Mohammed El Barri Quiz Part 2

On July 15, a company entered into a three-month agreement to rent a machine the company needed to complete a special order. The machine would be delivered on August 1, and rental payments are due on the first day of each rental month. The effect this event would have on the company’s July 31 financial statements would be to

• cause no change in assets, liabilities, or income.

• increase both assets and income.

• increase both assets and liabilities.

• increase liabilities and decrease income.

Bertram Company had a balance of $100,000 in Retained Earnings at the beginning of the year and $125,000 at the end of the year. Net income for this time period was $40,000. Bertram’s Statement of Financial Position indicated that Dividends Payable had decreased by $5,000 throughout the year, despite the fact that both cash dividends and a stock dividend were declared. The amount of the stock dividend was $8,000. When preparing its Statement of Cash Flows for the year, Bertram should show Cash Paid for Dividends as

• $20,000

• $15,000.

• $12,000

• $5,000

Dividends paid to company shareholders would be shown on the statement of cash flows as

• operating cash inflows.

• operating cash outflows.

• cash flows from investing activities.

• cash flows from financing activities.

All of the following are classifications on the statement of cash flows except

• operating activities.

• equity activities.

• investing activities.

• financing activities.

The most commonly used method for calculating and reporting a company’s net cash flow from operating activities on its statement of cash flows is the

• direct method.

• indirect method.

• single-step method.

• multiple-step method.

A company has a fixed overhead volume variance that is $10,000 unfavorable. The most likely cause for this variance is that

• the production supervisory salaries were greater than planned.

• the production supervisory salaries were less than planned.

• more was produced than planned.

• less was produced than planned.

During a conference call with a financial analyst, the CFO was asked to comment on notable aspects of the income statement. Which one of the following statements is correct?

• Gross profit rose by 25% with an 11% rise in operating expenses.

• Higher revenue with a better gross margin led to a 200% increase in operating profit.

• The 19% increase in revenue was leveraged into a 25% increase in gross profit.

• Operating profit doubled as a 23% increase in revenue led to 33% higher gross profit.

Which one of the following does not represent one of the three main conceptual spheres of sustainability?

• Economic.

• Environmental.

• Ethical.

• Social.

Last year a company had sales of $100 million, net income of $10 million, average total assets of $90 million, and average equity of $40 million. This year it had sales of $120 million, net income of $14 million, average total assets of $100 million, and average equity of $50 million. How did the total asset turnover ratio and the return on assets change, respectively?

• Increased; decreased.

• Increased; increased.

• Decreased; decreased.

• Decreased; increased.

A company based in Canada has a Swedish subsidiary. For the Swedish subsidiary, the British pound is the currency that mostly influences the costs of the goods it produces and the selling prices of those goods. The company’s primary sources of long-term debt financing are U.S. investors. The functional currency of the Swedish subsidiary is the

• U.S. dollar.

• Canadian dollar.

• British pound.

• Swedish krona.