Question

1. In the statement of cash flows, which of the following would be classified as an investing activity?

1. The issuance of bonds payable
2. The sale of production machinery
3. Interest paid to a lender
4. The sale of the company’s own common stock for cash

2. For which situation (s) below would an organization be more likely to use a process costing system of rather than a job-order costing system?

1. A commercial jet plane manufacturer
2. A masonry company that builds brick walls, bulkheads, and walkways designed by architects
3. An oil refinery that processes crude oil into gasoline
4. A framing shop that builds picture frames to order for individual customers

3. When the level of production activity decreases, variable costs will:

1. Increase per unit
2. Decrease in total
3. Decrease per unit
4. Increase in Total

4. In the article Toward Block chain-Based Accounting and Assurance by Jun Dai and Miklos Vasarhelyi, we identified several differences between a traditional Enterprise Resource Planning ERP accounting system and blochain Which of the following is NOT one of these differences?

1. Blockchain is relational database whereas an ERP system is append only.
2. The tampering/hacking risk in generally lower with Blockchain than with an ERP system.
3. Blockchain is decentralized and distributed, whereas traditional ERP systems are more centralized
4. The operation of blockchain is generally less labor intensive than the operation of an ERP system

5. Shoshoni Corporation prepares its statement of cash flows using the indirect method. Which of the following would be added to net income in the operating activities section of the statement?

Increase in Accounts Receivable                                 Decrease in Accounts Payable

1. Yes                                                                                Yes
2. Yes                                                                                No
3. No                                                                                 Yes
4. No                                                                                 No

1. Option A                       B. Option B                         C. Option C    D. Option D

6. Rainbow Corporation has provided the following data from its activity-based costing system:

Activity Cost Pool   Total Cost     Total Activity

Assembly                   $710,770           37,000 machine-hours

7. Jody is trying to decide between investing between two different assets, asset A &B. Asset A is expected to yield a lump sum payment to Jody in 20 years, but no cash payments until then.     Asset B will instead yield a series of annual payments to Jody over the next 30 years. Which of the following statements is most accurate regarding her choice between these two investments?     

1. Using the concept of the time value of money, the cash payments of each investments alternative must be componded to determine the future value of each investment in 30 years. Jody will then compare the two future values to make her selection
2. Using the concept of the time value of money, the cash payments of each investment alternative must be discounted back to the present value using an applicable discount factor.

Jody will then compare the two present values to make her selection

3. It is impossible to determine which is the best investment because the time period of the payment are different
4. Jody will add up the total cash payments under each alternative. The investment that will make the most total ($) cash payments to Jody over the next 30 years is better investment

28. Fill in blank in the following sentence:

Financial statements, including the annual

Answer 1

Solution:

1)

Cash flow from Investing activities are cash flow (outflow or inflow) from purchase / sale of fixed assets.

Hence, Investing activity is B. the sale of production machinery

The correct option is B.

2)

The correct option is C. An oil refinery that processes crude oil into gasoline

Process costing is used where the nature of work is repetitive, hence in processing gasoline, the crude oil is processed and it is in repetitive process.

3)

When level of production activity decreases, variable costs will also decreases in total.

There is a direct relationship between Variable Cost and production volume/activity.

Variable Cost per unit will remain same whether production increases or decreases.

Hence, the correct option is B. Decreases in total

4) – Not properly understand what is the requirement.

5)

The correct option is D. Option D

Increase in Accounts Receivable shows that Cash has gone from the business, hence this will be deducted from Net Income.

Decrease in Accounts Payable shows that the cash is paid to reduce the liabilities, hence this will be deducted from Net Income.

It means both the Accounts are not added in Net Income in the indirect method of cash flow.

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

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