Final
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| 6 steps to cash flows... | 1. find NI (rev-exp) or look at Inc Statement
2. add back non cash items (dep, amortization, intangible)
3.find change in BS (from 1yr to next)
4. Find OIF
5. Add up OIF
6. Reconcile to the BS
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| Affect on cash if assets increase (except cash)? | Decrease
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| Affect on cash if liabilities decrease? | Decrease
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| In OCF assets are _____ related to cash. | inversely
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| In OCF liabilities are _____ related to cash. | directly
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| Which ratio would be of primary importance to a manger in evaluating the success of a new policy of reducing the stock of goods needed to meet customer demand? | Inventory Turnover
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| Which transaction causes a decrease to retained earnings? | Declaring a stock dividend
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| On the IS interest expense is reported as ____. | other revenue or expense
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| When a company declares 3-for-1 stock split, the number of outstanding shares _____. | is tripled compared to the number of shares that were outstanding prior to the split.
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| The primary measure of the overall success of a company is _____. | net income
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| Price/Earnings Ratio | Market price per share/earnings per share
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| Quick Ratio | (cash+accounts receivable+marketable securities)/current liabilities
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| Earnings Per Share | net income/avg. number of shares of common stock
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| Current Ratio | current assets/current liabilities
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| Return on Assets | (net income+interest expense)/avg. total assets
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| Return on Equity | net income/shareholders equity
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| Inventory Turnover | sales/inventory or COGS/avg. inventory
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| What is a characteristic of equity as opposed to debt. | voting rights are typically attached
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| An increase in inventory is reported in a statement of cash flows using the indirect method as a _____. | deduction from NI in arriving at net cash flows from operating activities.
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| What would you expect to find as part of cash flows from investing activities? | Cash inflows from the proceeds of a sale of a building.
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| When preparing a statement of cash flows from using the indirect method, an increase in inventory will result in adjustment to reported net income because _____. | inventory was paid for with cash, but is still on hand at the end of the period
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| In determining cash flow from operating activities, what adjustments will be made as a result of an increase in accounts receivable during a period? | A deduction to net income when the indirect method is used.
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| When a company declares 2-for-1 stock split, the number of outstanding shares _____. | is doubled compared to the number of shares that were outstanding prior to the split
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| Sean Corp. issued a $60,000, 10 year bond at the face rate of 8% annually on 1/1/2008. The market rate was 10%. How much cash will the bond investors receive at the end of the first interest period? | $60,000 x .08 = $4,800
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| The stated value of common stock is $.50 and the total balance in the common stock account is $37,500. 5,000 shares are treasury stock. Shares Outstanding is _____? | $37,500/.5=75,000
75,000-5,000=70,000
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| Collected $10,000 in cash from customers' open accounts for period. | IO=Inflow from operating activities
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| Paid one of the company's inventory suppliers $500 in settlement of an open account | OO=outflow from operating activities
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| Purchased a $6000 copier, signed a 90 day note payable. | NR=not reported in the body of the CF but included in a supplemental schedule
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| Issued bonds at face value face value of $100,000. | IF=inflows from financing activity
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| Made $23,200 in cash sales for the week. | IO=inflow from operating activities
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| Purchased a lot for $50,000. The seller of the land agrees to accept a five-year promissory note as consideration | NR=not reported in the body of the CF but included in a supplemental schedule.
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| Renewed the property insurance policy for another 6 months, paid $1000 for the renewal. | OO=outflow from operating activities.
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| Purchased a machine for $10,000. | OI=outflow from investing activities.
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| Paid cash dividends of $2500. | OF=outflow from financing activities.
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| Reclassified as a short-term a long-term note payable of $5000 that is due within the next year. | NR=not reported in the body of the CF but included in a supplemental schedule.
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| Purchased 500 shares of the company's own stock on the open market for $4000. | OF=outflow from financing activities.
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| Sold 500 shares of Nike stock for book value of $10,000 (they were classified as long-term investments) | II-inflow from investing activities.
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| How do you find dividends paid for the year (if not given)? | Dividends= Beg. Bal R/E + NI - End Bal. R/E
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| How do you find current year's R/E? | R/E= Beg. Bal. R/E + NI - Dividends
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| What is included in the operating section of cash flows? | Current Assets & Current Liabilities
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| What is included in the investing section of cash flows? | Long-term assets
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| What is included in the financing section of cash flows? | Long-term debt, stock, dividends paid.
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| The following amounts are reported in the ledger of B&B co: Assets: $50,000 debit Liabilities: $18,000 credit R/E: $6,000 What is the balance in the contributed capital account? | $26,000.
$50,000=$18,000+$6,000+???
Just make the accounting equation balance.
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| What is a characteristic of serial bonds? | They do not all mature on the same date.
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| The result of using the effective interest method of amortization of discount on bonds is that the... | effective interest rate of each amortization period is constant.
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| Redeem $300,000 of bonds early at 103. Bonds were issued at a discount and the balance in the discount account was $15,000. What is the result? | =$300,000*1.03=$309,000
$9,000+$15,000= $24,000-Loss
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| The amount in the retained earnings account represents.... | earnings that have not been distributed to shareholders.
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| NI=$375,000, issued 8,000 shares common @ $15 and 2,000 shares preferred @ $30. What is the balance for S/E? | =$375,000+(8000*15)+(2000*30)
=$555,000
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| Would companies repurchase its own stock (treasury stock)to invest in the company? | no
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| A result of a stock split is... | ...the par value of the stock is changed in the reverse proportion as the stock split.
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| The book value per share of stock is... | based on the excess of total assets over total liabilities.
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| T or F: Investments in stock are reported as financing activities on the statement of cash flows. | False.
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| Cash flows from borrowing and paying off an 90 day bank loan are classified as... | A financing activity.
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| Which method of preparing the operating section of the statement of cash flows adjusts net income to remove the effects of deferrals and accruals for revenues and expenses? | Indirect method.
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| T or F: Most companies use the direct method of preparing the operating activities section of the statement of cash flows. | False.
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| For preparing the Operating Activities section of the statement of cash flows, the approach in which cash receipts and cash payments are reported. | The Direct method.
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| For preparing the Operating Activities section of cash flows, the approach in which net income is reconciled to net cash flow from operations. | The Indirect method.
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