sestian : For cah of the folowing tatements,circle () or (F) to indicate whether

Question

sestian : For cah of the folowing tatements,circle () or (F) to indicate whether the 1.(D(F) Retained carnings indicate the amount of cash available for distribution to shareholders 2. (F) A current ratio of 0.9 indicates that a company's current assets exceed its current 3· (T) (F) The statement of cash flows classifies changes in cash as operating, investinand liabilities financing activities future 4(D(F) Trading secunities are investments where there is no intention to sell in the nea (D(F) Intercompany eliminations avoid double counting on consolidated financial (T (F) () Available for sale securities are investments where there is no intention to statements T) (F) Amounts due from customers are called accounts receivable The Last-in, First-out (LIFO) inventory method results in an ending inventory valued at the most recent cost sell in the near future cash dividends (D (F) An example of a investing activity on the statement of cash flows is payment of tour '. Asubsidarysacompanythat owns more than 50% of another business's stock Question 2: Encirele the most suitable answer (10 marks) I. Amber Company had the following data: Retained carnings, January 1, 2015 Depreciation expense for 2015 Cost of goods sold for 2015 Paid-in capital, January 1, 2015 Rent expense for 2015 Sales for 2015 Dividends declared in 201s Wage expense for 2015 Prepaid rent, January 1, 2015 $45,000 $7,000 $102,000 $26,000 $12,000 $194,000 $15,000 $40,000 $2,000 What is the balance in Retained Earmings on December 31, 20157 a. $61,000 b. $63,000 c. $65,000 d. $74,000 2. A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is a. common size analysis. b. horizontal analysis. c. ratio analysis. d. vertical analysis. Page 3 of7

Explanation / Answer

question 1 answer is given below.

1. False retained earnings indicate the amount of earnings left over with the company after distribution of dividends to shareholders. 2. False Current ratio of 0.9 indicates the current assets are less than current liabilities. 3. True Cash flow statement shows the changes in cash flow due to financing , operating and investing activities. 4. False Trading securities are held with the intention of selling them in near furture. 5 True Inter company eliminations avoid double counting on consolidated financial statements. 6 True amounts due from customers are called accounts receivable 7 False LIFO values inventory ar the earliest cost 8 False Available for sale securities are intended to be held for an indefinite period, but to be sold off before their maturity. 9 falseq payment of dividend is a financing activity 10 false a subsidiary is a company in which more than 50% is held by holding company.

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