Question 1

A company sold a piece of land for $40,000 which had an original cost of $25,000. What is the cash ﬂow effect of this transaction?

Accepted Answer

A)   $15,000 increase in cash ﬂows from operations
B)   $40,000 increase in cash ﬂows from operations
C)   $40,000 increase in cash ﬂows from investing activities
D)   $15,000E) A) and C)
F) None of the above

Question 2

Which of the following would increase earnings but lower the quality of reported earnings?

Accepted Answer

A)   Writing off obsolete inventory
B)   Embarking on a capital expansion
C)   Increasing operating expenses.
D)   Decreasing operating expensesE) None of the above
F) A) and B)

Question 3

Wish Corporation acquired a computer for $15,000 and paid for it in full by issuing 1,000 shares of its own common shares, par $10 (current market price $15 share). This transaction should not be reported on the statement of cash ﬂows because cash was neither paid out nor received.

Accepted Answer

A) True 
 B)False

Question 4

When using the indirect method, a loss on the sale of equipment should be added to proﬁt to derive cash ﬂows from operating activities.

Accepted Answer

A) True 
 B)False

Exam 5: Fraud, Internal Control, and Cash

A company sold a piece of land for $40,000 which had an original cost of $25,000. What is the cash ﬂow effect of this transaction?

Correct Answer
verified

Wish Corporation acquired a computer for $15,000 and paid for it in full by issuing 1,000 shares of its own common shares, par $10 (current market price $15 share). This transaction should not be reported on the statement of cash ﬂows because cash was neither paid out nor received.

Correct Answer
verified

When using the indirect method, a loss on the sale of equipment should be added to proﬁt to derive cash ﬂows from operating activities.

Correct Answer
verified

Which of the following would increase earnings but lower the quality of reported earnings?

Correct Answer
verified

Exam 5: Fraud, Internal Control, and Cash

A company sold a piece of land for $40,000 which had an original cost of $25,000. What is the cash ﬂow effect of this transaction?

Correct AnswerverifiedShow Answer

Wish Corporation acquired a computer for $15,000 and paid for it in full by issuing 1,000 shares of its own common shares, par $10 (current market price $15 share). This transaction should not be reported on the statement of cash ﬂows because cash was neither paid out nor received.

Correct AnswerverifiedShow Answer

When using the indirect method, a loss on the sale of equipment should be added to proﬁt to derive cash ﬂows from operating activities.

Correct AnswerverifiedShow Answer

Which of the following would increase earnings but lower the quality of reported earnings?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified