41. If $250,000 of bonds are issued during the year but $100,000 of old bonds ar

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41. If $250,000 of bonds are issued during the year but $100,000 of old bonds are retired during the year, the statement of cash flows will show a(n)
A) net increase in cash of $150,000.
B) net decrease in cash of $150,000.
C) increase in cash of $250,000 and a decrease in cash of $100,000.
D) net gain on retirement of bonds of $150,000.

42. Joy Elle's Vegetable Market had the following transactions during 2011:1. Issued $50,000 of par value common stock for cash.
2. Repaid a 6 year note payable in the amount of $22,000.
3. Acquired land by issuing common stock of par value $100,000.
4. Declared and paid a cash dividend of $2,000.
5. Sold a long-term investment (cost $63,000) for cash of $6,000.
6. Acquired an investment in IBM stock for cash of $12,000.

What is the net cash provided by financing activities?
A) $26,000
B) $50,000
C) $28,000
D) $18,000

43. If a gain of $15,000 is incurred in selling (for cash) office equipment having a book value of $100,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is
A) $95,000.
B) $115,000.
C) $100,000.
D) $15,000.

44. Kandy Kane Corporation has income before taxes of $800,000 and an extraordinary gain of $200,000. If the income tax rate is 25% on all items, the income statement should show income before irregular items and extraordinary items, respectively, of
A) $650,000 and $200,000.
B) $650,000 and $150,000.
C) $600,000 and $200,000.
D) $600,000 and $150,000.

45. If the average collection period is 30 days, what is the receivables turnover?
A) 11.1 times
B) 12.2 times
C) 6.1 times
D) None of these

46. The discontinued operations section of the income statement refers to
A) discontinuance of a product line.
B) the income or loss on products that have been completed and sold.
C) obsolete equipment and discontinued inventory items.
D) the disposal of a significant segment of a business.

47. The current ratio may also be referred to as the
A) short run ratio.
B) acid-test ratio.
C) working capital ratio.
D) contemporary ratio.

48. A supplier to a company would be most interested in the company's
A) asset turnover.
B) profit margin.
C) current ratio.
D) earnings per share.

49. Which one of the following is not a characteristic generally evaluated in analyzing financial statements?
A) Liquidity
B) Profitability
C) Marketability
D) Solvency

50. Horizontal analysis is appropriately performed
A) only on the income statement.
B) only on the balance sheet.
C) only on the statement of retained earnings.
D) on all three of these statements.

Explanation / Answer

41) A Paid back $100,000 and received for $250,000 for net increase of $150,000 42) A 1. 2. 4. applies = 50,000 - 22,000 - 2,000 = 26,000 43) D Cash flows deal with gains/losses 44) D Income before irregular items 800,000 x (1 - 0.25) = 600,000 45) D Not enough information, need receivables balance 46) D 47) C Acid test has less types of current assets and liabilities in it 48) C This is more important than profit margin, because this shows the ability to meet obligations immediately. Firms could have a large profit margin, but low current asset ratio 49) C 50) D

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