Cash Flow and Depreciation Quiz

Cash, not including cash equivalents, includes:

• Postage stamps.

• Coins, currency, and checking accounts.

• Money market funds.

• Two-year certificates of deposit.

Which of the following is included in cash flows from operating activities?

• Cash received from selling goods and services.

• Cash received from selling fixed assets.

• Cash borrowed from a bank.

• Cash paid as dividends to shareholders.

A method of estimating bad debts expense that involves a detailed examination of outstanding accounts and their length of time past due is the:

• Direct write-off method.

• Aging of accounts receivable method.

• Aging of investments method.

• Percent of accounts receivable method.

A promissory note:

• Is a short-term investment for the maker.

• Is a written promise to pay a specified amount of money at a certain date.

• Is a liability to the payee.

• Is another name for an installment receivable.

A company borrowed $10,000 by signing a 180-day promissory note at 10%. The total interest due on the maturity date is.

• $50

• $550

• $500

• $5000

Nelson Company purchased equipment on July 1 for $27,500 and decided to depreciate the equipment on the straight-line method over its useful life of two years. Assuming the equipment's salvage value is $3,500, the amount of monthly depreciation expense Nelson should recognize is:

• $1,000

• $2,000

• $750

• $1,500

The straight-line depreciation method and the double-declining-balance depreciation method:

• Produce the same total depreciation over an asset's useful life.

• Produce the same depreciation expense each year.

• Produce the same book value each year.

• Are the only acceptable methods of depreciation for financial reporting.

Plant assets are:

• Tangible assets used in the operation of a business that have a useful life of more than one accounting period.

• Current assets.

• Intangible assets used in the operations of a business that have a useful life of more than one accounting period.

• Tangible assets used in the operation of business that have a useful life of less than one accounting period.

Current liabilities

• Accounts payable, wages payable, short-term notes payable.

• Unearned revenue, long-term notes payable, accrued expenses.

• Bonds payable, salaries payable, prepaid expenses.

• Mortgage payable, dividends payable, cash equivalents.

Long-term liabilities

• Short-term notes payable, accrued liabilities, bonds payable

• Bonds payable, long-term notes payable, mortgage payable.

• Lease obligations, deferred tax liabilities, accounts payable.

• Contingent liabilities, goodwill, unearned revenue.