3. Indicate the effects of the transaction listed below on each of the following total current assets, working capital (CA-CL), and current ratio. Indicate increase with “+," indicate decrease with “-" and indicate no effect cannot be determined with “0." Assume and initial current ration of greater than 1.0. Total Current Working Current Assets Capital Ratio 1. Food is sold for cash. 2. Equipment is sold less Than its book value. 3. A cash dividend is declared. 4. Treasury stock is purchased. 5. A fully depreciated fixed asset is retired. 6. Equipment is purchased with long-term notes. 7. Utility expenses are paid (they were not previously accrued). 8. A cash dividend is paid. |

3. Indicate the effects of the transaction listed below on each of the following total current assets, working capital (CA-CL), and current ratio. Indicate increase with “+," indicate decrease with “-" and indicate no effect cannot be determined with “0." Assume and initial current ration of greater than 1.0. Total Current Working Current Assets Capital Ratio 1. Food is sold for cash. 2. Equipment is sold less Than its book value. 3. A cash dividend is declared. 4. Treasury stock is purchased. 5. A fully depreciated fixed asset is retired. 6. Equipment is purchased with long-term notes. 7. Utility expenses are paid (they were not previously accrued). 8. A cash dividend is paid. |

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter14: Statement Of Cash Flows

Section: Chapter Questions

Problem 34E

See similar textbooks

Similar questions

Other things held constant, which of the following will DECREASE the current ratio, assuming an initial current ratio greater than 1.0? a. Machinery is purchased using cash b. Inventory is sold at cost for cash c. Accounts payables are paid with cash d. Machinery is purchased using cash & Accounts payables are paid with cash e. None of these
Super Corp. has an acid test ratio 1.5 to 1.0 which of the following will causethis ratio to deteriorate?a. Payment of cash dividends previously declared.b. Borrowing short term loan from a bank.c. Sale on inventory on account.fd. Sale of equipment at a loss.
Indicate the effect of the transactions listed in the following table on total current assets, current ration, and net income. Use (+) to indicate an increase, (-) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any necessary assumptions and assume an initial current ratio of more than 1.0. A cash dividend is declared and paid
Indicate the effects of the transactions listed, on current assets, current ratios and net income. Use (increase) to indicate an increase, (decrease) to indicate a decrease and (no effect) to indicate no effect or an indeterminate effect. A fixed asset is sold for more than book value. Net income will ______ Answer 1 A fully depreciated asset is retired. Net income will experience ______ An increase in inventory turnover ratio signifies _____________________ in a firm's efficiency. Merchandise is sold for cash. Total current assets will ________
Which one of the following will decrease net working capital? Select one: a. A decrease in accounts payable. b. A sale of inventory at a profit. c. A sale of a fixed asset for cash. d. An increase in accounts receivable. e. An increase in accounts payable.
Which of the following statements is true about the Days' Cash on Hand ratio? a.It is not useful in comparing different businesses to one another. b.It may be useful in determining whether a business is able to meet its cash commitments. c.It uses all current assets in the numerator of the ratio. d.The only operating expense used in the denominator of the ratio is depreciation expense
Indicate whether each of the following would be added to or deducted from net income in determining net cash flow from operating activities by the indirect method:a. Increase in merchandise inventoryb. Increase in prepaid expensesc. Depreciation of fixed assetsd. Gain on disposal of fixed assetse. Amortization of patentf. Increase in notes payable due in 120 days to vendorsg. Increase in accounts payableh. Decrease in wages payablei. Decrease in notes receivable due in 60 days from customersj. Decrease in accounts receivablek. Loss on retirement of long-term debt
How many of these items would be subtracted from net income to prepare the operating activities section of the statement of cash flows? a. Decrease in accounts receivable b. Issuance of common stock c. Increase in interest receivable d. Purchase of land e. Decrease in accounts payable f. Gain on the sale of equipment g. Depreciation expense h. Payment of dividends I. Decrease in utilities payable j. Increase in inventory Multiple Choice: A. 1 B. 2 C. 5 D. 4
Indicate the effect of the transactions listed in the following table on total current assets, current ration, and net income. Use (+) to indicate an increase, (-) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any necessary assumptions and assume an initial current ratio of more than 1.0. A fixed asset is sold for more than book value.
Analyze the following transactions and identify its effects on assets, liabilities, and capital. Write ? for increase, ? for decrease, NE for No effect and I/D if the effect is only in one major accounts. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Which will result to net increase in owner’s capital by P50,000? Increase in asset of P50,000 and increase in liabilities by P50,000 Increase in expenses by P100,000 and increase in revenue by P50,000 Increase in cash by P50,000 and decrease in accounts receivable by P50,000 Increase in cash by P100,000 and decrease in equipment by P50,000 none of the above
Company X is competing with company Y. These are their ratios: x y Current Ratio = .223 Current Ratio = .146 Cash Ratio = .057 Cash Ratio = .031 Quick Ratio = .105 Quick Ratio = .072 Based on liquidity and short term assets, which company is doing better?