173. Which of the following statements is true?
a. Publicly traded U.S. companies must provide an annual report to their shareholders when operating conditions change significantly.
b. An unqualified independent auditor’s report must be included in the annual report.
c. Notes to the financial statements do not need to be included in the annual report because that information is only for internal users.
d. None of these answer choices are correct.
Ans: D, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
174. Notes to the financial statements
a. are optional.
b. help clarify information presented in the financial statements.
c. are generally brief and few in number.
d. need not be read in detail if an unqualified opinion accompanies the financial statements.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
175. Tucker Tutoring Service Company recorded the following cash transactions for the year:
Paid $55,000 for salaries.
Paid $7,000 to purchase office equipment.
Paid $6,000 for utilities, advertising and supplies.
Paid $12,000 for rent.
Paid $18,000 in dividends.
Collected $125,000 from customers.
Borrowed $20,000 from the bank.
What was the company’s net cash provided (used) by operating activities?
a. $34,000
b. $52,000
c. $72,000
d. The amount cannot be determined from the information provided.
Ans: B LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting
Solution: $125,000 - $55,000 - $6,000 - $12,000 = $52,000
(Cash coll. – sal. paid – (util. + adv. + supp. paid) – rent paid)
176. Tucker Tutoring Service Company recorded the following cash transactions for the year:
Paid $55,000 for salaries.
Paid $7,000 to purchase office equipment.
Paid $6,000 for utilities, advertising, and supplies.
Paid $12,000 for rent.
Paid $18,000 in dividends.
Collected $125,000 from customers.
Borrowed $20,000 from the bank.
What was the company’s net cash provided (used) by investing activities?
a. ($7,000)
b. $7,000
c. $13,000
d. The amount cannot be determined from the information provided.
Ans: A, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting
177. Tucker Tutoring Service Company recorded the following cash transactions for the year:
Paid $55,000 for salaries.
Paid $7,000 to purchase office equipment.
Paid $6,000 for utilities, advertising, and supplies.
Paid $12,000 for rent.
Paid $18,000 in dividends.
Collected $125,000 from customers.
Borrowed $20,000 from the bank.
What was the company’s net cash provided (used) by financing activities?
a. ($2,000)
b. $2,000
c. $22,000
d. The amount cannot be determined from the information provided.
Ans: B LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting
Solution: $20,000 - $18,000 = $2,000
(Bank borrowing – div. pmt.)
178. Dr. Mark Veterinary Services recorded the following cash transactions for the year:
Paid $154,000 for salaries.
Paid $85,000 to purchase equipment.
Paid $49,000 for utilities, supplies, insurance, and advertising.
Paid $36,000 for rent.
Issued shares of stock for $60,000
Paid $28,000 in dividends.
Collected $650,000 from customers.
Paid $3,600 to purchase investments.
What was the company’s net cash provided (used) by operating activities?
a. $298,000
b. $383.000
c. $411,000
d. The amount cannot be determined from the information provided.
Ans: C, LO: 3, Bloom: AP, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting