Business

1. 1)  If a business acquired a $250,000 loan to buy a new warehouse, it would be recorded on a Cash 1) Flow statement as

A) An increase in cash flow from investing activities

B) A decrease in cash flow from operating activities

C) An increase in the cash flow from financing activities

D) A decrease in cash flow from investing activities E) A decrease in cash flow from financing activities

Answer: C

Diff: 1 Page Ref: 30-32

2. 2)  The Matching Principle used in accounting is consistent with 2) A) Accrual based accounting practices

B) The timing of cash inflows and outflows C) Standard credit and collections practices D) Cash based accounting practices

E) Calendar based accounting practices

Answer: A

Diff: 2 Page Ref: 24-25

3. 3)  The following accounts represent the financial status of Fandango Company as of October 1.The 3) business has cash of $100,000. It must pay its suppliers $250,000 within 60 days. It has a mortgage outstanding of $3.1 million, of which $100,000 is owed within the next 12 months. Inventory totals $700,000 and the net book value of its land, building and equipment is $3.6 million. Income tax

payable equals $50,000. It has $1 million in shareholder's equity. The value of the Company's

working capital is

A) $350,000 B) $1 million C) $400,000 D) $300,000

Answer: C

Diff: 2 Page Ref: 21

4) An increase in ________ represents a cash inflow from operating activities. A) Accounts receivable

B) Accrued salaries C) An organization D) Inventory

E) Prepaid rent

Answer: B

Diff: 1 Page Ref: 33

E) $800,000

4)

1

5. 5)  A patent is an example of a(n) 5)

A) Current liability B) Current liability C) Current asset

D) Intangible asset

E) Long term liability

Answer: D

Diff: 1 Page Ref: 20

6. 6)  On May 15 RAJ Inc. received prepayment of $132,000 representing the total amount to cover a 6) purchase order requiring delivery of the custom blended product in four equal monthly shipments.

The first...