ACG 2021 Exam 3 Questions And All
Correct Answers.
Operating activities - Answer the cash activities that create revenues or expenses in the
entity's major line of business
Inflows:
-cash collected from customers
-dividends received
-interest received
Outflows:
-cash paid to suppliers
-cash paid to employees
-cash paid for interest
-cash paid for income taxes
Operating activities indirect method - Answer use formula
Operating activities direct method - Answer use t-accounts
Investing activities - Answer the cash activities that increase or decrease the long-term
assets available to the company
-primarily affects long-term assets
Inflows:
-cash received from the sale of long-term assets
-cash received from the sale or maturity of investments
Outflows:
-cash paid for the purchase of long term assets
-cash paid for the purchase of investments
, Financing activities - Answer the cash activities that obtain cash from investors and creditors
needed to launch and sustain the business
-primarily affects liabilities and stockholder's equity
Inflows:
-cash received from the sale of the company's stock
-cash received from notes payable
-cash received from issuing bonds payable
Outflows:
-cash paid for the repurchase of the company's own stock
-repayment of principal on notes payable
-cash paid on maturity date of bonds payable
-cash paid for dividends
Direct vs indirect method - Answer -companies can choose between the direct and indirect
method for the operating activities section but the direct method is always used for he investing
and financing sections
Book value equation - Answer Gain/Loss = Cash Received - Book Value
Stockholder's rights - Answer 1. Vote- right to voting on matters that come before the
stockholders
2. Dividends- right to receive a proportionate part of any dividend
3. Liquidation- right to receive a proportionate share of any assets remaining after corporation
pays its liabilities in liquidation
4. Preemption- right to maintain one's proportionate ownership in the corporation
Authorized stock - Answer maximum number of shares the company can issue under its
charter
Issued stock - Answer number of shares the corporation has issued at any given time
Correct Answers.
Operating activities - Answer the cash activities that create revenues or expenses in the
entity's major line of business
Inflows:
-cash collected from customers
-dividends received
-interest received
Outflows:
-cash paid to suppliers
-cash paid to employees
-cash paid for interest
-cash paid for income taxes
Operating activities indirect method - Answer use formula
Operating activities direct method - Answer use t-accounts
Investing activities - Answer the cash activities that increase or decrease the long-term
assets available to the company
-primarily affects long-term assets
Inflows:
-cash received from the sale of long-term assets
-cash received from the sale or maturity of investments
Outflows:
-cash paid for the purchase of long term assets
-cash paid for the purchase of investments
, Financing activities - Answer the cash activities that obtain cash from investors and creditors
needed to launch and sustain the business
-primarily affects liabilities and stockholder's equity
Inflows:
-cash received from the sale of the company's stock
-cash received from notes payable
-cash received from issuing bonds payable
Outflows:
-cash paid for the repurchase of the company's own stock
-repayment of principal on notes payable
-cash paid on maturity date of bonds payable
-cash paid for dividends
Direct vs indirect method - Answer -companies can choose between the direct and indirect
method for the operating activities section but the direct method is always used for he investing
and financing sections
Book value equation - Answer Gain/Loss = Cash Received - Book Value
Stockholder's rights - Answer 1. Vote- right to voting on matters that come before the
stockholders
2. Dividends- right to receive a proportionate part of any dividend
3. Liquidation- right to receive a proportionate share of any assets remaining after corporation
pays its liabilities in liquidation
4. Preemption- right to maintain one's proportionate ownership in the corporation
Authorized stock - Answer maximum number of shares the company can issue under its
charter
Issued stock - Answer number of shares the corporation has issued at any given time
