Intro to Ch 5

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 The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in | A.| inventory back into cash, or 12 months, whichever is longer.| | B.| tangible fixed assets back into cash, or 12 months, whichever is longer.| | C.| inventory back into cash, or 12 months, whichever is shorter.| | D.| receivables back into cash, or 12 months, whichever is longer.| The net assets of a business are equal to

| A.| current assets minus current liabilities. |
| B.| total assets plus total liabilities. |
| C.| total assets minus total stockholders' equity. |
| D.| none of these.|
A general description of the depreciation methods applicable to major classes of depreci-able assets | A.| is not essential to a fair presentation of financial position. | | B.| should be included in corporate financial statements or notes thereto. | | C.| is needed in financial reporting when company policy differs from income tax policy. | | D.| is not a current practice in financial reporting.| Houghton Company has the following items: common stock, $720,000; treasury stock, $85,000; deferred taxes, $100,000 and retained earnings, $313,000. What total amount should Houghton Company report as stockholders' equity? | A.| $1,118,000. |

| B.| $848,000. |
| C.| $1,048,000. |
| D.| $948,000.|
  The stockholders' equity section is usually divided into what three parts? | A.| Preferred stock, common stock, retained earnings | | B.| Capital stock, additional paid-in capital, retained earnings | | C.| Capital stock, appropriated retained earnings, unappropriated retained earnings | | D.| Preferred stock, common stock, treasury stock|

Which of the following balance sheet classifications would normally require the greatest amount of supplementary disclosure? | A.| Plant assets |
| B.| Current assets |
| C.| Long-term liabilities |
| D.| Current liabilities|
In preparing a statement of cash flows, cash flows from operating activities | A.| can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash. | | B.| are always equal to accrual accounting income. |

| C.| are calculated as the difference between revenues and expenses. | | D.| can be calculated by appropriately adding to or deducting from net income those items in the income statement that do affect cash.| In preparing a statement of cash flows, which of the following transactions would be considered an investing activity? | A.| Issuance of bonds payable at a discount |

| B.| Sale of merchandise on credit |
| C.| Sale of equipment at book value |
| D.| Declaration of a cash dividend|
During 2010 the DLD Company had a net income of $50,000. In addition, selected accounts showed the following changes:

Accounts Receivable| $3,000 increase|
Accounts Payable| 1,000 increase|
Building    | 4,000 decrease|
Depreciation Expense| 1,500 increase|
Bonds Payable| 8,000 increase|

What was the amount of cash provided by operating activities?

| A.| $51,500 |
| B.| $49,500 |
| C.| $59,500 |
| D.| $50,000|
 
A generally accepted method of valuation is| | | | |
1. | trading securities at market value.| | | |
2.| accounts receivable at net realizable value.| | | | 3. | inventories at current cost.| | | |

| A.| 1 |
| B.| 2 |
| C.| 1 and 2 |
| D.| 3|
A limitation of the balance sheet that is not also a limitation of the income statement is | A.| the numbers are affected by the accounting methods employed | | B.| the use of judgments and estimates |

| C.| valuation of items at historical cost |
| D.| omitted items|
Olmsted Company has the following items: common stock, $720,000; treasury stock, $85,000; deferred taxes,...
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