflows?

Answer 14

Investing activities

Question 15

Where does redeem bonds go on the statement of cashflows?

Answer 15

Financing activities

Question 16

Where does issue of common stock go on the statement of cashflows?

Answer 16

Financing activities

Question 17

Where does payment of dividends go on the statement of cashflows?

Answer 17

Financing activities

Question 18

What are the last 3 line items on the statement of cash flows, if there has been a net decrease in cash?

Answer 18

Net decrease in cash
Cash at beginning of year
Cash at end of year

Question 19

What is the subtotal account called at the end of each section on the statement of cashflows?

Answer 19

Net cash flow from operating activities

Net cash flow from investing activities

Net cash flow from financing activities

Question 20

What section on the statement of cashflows would payment of interest on long term note payable go?

Answer 20

Operating activities

Question 21

What is the journal entry to record income tax expense, when a deferred tax liability has increased for the year?

Answer 21

Income tax expense. Xxx
Deferred tax liability. Xxx
Taxes payable. Xxx

Question 22

Interest paid on bonds calculation?

Answer 22

Interest paid on bonds = Face amount x coupon rate

Question 23

Journal entry for redemption of bonds payable with an unamortized premium and a gain on extinguishment?

Answer 23

Bonds payable. Xxx
Unamortized premium on bonds. Xxx
Gain on extinguishment of bonds. Xxx
Cash. Xxx

Question 24

Extinguishment of bonds relates to…

Answer 24

Redeemed bonds

Question 25

Cash from issuance of common stock = ?

Answer 25

Cash from issuance of common stock = common stock + PiC

Question 26

Which accounts need to be looked at for cash dividends being paid?

Answer 26

Dividends payable and retained earnings

Question 27

What is the journal entry to determine a cash inflow from the sale of equipment, when there is a loss on sale of equipment?

Answer 27

Cash. Xxx
Accumulated depreciation. Xxx
Loss on sale of equipment. Xxx
Property plant and equip. Xxx

Question 28

Statement of Cashflows using the indirect method memorize

Answer 28

Statement of cash flows
For the Year ended December 31, 200X

Operating activities:
Net income
Adjustments to Reconcile Net Income to Cashflows from Operating Activities:
Depreciation Expenses
Change in Accounts Payable
Change in Accounts Receivable
Change in Inventory
Change in Interest Payable
Net Cash Provided or Used from operating activities 

Investing Activities:
Sale of Equipment 
Purchase of Equipment
Sale of Land
Purchase Held to maturity securities
Net Cash Provided or Used from Investing Activities 

Financing Activities:
Dividends Paid
Retirement of Mortgage Payable
Redeem Bonds
Issue Common Stock
Borrow on LT note payable
Purchase Treasury Stock
Net Cash Provided of Used from Financing Activities

Change in Cash
Cash, December 31, 20X1
Cash, December 31, 20X2

Question 29

On the statement of cashflows for equipment transactions, companies are required to report…

Answer 29

Gross amounts instead of net amounts

Question 30

What are the 5 major categories in the operating activities section using the direct method?

And the name for the subtotal column?

Answer 30

Cash collected from customers
Cash paid to employees
Cash paid to suppliers
Cash paid for interest
Cash paid for income taxes

Cash provided from operating activities